Farming Focus InBrief – April 2022

  • If you require advice from one of our consultants, do not hesitate to contact them by email or phone.  If you do not have their details please contact the office on 01664 503200 or email [email protected]
  • Input prices were already high before the invasion of Ukraine but cost inflation has now been exacerbated. Between January 2021 and January 2022, the price of UK produced ammonium nitrate was up 145%, urea up 156%, and glyphosate up 307%.   Since the invasion, the value of ammonium nitrate has exceeded £900/t, up from £645/t in January.  The value of tractor diesel has also risen substantially, with some reports quoting 130p/l.  The high cost of inputs will challenge many businesses over the next 12 months and beyond.  The working capital of farms will be under significant pressure.  While the cost of outputs has risen, the level of cash required to operate has also increased rapidly.  Our Spotlight article looks how the rising costs are affecting our Model Farms.
  • The Chancellor, Rishi Sunak, used the Spring Statement on the 23rd March to announce a number of policies designed to mitigate the cost of living crisis.  The Statement came a day after the latest inflation figures were announced.  These showed year-on-year inflation in February (CPI measure) had risen to 6.8%. Even so, the 1.25% increase in National Insurance contributions will still be introduced in April, although the threshold at which it becomes payable will be increased to £12,570 (to come into force in July). The rate of fuel duty has been reduced by 5p/l and VAT on energy saving equipment (solar panels, heat pumps etc) has been cut to zero.  He also made the commitment to cut the basic rate of income tax by 1% to 19% by the end of the Parliament (2024).
  • Defra is consulting on binding environmental targets for England which could have a significant effect on agriculture over the coming years. These include water quality, the area planted to woodland, halting species decline and the creation of wildlife-rich habitats outside of protected sites.
  • The Bank of England increased the Base Rate by a further 0.25% on the 17th March.  This takes the cost of borrowing from 0.5% to 0.75%.  This is a response to increasing inflation.  The Bank is tasked with keeping inflation at 2% but, according to the Bank’s own forecast, increases in prices will hit 8% this spring.  The rise in interest rates is meant to bring inflation back towards the target over the medium term.  Many forecasters believe that there will be two further 0.25% rises before the end of 2022, taking rates to 1.25%.
  • The 5th  Woodland Carbon Guarantee auction will take place from midday on Monday 9th May to midday on Sunday 15th May 2022.  Applications to take part in the next auction can be submitted now and need to be made by midnight on Sunday 24th April.  Woodland creation projects accepted into the Woodland Carbon Guarantee scheme have the option to sell Woodland Carbon Units (WCUs) to the government every 5 or 10 years up to 2055/56.
  • It has been confirmed that Young Farmers and New Entrants will not be able to apply for entitlements from the National Reserve in England this year, except in respect of land which was leased, bought, or gifted prior to 17th May 2021. With De-linking of entitlements expected to take place in 2024 this is just another step in drawing the BPS to a close.
  • British Sugar has announced all contracts, irrespective of length, will receive at least £27 per tonne for the 2022/23 crop year.  The guaranteed £27 per tonne will apply to all beet for the crop which is about to be planted.  Any growers with a fixed contract price below this amount will have it raised to £27 per tonne.  Those whose contracts include a market bonus element will receive a guaranteed market bonus of £5.82, raising their price to £27 per tonne on delivery.  Any surplus beet for the 2022/23 crop will also be paid at £27 per tonne.
  • Defra has announced that the ’emergency’ authorisation of Syngenta’s Cruiser SB seed treatment for sugar beet has been granted for this year.  Used to control Yellow Virus, the use of the neonicotinoid is dependent on nine conditions being met.  This includes an initial threshold for use, meaning the seed treatment can only be used if the predicted Yellow Virus incidence is at or above 19% of the national crop on 1st March.  According to Defra, following what has been a relatively mild winter, modelling on 1st March predicted a 68% (!) level of virus incidence.  In 2018, 25% of the national sugar beet crop was lost to YV, with an estimated cost to processors and growers of £67 million.
  • A reminder that Countryside Stewardship (CS) is now open for applications (see This includes the Higher-tier, Mid-Tier, Wildlife Offers and the stand-alone Capital Grant Scheme.  Many are having another look at CS, in part to try and retrieve some ‘lost’ BPS, but also because the domestic scheme has seen some improvements and flexibility.  Successful applications will commence 1st January 2023 and can be ended early where an ELM agreement has been approved.  Payments have been timelier and the penalty/inspection process less penal.  Most will have some areas on their holding that are less productive and could probably be entered into CS.  Please contact one of our consultants if you are considering CS, they can help you prepare and submit a cost-effective CS application but only if initial discussions conclude it is financially viable.
  • Our Special Edition in February also included details on the Lump Sum ‘retirement’ scheme which will be in operation this year only (see Do not hesitate to contact one of our consultants if this is something that maybe of interest to your business and they can work through the details with you.
  • The Andersons Centre will be at Dairy Tech on Thursday 7th April.  Please join us on stand B50 where our consultants will be available to speak to. Please note that we will also be selling copies of the 52nd edition of the John Nix Pocketbook on the stand and there will be a 20% discount for purchases on the day.

This month’s Spotlight looks at the impact of cost inflation on two of our Model Farms Click Here for further information.

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