Farming Focus InBrief – October 2021

  • 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]
  • Scotland, Wales and Northern Ireland have all recently announced updates to their future farm policies, although none have given any clear proposals for new schemes or timings. However, we do know, in all the regions the BPS will continue in the short term whilst plans continue to be developed and consulted on.  Furthermore, the Welsh Government has confirmed the BPS will continue until 2023. It has also said existing Glastir contracts coming to an end in December 2021 will be given a two-year extension until the end of 2023 with the Farming Connect Programme continuing until March 2023.  The new Sustainable Farming Scheme which will replace the BPS and Glastir is expected to launch fully in 2025.
  • The UK Government has, once again, delayed the implementation of border controls on agri-food imports from the EU.  The postponement is blamed on the combined effects of the Covid-19 pandemic and food supply-chain issues, but it is equally a result of the Hard Brexit the Government negotiated.  Many of the checks and paperwork requirements were due to be fully implemented from the 1st October, but have been delayed until the New Year or later. This effectively retains the lop-sided situation where UK exports to the EU are subject to the full range of EU checks, whilst imports from the EU are currently allowed into our market with far fewer restrictions. 
  • Defra is giving a ‘heads-up’ that the Countryside Stewardship Facilitation Fund will open in England for a 6th round in December.  The fund supports facilitators, either individuals or organisations, to bring farmers and foresters together to produce landscape-scale Countryside Stewardship agreements.  A total of £2.5m will be available under the latest round, which will close to applications on 19th January 2022.  Further details expected soon.
  • The sugar beet price for the 2022 crop will be £27 per adjusted tonne.  This is a significant increase over the price for this year’s crop of £21.10 and £22.00 on the one-year and three-year contracts respectively.  This will be a flat-rate price, with no market related bonus as has been available recently. The fact that the announcement comes so late highlights the difficulty the two parties had in reaching a price agreement.  With buoyant prices for alternative crops and growing costs rising, a sizeable uplift was required to keep the area planted up.  The Virus Yellows insurance scheme, will continue for 2022.
  • Defra has given Rothamsted Research permission to run field trials on wheat that has been genome edited. The trials will be on CRISPR-edited wheat, which has been designed to have reduced levels of the naturally occurring amino acid, asparagine.  Asparagine turns into acrylamide when bread is baked or toasted which has been found to cause cancer in rodents and is considered as ‘probably carcinogenic’ to humans and is therefore a huge problem for food manufacturers.  It is expected the Government will propose allowing gene editing to be used commercially in the UK for both crops and livestock, following a consultation held this year.
  • Arable markets remain firm. Over 6m tonnes of wheat have already been traded with the EU, over 50% more than this time last year, pushing prices upwards.  Demand from China is fuelling buying from speculators, which in turn is increasing the volatility in the market.  Furthermore, there are reports Russia may impose an export tax on its grains, making global supply tighter.  Dry weather in Canada has reduced yields there, fuelling OSR prices.  Barley prices are also good, just a £7 per tonne discount to wheat with milling oats about £20 per tonne above feed oats.
  • The GDT average price index experienced a significant rise in September after consecutive declines since April and is now back above the $4,000 mark at $4,011. There is a general upturn in the global dairy commodities market, although still a little way off levels seen in the spring.  A ‘fly in the ointment’ could be a slow-down in demand from China but reports of a shift in demand from other parts of Asia and the Middle East could compensate for this.  Domestic Farmgate milk prices remain strong.  The average farmgate milk price for August is 31.24ppl, 11% more than last year.  But production has been falling due to poor grass growth.  The AHDB expects production to run below year earlier levels until the New Year.  Although the milk price is good, feed prices remain high meaning the milk to feed price ration will not encourage more production.  Rising labour and energy costs are also squeezing margins.
  • Farmgate beef and sheep prices remain strong. The GB all prime cattle deadweight average stands about 40ppkg above last year’s level.  The GB deadweight NSL SQQ is in the region of 60ppkg above 2020 prices and over £1 per kg higher than the 5-year average.  Supporting prices is tight supply.  The prime cattle and cow kills were both down by 4% and 5% respectively for the period January to August compared with 2020.  The UK monthly sheep meat production has been below last year and the 5-year average for every month so far this year, with July and August experiencing particularly sharp year-on-year declines.  In the period January to August, the lamb kill totals 7,255,200 head, almost 900,000 less than for the same period in 2020. 
  • A reminder that the Future Farm Resilience Fund is now open. If you would like a one-to-one farm resilience review and report carried out by one of our consultants and access to online skills and training, including resilience planning webinars all for free get in touch with one of our consultants. Places are limited.  More information can be found at https://www.eventbrite.co.uk/o/ricardo-future-farming-resilience-fund-29430290977
  • FPC Future, an agritech event, takes place on 4th November at the Lincolnshire Showground. With its exhibition, conference and tours of the University of Lincoln, it seeks to provide growers with all the agritech information they need. This event should be of interest to those looking at opportunities in the fresh produce sector as well as ascertaining how new technologies could boost productivity by helping their workforce to become more efficient. Registration is free – www.fpcfuture.co.uk

This month’s Spotlight looks at the situation regarding the surge in gas prices and the knock on effect on the fertiliser market and the wider food chain.   Click Here for further information.

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to Andersons’ AgriBrief Bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://agribrief.co.uk/

 

Farming Focus InBrief – September 2021

  • Andersons’ consultants are continuing to support their clients during the pandemic. If you require any advice, please contact your  usual consultant, or the office on 01664 503200 or email [email protected].
  • The deadline for applications to the Sustainable Farming Scheme (SFI) Pilot has been extended until 30th September 2021 (originally 1st September).  The Pilot is for those who expressed an interest in the scheme earlier in the year.  Furthermore, Defra continues to make amendments to the online guidance for the SFI Pilot.  There seems to be a lot of guidance, we think the best place to start and ‘navigate’ from is https://www.gov.uk/government/collections/sustainable-farming-incentive-pilot-guidance. The extension might suggest that not as many have signed-up to the scheme as Defra hoped.  If you expressed an interest in the scheme earlier in the year and would like help with applying, do not hesitate to contact one of our consultants.
  • Farmers in Scotland could receive 95% of their 2021 BPS payment as early as September.  Once again, Scotland has announced it will be running a National Basic Payment Support Scheme.  This will mean loan offers will be made, calculated at 95% of a claimant’s anticipated BPS payment including the Greening amount, capped at a maximum of £133,638 (€150,000).  Letters will be sent out in batches, with the first set arriving from mid-August.  Similar to the scheme in 2020, those wishing to make use of the scheme will need to opt in.  Balance payments will be made from December 2021 when the payment window opens. In Wales, the aim is to make a BPS advance payment of 70% of the estimated claim value from 15th October 2021.  Payment will be made automatically subject to submission of an eligible BPS claim and the necessary supporting documents.  Balancing payments will be made from 15th December subject to completion of the full validation of the claim.  In England there has been no announcement regarding ‘early’ payment.  As in previous years payments are expected to commence on 1st December 2012
  • Covid and Brexit disruptions are impacting on costs and availability in some parts of the economy. Rising costs of steel and timber from global demand and restricted production are also affecting building projects.  Globally, costs for containers and bulk shipping have risen considerably.  At home a shortfall of HGV drivers is causing problems.  An existing shortfall has been exacerbated by EU drivers leaving due to a combination of Brexit and Covid.  Covid has also delayed HGV driving tests meaning few new drivers are coming through.  High-profile shortages such as Nando’s chicken and McDonalds milkshakes have already been reported (although the former is as much about a shortage of poultry processing staff as transport issues).  There are few reports of deliveries to and from farms being affected, but it will be an area of concern over the coming months.  It may be advisable not to let stocks on farm run too low as orders may take longer to arrive than usual and haulage of grain or livestock may have to be booked earlier.
  • Higher Tier Countryside Stewardship agreement holders with 5-year options ending on 31st December 2021 and further 10 or 20-year options (called CS 5 in 10 Agreements) could be offered a replacement agreement under domestic regulations. These will run for 10 or 20 years and although not completely clear, it appears the options coming to their 5-year end will be extended so this land continues to be managed environmentally.  NE will carry out initial assessments to see if an agreement is suitable for a replacement.  If this is deemed to be the case, the RPA will write to agreement holders inviting them to apply.  It will be possible to terminate a replacement agreement early, without penalty, at the end of an agreement year if a place in ELM has been secured. 
  • Defra has confirmed the Catchment Sensitive Farming initiative is to be expanded to cover the whole of England by March 2023. The programme gives farmers support to reduce air and water pollution.  Some funding via CS is only available with support from a Catchment Sensitive Farming Officer (CSFO) and if the land is in a priority catchment area.  It is unclear whether this announcement will mean the whole of England now falls within this category and these grants are available to all. There will be extra funding for more NE advisors to be available to help farmers implement practical solutions to reduce pollution.  But it will also fund 50 new EA inspectors to carry out an increased number of farm inspections.
  • The Farm Business Grant (FBG) opened in Wales on 1st September 2021 for expressions of interest.  The closing date is 1st October and successful applicants will have four months in which to purchase and claim for items.  The FBG provides a 40% contribution towards capital items which have been pre-identified to improve technical, financial and environmental performance.  A budget of £2m is available under this round.
  • A reminder that the Future Farm Resilience Fund is now open. If you would like a one-to-one farm resilience review and report carried out by one of our consultants and access to online skills and training, including resilience planning webinars all for free get in touch with one of our consultants. Places are limited.     More information can be found at https://www.eventbrite.co.uk/o/ricardo-future-farming-resilience-fund-29430290977
  • FPC Future, an agritech event, takes place on 4th November at the Lincolnshire Showground. With its exhibition, conference and tours of the University of Lincoln, it seeks to provide growers with all the agritech information they need. This event should be of interest to those looking at opportunities in the fresh produce sector as well as ascertaining how new technologies could boost productivity by helping their workforce to become more efficient. Registration is free – www.fpcfuture.co.uk

This month’s Spotlight looks at the latest the latest situation regarding the spreading of organic manure this autumn and the impact of the Farming Rules for Water.   Click Here for further information.

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to Andersons’ AgriBrief Bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://agribrief.co.uk/

 

Farming Focus InBrief – August 2021

  • Andersons’ consultants are continuing to support their clients during the pandemic. If you require any advice, please contact your  usual consultant, or the office on 01664 503200 or email [email protected].
  • The Future Farm Resilience Fund opens this month (August) in England and will run until March 2022. It is designed to provide business support to farmers during the early years of the Agricultural Transition.  Nineteen organisations have been awarded funding to deliver a variety of business support, which will be free of charge.  This initial phase will be fed-in to design the final scheme which will run from 2022 to 2024.  Andersons, in partnership with Ricardo are one of the organisations delivering support and will offer one-to-one farm resilience reviews, resilience planning webinars and access to online skills and training.  If you would like some free business support to help plan for the future, more information can be found at https://www.eventbrite.co.uk/o/ricardo-future-farming-resilience-fund-29430290977 or contact one of our consultants to sign up.
  • Defra has confirmed the new Farming Investment Fund (FIF) will open for applications in October this year. This is for capital items and is expected to be similar to the previous Countryside Productivity Small Grant scheme, where a 40% grant was available for pre-identified capital items.
  • A new Welsh Agriculture Bill is to be laid before the Senedd this autumn.  It will contain the powers to enact the new Sustainable Farming Scheme (SFS).  The Welsh Government has suggested the new support scheme should start in 2024 (although this is not 100% certain).  The Bill is unlikely to give details of how the SFS will work in practice, this is still being worked on.  Instead, it will set the legal framework under which the scheme will operate.
  • It was announced by the AHDB at the Cereals Event that the levy board was working in collaboration with Defra to produce an industry-standard carbon calculator for farming.  The aim is to have a tool available for the start of 2023. There is a plethora of different carbon calculators being used in UK farming at present, all with different methodologies and producing different results.  In addition, an industry group has been granted funding to develop a Farm Soil Carbon Code.  This would be similar to the existing Woodland and Peatland Codes, providing a set of formal protocols that would allow farmers to quantify and verify reduced greenhouse gas emissions and/or soil carbon capture as a result of adopting regenerative farming practices.  The lack of a formal standard is one of the issues holding back the development of a market in carbon offsetting in farming.
  • Defra and Natural England have announced the potential creation of two new AONBs, plus the extension of two existing ones.  The new ones are a Yorkshire Wolds AONB and a Cheshire Sandstone Ridge AONB.  The extensions are to Surrey Hills and the Chilterns.  Unhelpfully, the statement (see https://www.gov.uk/government/news/natural-england-announces-landmark-new-programme-for-protected-landscapes) gives no details on the precise areas to be covered by the designations.  A consultation is promised later in the year.
  • The second part of the National Food Strategy has been released. Whilst the recommendation of a sugar and salt tax made headline news, other recommendations directly affect farming more.  Such as guaranteeing the budget for Agricultural payments until at least 2029 and ring fencing some of the money to put towards schemes which would fund taking out of production 20% of the least productive land to create environmentally friendly landscapes.
  • British Sugar has announced the beet price for the 2022 season will be a minimum of £25.   This compares to £21.10 being paid for the current crop (under one-year contract terms).  The idea behind the company releasing an ‘indicative’ price before negotiations are complete seems to be to persuade growers to keep beet in the rotation as they plan their cropping decisions. The NFU is holding out for a higher contract price.  In recent years a contract price has not been announced until September.
  • According to the AHDB’s 2021 Planting and Variety Survey, GB winter wheat plantings have recorded a year-on-year rise of 26% to 1,742K hectares.  Every region recorded a rise in plantings. In contrast, the total GB barley area has recorded an 18% year-on-year fall to 1,119K hectares as growers ‘correct’ their rotations from their enforced spring cropping regime last season.  The winter barley area rose 15% to 350K hectares, with spring barley plantings recording a 28% fall on the year to 769K hectares; still quite historically high.  58% of the GB barley area is of a malting variety. The area of oats has risen by 1%, whilst OSR plantings have fallen by a further 15% since last year.  This makes the cropped area the lowest since 1989 (including spring OSR).  Ironically, crops look good this year and those growing it look like being rewarded with a high gross margin so it may encourage a small resurgence of OSR for 2022.
  • The UK potato crop escaped the storms which hit mainland Europe, but conditions are ideal for blight. New crop prices have been supported as stocks have been slow to the market.  Easing of Covid-19 restrictions has seen an increase in demand for processing and chipping potatoes.  The warm weather has helped demand for salad, but less so for maincrop packing types.  The loss of data from AHDB means it is difficult to know the area planted in the UK.  World Potato Markets initially assumed a 5% decline, but it may be less.  Any decline would result in one of the smallest crops ever; an average yield would mean a crop of just over 5mt.  Planting in Germany, France, Belgium and the Netherlands is estimated to be down by 4.5% to less than 500,000ha, with up to 20,000ha impacted by storms, although some should be salvageable.

This month’s Spotlight looks at the latest information released on the Sustainable Farming Incentive (SFI).  This is the first component of ELM. This initial phase of SFI will open for applications in 2022 Click Here for further information.

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to Andersons’ AgriBrief Bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://agribrief.co.uk/

 

Farming Focus InBrief – July 2021

  • Andersons’ consultants are continuing to support their clients during the pandemic. If you require any advice, please contact your  usual consultant, or the office on 01664 503200 or email [email protected].
  • The UK and Australia have agreed the outline terms of an historic free-trade agreement – the first all-new deal signed by the UK since it left the EU.  As such, it is seen by many as an important precedent for future trade deals, particularly concerning agriculture.  Whilst the deal has been announced, it is an agreement in principle and subject to further negotiations on the legal text. There is an eventual aspiration to fully liberalise Australian goods entering the UK market.  However, there are lengthy adjustment periods for most agricultural products – up to fifteen years for beef and lamb. But the UK grazing livestock and sugar sectors in particular will be exposed to increased competition from Australia in the long-term.  Additional competitive pressure is likely to emerge when the likes of New Zealand and others strike trade deals with the UK.  Of course, having generous quota access with eventual full liberalisation does not necessarily mean that Australian imports will reach these levels, particularly as there is plenty of demand in Asia-Pacific and the UK is a long way from Australia.  But the access offered to Australia is sizeable and of concern to British farming, particularly as it is the first of several trade deals.
  • Further details of the Sustainable Farming Incentive (SFI) pilot scheme are now available. Those who submitted an Expression of Interest in the pilot will be shortly asked to make an application.  The pilot agreements will commence in October 2021 and continue until late 2024.  If you expressed an interest and would like advice on drawing-up an application, please contact one of our consultants.
  • The new England Woodland Creation Offer (EWCO) is now open.  The EWCO is available in addition to the Woodland Creation and Maintenance grant provided under the Countryside Stewardship scheme.  It supports the creation of a range of woodland types, but it will have more emphasis on the environmental and public benefits of woodlands. Sizes range from a minimum of 1ha per application with 0.1ha blocks. Capital grants covering the standard costs of buying and planting a tree, up to a maximum cap of £8,500 per ha is available – this compares to a maximum of £6,800 per ha under the Woodland Creation and Maintenance grant via the CS.  Maintenance payments for 10 years and further ‘Additional Contributions’ of between £400 and £2800 per ha are also available.
  • Tenants will be able to challenge their Landlords’ refusal to allow them to enter into land management agreements under new regulations which came into effect from the 21st June.  It applies to 1986 Agricultural Holdings Act (AHA) tenancies only.  Tenants can apply to arbitration to vary the terms of the tenancy, or to gain Landlord’s consent, to enter one of the new financial assistance schemes (such as ELM) or to comply with a statutory duty (e.g. erecting a slurry store to be NVZ compliant).  The regulations apply to England with equivalent Welsh ones expected later in the year.
  • The first estimates of Total Factor Productivity (TFP) for 2020 (unsurprisingly) show a sharp decline compared with 2019.  TFP measures how well inputs are converted into outputs and thus gives an indication of the efficiency and competitiveness of the farming industry.  After a significant increase in 2019 (+4%), TFP has fallen back further by 6.7% in 2020.  The decrease was mainly due to a -6.3% decline in the overall levels of production but there was also a small 0.5% increase in the volume of inputs. The main driver was the drop in crop output of -12.4%.  Cereals decreased by -26% due to the challenging weather.  OSR and sugar beet experienced declines of -41% and -23% respectively. The overall livestock output declined by -0.6%.
  • Reports from the Royal Institution of Chartered Surveyors (RICS) and the Royal Agricultural University (RAU) show the Weighted Average farmland price for the full year 2020 was £10,390 per acre (£25,674 per Ha).  This is a hefty 20% rise over the two surveys combined for 2019, where the price was £8,602 per acre (£21,257 per Ha).  The Weighted Average Value excludes those sales which have been identified as having a residential value of more than 50% and a regional adjustment is also made.
  • Bovine TB cattle vaccination trials commenced in June in England and Wales with the aim of rolling out cattle bTB vaccinations by 2025.  This would be a ‘game changer’ and cannot come soon enough, particularly for those that live with the drudgery of constantly testing. The Government has also said it will end issuing new licenses for intensive badger culls as from 2022.  Many farmers will be disappointed to hear this, especially as even under the Government’s own admission it has led to a ‘significant reduction’ in the disease. 

This month’s Spotlight looks at the forecasts for Andersons’ Meadow Farm model. Click Here for further information.

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to Andersons’ AgriBrief Bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://agribrief.co.uk/

 

Farming Focus InBrief – June 2021

  • Andersons’ consultants are continuing to support their clients during the pandemic. If you require any advice, please contact your  usual consultant, or the office on 01664 503200 or email [email protected].
  • UK farm profits fell by 20% in real terms between 2019 and 2020 based on latest Defra Total Income from Farming (TIFF) data. TIFF measures aggregate profitability of all UK farming businesses for the calendar year. The main reason for this decline was a 15% fall in the value of crop output. Income from diversification declined by almost 25%. Livestock sector output was broadly flat whilst costs declined in real terms. Looking to 2021, there are good prospects for a recovery with crops looking in good condition and prices, for crops and livestock, looking generally good (with 1-2 exceptions).
  • The Queen’s Speech which sets out the Government’s legislative agenda for the forthcoming Parliamentary session included a number of bills of relevance to the farming and rural sector. The most notable is the Environment Bill which is planned to be passed before the end of the year. Three Animal Welfare Bills are also planned which will include provisions to ban live animal exports for slaughter or fattening. A Planning Bill is set to include provisions for the ‘zoning’ of sites for development and plans to increase the numbers of homes built.
  • The farming industry has come together to call on the Government to protect the agricultural sector under any Free-Trade Agreement (FTA) with Australia. The farming sector is asking that some tariff and tariff rate quota restrictions remain whilst UK standards (environment, labour, food safety and animal welfare) are maintained. Some within Government are pushing for tariff-free and quota-free trade. Whilst imports from Australia are currently small in many cases, the deal sets an important precedent for future trade deals with the likes of the US and Brazil.
  • Plans for nature restoration and woodland creation have been unveiled as part of the Government’s plans to tackle climate change, address biodiversity challenges and help to deliver its net-zero commitment. The England Wood Creation Offer (EWCO) is due to open for applications shortly and replaces the Woodland Carbon Fund. It will be administered by the Forestry Commission and support will be available for diverse woodland types, from a minimum of 1 Ha per application. Payment rates are not yet published. From 2024, EWCO will transition into ELM and EWCO agreement holders will be able to transfer across to ELM at agreed points without penalty. 
  • The UK organic farming land area grew marginally in 2020. Latest Defra estimates put the organic land area at 489,000 Ha, up 0.8% on 2019. This accounts for 2.8% of the UK farmed area on agricultural holdings. It is mostly permanent pasture (62%) and temporary grassland (20%) with cereals accounting for 9% of area. Grazing livestock numbers on organic farms are down with sheep 13% lower and cattle numbers down by 9%. Pig numbers were down marginally (-0.6%) whilst poultry numbers rose by 2%. 
  • AHDB restructuring, due to the votes by the horticultural and potato sectors to end their levies, means that it is seeking to make around 140 staff redundant (30% of workforce). The majority will be in the two sectors concerned but it is also looking to make wider efficiency savings.
  • Wheat prices have fallen by £20/t since their highs of early May and currently stand at around £172/t. This is driven by improved weather conditions globally and projected records for cereals yields in the US. Feed barley has also slipped in line with the wheat price. Malting barley premiums are mixed. Growing and ripening conditions are ideal for barley across Europe. 
  • Chinese imports of maize look set to continue at high levels for 2021/22 marketing year. Historically, it has imported 5-6 million tonnes annually. In 2020-21, it imported 25 million tonnes. Some analysts believe it has already booked a similar amount for the year ahead. This could tighten global supply in 2021/22 and push the whole grain price matrix higher. 
  • UK farmgate milk prices remain good with further rises reported in May. Arla has announced a further 0.44ppl rise for member suppliers from 1st June. Several other suppliers have also increased their prices including: Muller (+1ppl for non-aligned suppliers); First Milk (+0.5ppl); Meadow Foods (+1.25ppl); Yew Tree Dairy (+2ppl); Freshways (+2.5ppl from July) and; Medina Dairy (+2.7ppl from 1st July). 
  • Finished beef and lamb prices have cooled somewhat in recent weeks. In early May, the deadweight beef price passed the 400 p/kg price for the first time.  For week ending 29th May, the GB all prime average price stood at 394 p/kg, returning to early April levels. These prices are still strong however. Whilst the orders from the catering sector have risen there is some evidence that retail orders have dropped slightly. Deadweight pig prices have continued to increase, with EU-spec SPP currently at nearly 152.8 p/kg.

This month’s Spotlight looks at Defra’s consultation on Lump Sum and Delinking of BPS in England. Click Here for further information.

If you would like more detail on the topics covered above as well as additional articles on UK farm business matters, why not subscribe to Andersons’ AgriBrief Bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://agribrief.co.uk/

 

Farming Focus InBrief – May 2021

  • Andersons’ consultants are continuing to support their clients during the pandemic. If you require any advice, please contact your  usual consultant, or the office on 01664 503200 or email [email protected].
  • The UK Government has set challenging new targets for the reduction of greenhouse gases (GHG). This is likely to have implications for agriculture as one of the economic sectors that is seen both as part of the problem, and the solution, when it comes to battling climate change.  The UK had a previous commitment to reduce emissions by 68% compared to 1990 figures by 2030.  The target has now been extended to a 78% cut by 2035.  The eventual aim is for the UK to be ‘net zero’ by 2050. 
  • New Regulations to protect water from pollution came into force in Wales from 1st April 2021.  The rules, put the whole of Wales into a Nitrate Vulnerable Zone (NVZ).  The Water Resources (Control of Agricultural Pollution) (Wales) Regulations 2021, apply to all land, but transitional periods have been provided for certain requirements where land was previously not within an NVZ. Full guidance can be found via  https://gov.wales/sites/default/files/publications/2021-03/water-resources-control-of-agricultural-pollution-wales-regulations-2021-guidance-for-farmers-and-landmanagers.pdf
  • The RPA has announced expiring Countryside Stewardship (CS) agreement holders may be offered a new five-year Agreement, instead of one-year extensions.  So called ‘Mirror Agreements’ will be available for Mid and Higher Tier agreements which are due to expire on 31st December 2021.  The new Mirror agreements will be offered under domestic CS regulations and subject to the 2022 manual.  One-year CS extensions will no longer be offered.
  • The RPA has given some updated information on Countryside Stewardship (CS) inspections, especially for agreements which commenced from 1st January 2021.  CS (and Environmental Stewardship) agreements which started prior to this date must still meet EU rules for inspections.  But for CS agreements starting on or after 1st January 2021 UK domestic rules apply and the RPA has changed ‘Inspection’ to ‘Environmental Outcome Site Visit’. In 2021 there will be two approaches to the ‘Environmental Outcome Site Visit’;
    • Whole Agreement will look at all the options in the agreement
    • Campaign – this will just look at certain options which have been chosen for the year. For 2021, these are;
      • Buffer Strips – SW1 and SW4
      • Grassland Options – GS1, GS2, GS7 & GS17
      • Boundary Options – BE3
  • Defra has announced Organic Higher Level Stewardship (OHLS) agreements will now be eligible for one year extensions.  Originally it had said extensions would not be available for Organic ELS/HLS agreement holders. 
  • The much-delayed consultation on the delinking of the BPS and lump-sum payments has been postponed again.  It has now been put back due to the ‘purdah’ period ahead of the Local Elections.  It will not appear before the 7th May.
  • The International Grains Council (IGC) has released its first full supply and demand projection for the 2021/22 year.  This shows 63mt more grain production than last year at 2,287mt (a 2.8% increase).  But with consumption increasing by 54mt this only stops the decline in stock levels. The level of grain stocks entering the new marketing year is the lowest for four years – this is what is fueling the global price rises.  The figures are marginal at this stage of the year, the current concerns over the dry weather, or the arrival of rain in the key grain growing areas of the world could have major swings in the availability of grains for the coming year, and prices.
  • British Sugar believes total sugar production is likely to be just over 1mt in 2021; 10% higher than in 2020.  The reason is a reversion to more normal yields after virus yellows disease caused a drop of 25% in crop output last year.  The cold weather in February reduced aphid numbers which spread the disease. Crop plantings this spring are down 10% on the 2020 area of 103,000 Ha, but higher yields are expected to more than compensate for this.
  • Commodity and farmgate milk prices remain good. The average Global Dairy Trade (GDT) index stood at $4,110 at the event held at the end of April. Closer to home, a further 1.4ppl increase in May for Arla member suppliers sees the co-operative leading the way on milk price.  However, the cold, dry weather is continuing to curtail grass growth and production.
  • Finished beef and lamb prices continue to exceed expectations. The deadweight beef price has passed the £4/kg price for the first time.  And, after declining monthly since the middle of 2020, pig prices have started to increase.

This month’s Spotlight looks at Farm Business Incomefor England for the past year. Click Here for further information.

If you would like more detail on the topics covered above, why not subscribe to Andersons’ AgriBrief Bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://agribrief.co.uk/

 

Farming in Focus InBrief – April 2021

  • Andersons’ consultants are continuing to support their clients during the pandemic. If you require any advice, please contact your  usual consultant, or the office on 01664 503200 or email [email protected].
  • The application window for Basic Payment Scheme claims has now opened in all parts of Great Britain. The deadline for submission without incurring a penalty is 17th May this year, as 15th May falls on a Saturday.  The biggest change in the scheme is the removal of most of the Greening requirements (Ecological Focus Areas are still required in Scotland).  This should make the process of claiming somewhat easier.  The entitlement usage rule, which used to mean, at least once in every two years all entitlements needed to be used in a single claim, has also been abolished.  Meaning unused entitlements will not be removed from claimants. In England, the annual revenue claims under Countryside Stewardship and Environmental Stewardship are also open.   Again, the deadline is the 17th  If you need advice on completing your 2021 BPS application or an Agri-environment revenue claim, please contact your usual consultant or 01664 503200 or email [email protected].
  • Morrisons has pledged to be the first supermarket to be supplied by net-zero farms.  The supermarket has said it will work with its 3,000 suppliers to help them become zero carbon emitters by 2030.  Waitrose has also committed to be supplied by net zero farms by 2035.  Morrisons expects eggs will be the first products to reach this status and this could be as early as 2022.  Lamb, fruit, vegetables, pork and beef will then follow. The retailer’s Livestock and Produce Teams will initially work with a small number of their suppliers to create net zero carbon farm ‘models’.  Once these ‘blue prints’ have been established they will be rolled out across all of the retailer’s suppliers to enable all food to be produced in a climate friendly way.
  • The Farm Business Grant opened in Wales on 1st March.  This is the 8th Expression of Interest EoI) for the scheme which pays up to 40% towards the cost of specific capital items which have been pre-identified to improve the economic and environmental performance of the business.  Applications are made via RPW Online.  The deadline for EoI is 9th April 2021.  Further information is available via: https://gov.wales/farm-business-grant-rules-booklets
  • The Swedish company Oatly, that produces alternatives to dairy products from oats, plans to open its first UK factory in 2023.  The facilities which will be based in Peterborough, Cambridgeshire will initially produce 300 million litres of oat drinks per year, increasing to a capacity of 450 million litres.  According to the company it will use oats from across the UK which will be a boost for the domestic crop, which has seen a resurgence in recent years.
  • Cereals 2021 will now be held on June 30th – July 1st this year.  Under the Government’s lockdown exit strategy, restrictions are due to end on 21st June, organisers have therefore decided to move the event from the original June 9th -10th in order to accommodate the maximum number of visitors and exhibitors.  The event will continue to be held at Boothby Graffoe, Lincolnshire with the format remaining the same as in previous years.
  • The Budget, on the 3rd March continued support for the economy to cope with the effects of the Covid-19 pandemic whilst making the first, tentative, steps towards rebuilding the public finances. The economic outlook is set to improve later this year as lockdown measures are gradually unwound.  The UK economy is forecast to have shrunk by 9.9% in 2020 – the largest contraction for 300 years.  The latest forecast from the Office of Budget Responsibility (OBR) indicates that the economy will rebound with 4% growth in 2021 followed by an increase of 7.5% the year after.
  • The effect of Brexit can be seen in sharply reduced trade volumes with the EU. The Office for National Statistics (ONS) recently published UK trade data for January 2021.  Unsurprisingly this has revealed significant drops in food and live animals trade with the EU; there has been a 64% drop in exports to the EU, whilst imports from the EU have fallen by 24%.  More time is needed before definitive conclusions can be drawn, however.  The situation has improved since January and traders who are well-organised are getting through the EU border controls.  It will be mid-year before a definitive picture will emerge as agri-food trade is often lower during January to March.  Trade should recover somewhat but probably not to the same levels as before.  The significant decline in EU imports also presents opportunities for domestic suppliers to capture a greater proportion of the UK market, particularly in perishable agri-food products.  This will mean that there will be winners as well as losers as a result of Brexit.

This month’s Spotlight looks at the Sustainable Farming Incentive (SFI) pilot scheme, it gives details of the different ‘Standards’ and payment levels released by Defra; a first look at this component of ELM. Click Here for further information.

If you would like more detail on the topics covered above, why not subscribe to Andersons’ AgriBrief Bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://agribrief.co.uk/

 

Farming in Focus InBrief – February 2021

  • Andersons’ consultants are continuing to support their clients during the pandemic. If you require any advice, please contact your  usual consultant, or the office on 01664 503200 or email [email protected].
  • The Environment Bill has passed the Committee stage in the House of Commons.  It now moves on to the House of Lords.  However, due to a lack of Parliamentary time, the passage of the Bill will be delayed until the start of the next session in May. It is now expected to become law in the autumn.
  • All parts of Great Britain have published their cross-compliance guidance for 2021. In all countries the requirements are pretty-much identical to those for 2020.  The main change is how the rules and inspections are enforced – with Brexit there is now more flexibility on how the inspection regime operates.  The English guidance can be found at – https://www.gov.uk/guidance/cross-compliance-2021; the Welsh version at – https://gov.wales/cross-compliance-2021Defra has also published a useful list of what is required at a cross-compliance inspection this can be found at Cross compliance inspections: information needed for an inspection – GOV.UK (www.gov.uk)
  • The Seasonal Agricultural Workers Scheme (SAWS) will be extended to 30,000 places for 2021. The Government has announced the Pilot scheme, which ran with 2,500 places in 2019, and 10,000 in 2020 will be extended, and expanded, for the coming year, but the numbers still fall short of the estimated 80,000 seasonal workers required.
  • Defra has launched a consultation on the rules surrounding Gene Editing (GE) which could see approvals made easier. It is Defra’s view that organisms produced by GE or by other genetic technologies should not be regulated as GMOs (as is the case now under retained EU legislation) if they could have been produced by traditional breeding methods.  Brexit allows the UK to change this legislation.  The consultation can be found via https://consult.defra.gov.uk/agri-food-chain-directorate/the-regulation-of-genetic-technologies/. Responses by Wednesday 17th March 2021.
  • Defra has authorised the emergency use of neonicotinoids on sugar beet seed in 2021.  The authorisation is for the use of Syngenta’s Cruiser SB seed treatment in England only, once a threshold for virus levels has been reached.  The emergency authorisation has strict conditions attached including:
    • the application rate will be below the normal commercial rate
    • no flowering crop is to be planted within 22 months of the sugar beet crop, with no oilseed rape crop to be planted within 32 months  of the sugar beet crop
    • an industry-recommended herbicide programme must be followed to limit flowering weeds in and around the sugar beet crop.
  • The UK sugar industry faces increased competition after it was confirmed the Government’s proposed Autonomous Tariff Quota allowing imports of 260,000 tonnes of raw sugar per year without having to pay the UK’s import tariff of £280 per tonne will be enacted.  This is likely to increase price pressure in the UK market as low-cost cane sugar competes with UK beet.  The Government argues that this volume will merely replace sugar imports from the EU.  With the Brexit deal, however, then EU sugar can continue to come into the UK tariff-free too.
  • With the UK-EU Trade and Cooperation Agreement (TCA) (Brexit trade deal) in place, attention is shifting towards Free Trade Agreements (FTAs) with non-EU countries. The TCA was largely about protecting what was already in place – i.e. the significant trade between the UK and the EU. Therefore, the agreement largely preserves the status quo and has had little effect (so far) on markets.  Attention is now turning to the new deals the UK might sign with other countries.  This would see a change in the trading environment – and an effect on prices.  From an agricultural perspective, the most notable of these are the US, Australia and New Zealand. The negotiations which are most likely to conclude in 2021 are those with Australia and New Zealand.  Both countries are major exporters of beef and lamb, dairy products and wine.  Admittedly, imports of beef and lamb from both countries into the UK and EU have been below historic levels recently (supporting current strong prices).  This is mainly a function of a greater emphasis being placed on the Asia-Pacific region, particularly China which is struggling with African Swine Fever.  However, if the UK agrees an FTA with these countries it will lower trade barriers significantly and make the UK a more attractive destination.  Longer-term, it is inevitable that the UK will seek FTAs with other countries.  Chief amongst these would be Mercosur, which includes Brazil and Argentina – two farming powerhouses.
  • Vydate has not been re-authorised for use in the UK as from 31st December 2020.  The pesticide, can no longer be used, sold or distributed in the UK.  The decision was made just one week before authorisation ended and only gives until February 28th 2021 to dispose of any product.
  • Defra has announced the Countryside Productivity Small Grants Scheme Round 3 claim deadline has been extended by two months.  Applicants now have until midnight on the 31st May 2021 to buy and install all their items, and submit their claim for payment.
  • Country Stewardship (CS) applications are expected to open shortly. Whilst ELM is being piloted the CS scheme will remain open to new applications and those that go into CS will not be penalised if ELM is ‘better’. The RPA has stated ‘no-one in a CS agreement will be unfairly disadvantaged’ as the transition to ELM takes place.  Those who enter a CS agreement from 2021 onwards will be able to end their agreement, at agreed points, where they have secured a place in ELM.  A new objective for CS from 2021 will be air quality, with the aim to reduce ammonia emissions from agriculture.  Under a new Capital Grants offer, existing options that improve air quality such as slurry store covers or planting tree shelter belts are expected to be available as a stand-alone capital agreement, in priority areas, together with two new capital items – automatic floor scrapers and low emission flooring for livestock housing.  Further details are expected in the new CS 2021 manual, which is expected shortly and we hope to be able to feature this in next month’s Farming in Focus Spotlight.  With BPS payments starting their phase out this year, many are taking another look at CS.  Our consultants are experienced in drawing up applications which ‘work’ for their clients.  If you would like to discuss a CS application, please find the ways to contact us at the beginning of this briefing note.

This month’s Spotlight looks at the recently released Farm Business Income figures.  These are broken down by farming sector and for each one, into 4 profit areas, showing just how reliant the land based sectors are on the BPS money. Click Here for further information.

If you would like more detail on the topics covered above, why not subscribe to Andersons’ AgriBrief Bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://agribrief.co.uk/

 

ANDERSONS NEWS RELEASE – WEBINARS 2021

ANDERSONS WEBINARS 2021

Brexit: It’s Just the Start

The farming industry breathed a collective sigh of relief when the UK and EU signed their 11th-hour trade agreement.  However, those in the agricultural sector who believe that trade issues have been put-to-bed for the foreseeable future are likely to be disappointed.  Now that the UK has left the EU, the industry will arguably have to keep a closer eye on trade policy, not least to ensure that the sector’s position is protected when deals are being done.  This is the message from Andersons the Farm Business Consultants.

Firstly, the UK/EU ‘Trade and Cooperation Agreement’ (TCA), even at 1,246 pages, is not the final word on trade with the European Union.  The next few months will see how the complex provisions of the deal in areas such as Rules of Origin, Customs and Checks impact on trade in practice.  Already problems have been seen, especially regarding Northern Ireland.  And this is when trade flows have been quieter than usual as a result of previous stockpiling.  The TCA does not cover services (around 80% of the UK economy), including the key sector of financial services.   There are also unresolved questions on data sharing, and some parts of the deal, such as fisheries, come up for review after five years.  Therefore, perhaps after a brief pause, there is likely to be continuous ongoing negotiations with the EU on these issues.  The danger for farming is that it might get drawn into these negotiations as ‘leverage’.

The TCA also includes Level-Playing-Field provisions to uphold existing standards in areas such as environmental standards and labour law.  Any significant undercutting by one side could lead to retaliatory tariffs by the other – with farm goods likely to be a key target for any such tariffs.  How the level-playing-field rules are going to work in practice is very unclear.  For example, if the UK were to authorise GM crops, or at least gene-edited crops, would the EU see this as a reduction in ‘environmental standards’.  The scope for arguments seems huge.

The second main area of concern is trade deals with other countries or trading blocks.  The TCA was largely about protecting what was already in place  –  i.e. the significant trade between the UK and the EU.  Therefore, the agreement largely preserves the status quo and has had little effect (so far) on markets.  Any new deals the UK signs with other countries will see a change in the trading environment – and an effect on prices.

Much of the focus in this area has been on the US and the potential clash of production standards with the famous chlorinated chicken and hormone beef.  A deal with the UK is unlikely to be top of Joe Biden’s to-do list in the short-term.  Deals with Australia and New Zealand are perhaps more likely in the short-term and, arguably, could have a bigger impact on our farm markets – especially in the livestock sectors.  Free trade agreements with these two nations are seen by the UK Government as a prelude to the UK joining the Comprehensive and Progressive Trans-Pacific Partnership (CPTPP).  Further down the line, the UK is almost certain to explore deals with other agricultural ‘powerhouses’ such as Mercosur, which includes Brazil, and Argentina.

The danger for farming in all of these potential deals is that the UK Government may be willing to trade access to our agricultural markets for gains for our exporters elsewhere in areas such as aerospace, financial services, medicines etc.  The UK farming industry needs to ensure it is not made a sacrificial lamb.

The final area concerns tariffs on food imports generally.  For those countries we do not have a Free Trade Agreement (FTA) with, the level of tariff protection offered by the new UK Global Tariff (UKGT) is very similar to that which we enjoyed in the EU.  However, the UKGT is only ‘temporary’ and could be easily changed.  If the UK economy enters a post-Covid recession, might the Government be tempted to move to a ‘cheap food’ policy and lower some of these tariffs?

In summary, trade matters will continue to be important for the farming sector for years to come.

Andersons is running two Webinars on the 11th February looking at trade matters in more detail along with farm profitability and future agricultural policy.  For more information, please go to https://theandersonscentre.co.uk/webinars/

Ends

 

No of words 725
Author Richard King
Date 22nd January 2021

This news release has been sent from The Andersons Centre, Old Bell House, 2 Nottingham Street, Melton Mowbray, Leicestershire LE13 1NW.  For further information please contact Richard King on 07977 191 427.  

Farming in Focus InBrief – January 2021

  • Andersons’ consultants are continuing to support their clients during the pandemic. If you require any advice, please contact your  usual consultant, or the office on 01664 503200 or email [email protected].
  • The first forecast of Total Income from Farming (TIFF) by Defra shows farm profits in 2020 fell by over 20% to £4.151bn compared with £5.278bn in 2019. Crop output, in monetary terms, is down 13% compared to 2019.  Livestock output is forecast to rise slightly.  We had been predicting a 10% drop, so the level of decrease comes as a bit of a surprise.  However, the first Defra forecasts have a history of quite large revisions, so the figure could yet settle closer to our estimate (£4.7bn) when the ‘first estimate’ is published in May next year. 
  • The Agricultural and Horticultural Development Board (AHDB) has published a new 5-year strategy (see https://ahdb.org.uk/strategy) and is asking ley-payers to comment on the proposals by the end of January. The AHDB will focus on two main areas.  The first is assisting levy-payers on-farm.  This will be through using data and analysis to help them make better decisions, investing in R & D and promoting knowledge exchange to get best-practice out onto farms.  The second focus area is promoting produce – both in new markets abroad but also domestically.
  • The RPA paid 95% of English farmers their 2020 BPS on 1st December.  This equates to £1.671bn (up some 40% on the amount paid on the first day in 2019).  The Agency also started paying Countryside Stewardship and Environmental Stewardship revenue payments for 2020.  There will only be one payment under these schemes this year rather than split payments as in the past.  The Welsh Government paid 94.6% (93.5% in 2019) of farm businesses either their full BPS or the BPS Support Payment (estimated 90%) during the first week of the 2020 payment window.  This equates to over £219.3m being paid to more than 14,900 claimants.
  • The Welsh Government has set out plans to replace the BPS with its Sustainable Farming Scheme (SFS).  However, those eager for scheme details still have to wait. The Agriculture (Wales) White Paper sets out the intentions for primary legislation and provides the basis of the Agriculture (Wales) Bill.  The full White Paper can be found at https://gov.wales/sites/default/files/consultations/2020-12/agriculture-wales-bill-white-paper.pdf. A consultation will run until 25th March 2021.  The Agriculture (Wales) Bill is planned to be put before the Senedd in summer 2022.  It will provide the framework for future policy with secondary legislation providing the detail.  Included will be the provisions to establish Sustainable Land Management (SLM) as the ‘overarching principle’ for future agricultural policy.  The proposal is to replace the BPS and Glastir with the Sustainable Farming Scheme (SFS).  However, the White Paper does not offer a time-line for this transition, but the Welsh Government has requested a ‘sunset’ clause, so legacy CAP schemes will end in 2024.  No scheme details or payment rates have been included, but the aim is to make payments by ‘rewarding’ farmers for the delivery of outcomes rather than compensation for the costs of inputs.  A Farm Sustainability Review will be required for each farm.
  • The EU has extended the recognition of the UK’s organic standards and six organic certification bodies until the end of 2021.  Without this approval, UK produce would not have been able to be sold in the EU as ‘organic’ after 31st December 2020.  This is a short-term reprieve, so does not provide long-term certainty for UK organic exporters.  
  • The AHDB’s Early Bird cropping intentions survey shows the wheat area is forecast to bounce back by 28% to 1,815,000ha in 2021; similar to 2019 levels. Winter barley is also expected to increase by 24% to 394,000ha.  OSR continues its decline by another 18% to 318,000ha, the smallest since 1986.  The spring barley area is forecast to reduce back to more normal levels, by 30% to 767,000ha.  The pulse area may rise by 7% to 257,000ha as growers switch from OSR.
  • British Sugar now believes production this year will be 25% lower than last at 900,000 tonnes. It has also announced the one-year contract bonus has been triggered for 2019 and eligible growers should have received 2.6p/t in December from the processor.
  • The AHDB’s first production estimate for this 2020 year’s potato harvest is 5.318mt, up 3.1% on 2019. Average yields were 46.2t/ha, the highest since 2017.  The levy board is forecasting demand to be 4% higher in 2020 than 2019, with fresh sales outweighing the decline in out-of-home sales.
  • The English and Welsh Governments have issued a consultation on banning the export of live animals for slaughter and fattening.  The Governments are also consulting on wider proposals to improve animal welfare in transport.  The consultation can be found at; https://consult.defra.gov.uk/transforming-farm-animal-health-and-welfare-team/improvements-to-animal-welfare-in-transport/ It closes on 28th January 2021.

This month’s Spotlight looks at the recently agreed UK-EU Post Brexit Trade Deal and Implications for UK Agriculture. Click Here for further information.

If you would like more detail on the topics covered above, why not subscribe to Andersons’ AgriBrief Bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://agribrief.co.uk/

 

Farming in Focus InBrief – December2020

  • Andersons’ consultants are continuing to support their clients during the pandemic. If you require any advice, please contact your  usual consultant, or the office on 01664 503200 or email [email protected].
  • The payment window for BPS 2020 opened on 1st December.  However, Scotland has used a National Scheme to make 90% advance payments, starting back in September.  Wales has a good record for making payments on the first day, but those who do not receive payment in the first week, will hopefully have applied for a 90% advance; applications closed on 27thNovember.  England does not have any advance options, but anecdotal evidence shows more payments are expected in the first tranche.  The exchange rate is the same as in 2019, but payment rates are higher as no financial discipline has been deducted this year.
  • The Agriculture Act 2020 has received Royal Assent enshrining into law the phasing out of the BPS over the seven year ‘Agricultural Transition’ in England (more information has been published on this and is included in our Spotlight article – see below). There had been strong lobbying for the Act to also include minimum standards for food imports to the UK.  A compromise was reached between the House of Lords and House of Commons after the Government  tabled a new amendment, meaning the newly formed Trade & Agricultural Commission would be put on a statutory footing, with its reports on future trade deals put before Parliament. 
  • The Comprehensive Spending Review (CSR) delivered on the 25th November, painted a grim picture of the economy; with it set to shrink by 11.3% this year (2020-21) – the largest fall for 300 years.  A recovery is then forecast with 5.5% growth in 2021-22 and 6.6% the following year.  For farm businesses, total farm support in England will be £2.4 billion in 2021-22 to meet the government’s commitment to maintain the current annual budget to farmers in every year of this Parliament.
  • Brexit negotiations are at a crucial stage and, although the EU believes 95% of the text for the trade deal has been agreed, 3 sticking points remain.  These are the level playing field provisions, State Aid and fisheries.  Given that several deadlines have now passed and the Transition Period will end on 31st December, time is now the biggest threat.
  • The Scottish Government has announced payments under the Less Favoured Areas Support Scheme (LFASS) will continue in 2021 and will be increased back to the levels paid in 2018.  In addition, regulations are being put before Parliament to allow LFASS to continue to 2024, also fixing payments at (the higher) 2018 rate.  But there is frustration over the lack of progress on support post 2024.  NFU Scotland has said the Scottish Government needs to ‘stop dithering and start delivering’.
  • The first round of the new ‘Farm Business Grant – Yard Coverings’ scheme is open in Wales.  A General Rules Booklet with a list of the eligible items can be found at https://gov.wales/sites/default/files/publications/2020-11/farm-business-grant-yard-coverings-rules-booklet_0.pdfApplications have to be made via RPW Online and guidance on how to do this can be found via https://gov.wales/farm-business-grant-yard-coverings-using-rpw-online-apply The minimum grant threshold is £3,000 per application and the maximum £12,000.  This FBG – Yard Coverings Scheme is separate to the main FBG Scheme, meaning any funds received under the main scheme do not affect the Yard Covering scheme thresholds and vice-versa. The grant provides a maximum 40% contribution towards standard costed capital investments in equipment. The closing date for EOIs is 18th December.  A further round is expected to run from 18th May to 25th June 2021. 
  • The Government has announced an extension to the temporary increase in the Annual Investment Allowance (AIA).  In the 2018 Budget, the cap was increased from £200,000 per annum to £1 million.  It was due to revert back to £200,000 on 1st January 2021 but will have a year-long extension until 1st January 2022.  The AIA provides businesses with 100% same year tax relief on qualifying capital expenditure which includes plant and machinery. 
  • British Sugar is forecasting ‘well-over’ a 10% decline in sugar production compared to last year’s 1.19m tonnes. Dry conditions at planting and virus yellows have impacted the crop.  It is a similar picture in continental Europe.  In France, where yields are reported to be down between 25-50% there has been an easing of the neonicotinoid ban to try and reduce the prevalence of virus yellows and save the sector.
  • The use of Glyphosate could be extended until at least 15th December 2025. All active substances due to expire between 1st January 2021 and 31st December 2023 will be given a 3-year extension under the new GB pesticides regulations.
  • Defra has launched a consultation on reducing ammonia emissions from urea fertilisers. Defra’s preferred option is a ban on solid urea fertilisers.  The consultation closes on 26th January.

This month’s Spotlight looks at Defra’s ‘Path to Sustainable Farming’ publication which gives more detail on future farm support in England, including the deductions to BPS payments and the schemes which will be in operation in the future. Click Here for further information.

If you would like more detail on the topics covered above, why not subscribe to Andersons’ AgriBrief Bulletin? Over the course of each month, we give a concise and unbiased commentary on the key issues affecting business performance in the UK agri-food industry, and its implications for farming and food businesses. Please click on the link below for a 90-day free trial:

https://agribrief.co.uk/

 

Farming in Focus InBrief – November 2020

  • Andersons’ consultants are continuing to support their clients during the pandemic. If you require any advice, please contact your  usual consultant, or the office on 01664 503200 or email [email protected]
  • The House of Commons removed the amendments to the Agriculture Bill proposed in the House of Lords that would have enshrined protection of UK food standards in law.   Other amendments on incorporating climate change requirements into policy and restricting the use of pesticides in certain locations were also rejected.  The Bill returned to the Lords.  Initially it was expected, as their amendments had been rejected once, the current version would be accepted, but this has not been the case and the Lords have put forward a (similar) amendment (16B), which seeks to ensure ‘equivalence of standards’ for imported agri-food products under any future trade deals.   The Bill has returned to Parliament.  In the meantime, Lizz Truss, International Trade Secretary, announced the newly formed Trade & Agricultural Commission will be put on a statutory footing, with its reports on future trade deals put before Parliament.   This doesn’t exactly incorporate the Lords’ amendment(s), but the Government is probably hoping it’s enough of a concession that they stop trying to amend the Bill.  But many fear this doesn’t go far enough, MPs would still not have the right to vote on such deals and intense lobbying of MPs to try and get them to support the amendment is taking place.  A vote by Parliament is expected at the beginning of November. 
  • The Environment Bill has restarted its journey through the Parliamentary process, after being dormant since mid-March.  The aim would be for the Bill to become law in the early part of 2021.  There are several proposals in the legislation that will influence agriculture.  One is the setting-up of the Office of Environmental Protection (OEP) which will hold the Government to account on environmental matters.  It also sets out the broad principles of environmental protection such as ‘polluter pays’ and hazard versus risk-based regulatory approaches, which could have relevance in pesticides regulation and fertiliser use.
  • Brexit talks are at last getting down to the real detail.  Compromises are still required on the difficult topics of the Level Playing Field and Fisheries. The October European Council was widely seen as a ‘deadline’ but it will be into November now before an agreement might be reached, leaving very little time for the ratification process.  With the Transition Period ending on 31st December; last minute glitches could also result in a No Deal situation on 1st January.
  • Boris Johnson, has pledged that 30% of the UK’s land area will be ‘protected’ by 2030.  This is part of an international ’30 by 30′ campaign.  In terms of England, around 26% of its land area is currently either protected as being part of a National Park or Area of Outstanding Natural Beauty (AONB).  The extra 4% equates to around 400,000 hectares.  This might come from an extension of existing areas, or completely new designations.
  • Provisional results from the June 2020 Survey of Agriculture and Horticulture have been released by Defra showing planted areas in the UK for main crops and estimates for crop production.  Not surprisingly, the weather has had a significant affect. Wheat plantings were down by 22% and, with yields also significantly reduced, production is provisionally reduced to just over 10mt.  Spring barley area was up 55% on 2019 levels.  But reduced yields means, although the total barley planted area was 22% higher, total production was just 3.9% more than last year.  The oat area increased by 16%, but again yields were poor, resulting in a 5.5% reduction in production compared to 2019.  OSR continues to struggle with cabbage stem flea beetle; the result being a 39% year-on-year reduction in production.  The wet weather and failed OSR fields resulted in an increase in the fallow and maize area by 57% and 6% respectively.  The field bean and combining pea areas have also risen by 38% and 27% respectively. 
  • The dramatic change in crop areas (see above) means production available for marketing is equally unusual. The price of wheat has risen by over £20 pert since harvest.  But barley has not followed suit, instead, a price spread over £40 has emerged. Demand for malting barley is poor due to Covid restrictions reducing the requirement for beer.  Therefore, the large spring barley harvest is mainly being bought for feed.  The new crop price spread is smaller but still £15 to £20 pert  The OSR market is poor, the lack of OSR in the UK has very little impact on prices; the OSR market is led by the soy and palm oil markets. 
  • The results of the provisional June 2020 Survey show all the main categories of UK livestock have declined in number over the past year underlining the uncertainties facing the sector.   The total number of cattle and calves has continued to fall and is at its lowest level since the basis of data collection changed in 2009.  Both the dairy and beef breeding herds continue their historic decline. The sheep breeding flock has also recorded a year-on-year drop, with all categories showing a fall in numbers.  This may be due to uncertainty ahead of Brexit.  However, autumn sales of breeding sheep and store lambs have been strong, which would indicate otherwise.  Total pig numbers have decreased slightly from 2019, although they are still higher than any other year since 2004.  But the breeding herd has declined by a relatively large amount; on the back of good margins this is rather puzzling. 
  • On 30th September the first shipment for 24 years of UK beef departed for the US. Access was granted back in March for a deal worth an estimated £66m over the next five years.  At £66m over five years, this would equate to a simple average of £13.2m per year.  To put this into context, exports to Ireland averaged £135.6m p.a. for the years 2017-2019.  However, market access to the US could provide a valuable opportunity in the long-term as, per capita, meat consumption in the US is three times the global average.  There will be severe competition for any UK exports though, as other beef producing nations around the world also regard the US as a prize market.

This month’s Spotlight gives more detail on the transition to the new Environmental Land Management scheme in England. Click Here for further information.

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