News From The Farming Market – April 2018

Concerns have been raised over the ability of Defra to cope with a growing amount of Brexit-related work. A rise in projects from 43 to 70 is forecast requiring an increase in staff numbers of 1,200. A budget of £310m has been allocated to Defra to prepare for Brexit.

As prices of new machinery continue to rise, the market in second-hand equipment remains buoyant. An increase in domestic demand is matched by strong interest from overseas buyers drawn by favourable exchange rates. Recent auction sales have seen 80% of items destined for abroad to 30 different countries with Spanish buyers prominent. Auctioneers forecast a rise in sale numbers over the next two years as more farmers consider their futures.

Further cuts in the milk price paid to farmers is hitting confidence in the sector. Defra figures show that the number of young dairy cattle has fallen 6.4% over the last twelve months as a consequence of the 2015 financial crisis in the sector. This will lead to an inevitable shrinkage in the national dairy herd. A rise in beef cattle numbers indicates a move in that direction.

Exports of fresh and frozen sheep meat have risen by 17% driven by favourable exchange rates. Most exports go into Europe with France and Germany being the largest consumers. However, the domestic market continues to decline.

The number of Eastern Europeans searching for UK agricultural jobs, on line, has fallen by 34% in the past year. This is seen as a sound early indicator of a looming crisis in the labour market which already has a 29% shortfall in seasonal workers. A committee of MPs has criticised the lack of action by Defra and the Home Office to address this problem.

The Rural Payments Agency claims that 95.5% of farmers had received their subsidy payments by the end of February, an amount totalling £1.59bn. Bridging loans are promised for those whose claims cannot be completed by April.

A leading agricultural group has calculated that farm input costs have risen by 4.5% in the last six months. The rise has been driven by increases in fuel (6.5%), fertilisers (16.9%) and animal feed (4.8%). Fuel prices are adversely affected by the weakness of sterling against the dollar.

Defra has launched a consultation on animal welfare in transit including a ban on the export of live animals for slaughter, post Brexit. The consultation asks for views on journey times and modes of transport, amongst other things. The Defra minister has indicated a desire to raise welfare standards but is likely to meet opposition on the live export ban from Northern Ireland, in particular, where the trade is worth £70m per year.

The Government is to set up a consultation to review the current effectiveness of enforcement against illegal gypsy and traveller sites. Farming leaders have said that such sites have a detrimental effect on local businesses, society and environment as well as on the landowner. They are calling for earlier and more effective use of existing powers of removal.

The Vivero bioethanol plant in East Yorkshire has reopened after a four-month shut-down caused by adverse trading conditions. The plant processes wheat from 900 farms into ethanol and high-quality animal feed. New regulations increasing the amount of renewable transport fuels have improved trading prospects.

Milk production in Great Britain reached a near record of 12,400m litres at the end of the milk accounting year. The figure is over 3% up on the previous year despite losses due to adverse weather.

Incidents of livestock worrying are on the increase with NFU Mutual revealing that claims have reached a record £1.6m. A report form MPs discloses that over 1,800 animals have been killed by dog attacks over the last four years.

The 2017/18 sugar beet harvest ended in March with growers celebrating record yields. The harvest produced 8.9m tonnes of beet, at an average of 83.4 tonnes per hectare, an increase of 4.5% on the previous record. Processing of the beet at the four factories yielded almost 1.4m tonnes of sugar, enough to supply 50% of the UK demand.

The continuing wet weather is delaying the usual spring turn-out of animals and creating a fodder crisis. Supplies are tight with merchants restricting sales to regular customers and resorting to importing wheat straw from Spain and France. Market prices have risen accordingly, and it is estimated that the delay is costing Scottish farmers £5m per week for fodder.

Reproduced with kind permission from NIG FarmWeb