News From The Farming Market – July 2018

An all-party committee of MPs has been convened to look at the future of British dairy exports. The committee will consider the present situation, calling for information from the various Government agencies involved in the sector and what the export strategy should be post-Brexit. Recent price increases for producers have raised optimism with a feeling that a milk price of 30p/litre is achievable.

Defra has confirmed that the long-awaited Agriculture Bill will be published before the end of July. The Bill will set up the system of support for farmers, post-Brexit, as the Government seeks to move away from a regime based on the amount of land owned or farmed and will transform UK farming and environmental protections.

The worst spring weather, in decades, led to a steep rise in animal mortality. The sheep sector was particularly badly hit with losses up by 10% for adult sheep and 30% for lambs. Around 250,000 lambs were lost making it possibly the worst season ever, according to some commentators.

Farmers own or host more than two thirds of Great Britain’s solar power capacity, 9GW out of the total 13GW. With installation costs falling farmers are seeing a good business case to install solar power with or without Government subsidy. The hot weather in June meant that solar power has been generating over 25% of UK electricity output.

The farmland market, in England, has shown a rise in values over the first six months of 2018 with supplies remaining tight. However, the rise in value masks the fact that around 40% of farms marketed in 2017 remain unsold. Purchases by non-farming investors have risen and it is estimated that up to 25% of sales are done privately.

Oilseed rape crops had a bad start with poor spring weather. However, the recent dry weather has benefited them, and the harvest looks likely to be a little earlier than usual with oil yields forecast to be good.

China has lifted its ban on the import of British beef imposed after the BSE crisis in 1996. Beef exports to China are forecast to be worth £250m in the first five years. China is currently the UK’s eighth largest food and drink export market with sales of £560m.

The number of farmer co-operatives in the UK has fallen for the fifth successive year to 420, giving them a market share of 6%. This contrasts sharply with other European nations where co-ops continue to flourish with market shares in Germany and France of 45% and 55% respectively. A £10m Government fund to support co-operatives was launched earlier this year.

A review of farm inspections and regulations that began in February has produced an interim report. It finds that farmers and regulators are exasperated by the unduly precise and inflexible regulations borne out of our membership of the EU. Around 150,000 farm inspections are carried out each year by various regulatory agencies leaving huge scope for simplifications and financial savings to be made post-Brexit.

Russia has extended its ban on food products from the West until the end of 2019. The extension of the embargo on dairy, meat products and most other foods is in response to the EU renewal of sanctions against Russia for its annexation of Crimea.

The Welsh dairy co-operative, South Caernarfon Creameries, is recruiting more farmers to supply milk after a further year of record cheese and butter sales. A recent £12m investment helped sales rise by 36% to £45.1m for the 127-member co-operative which is actively seeking new export markets.

Following the news that China has lifted its ban on UK beef, there are hopes that similar success can be achieved with Japan. Representatives have visited the UK to inspect beef and lamb production and health controls. The Japanese ban was imposed after BSE, over 20 years ago.

A survey by agricultural valuers showed that the amount of tenanted land changing hands in 2017 remained almost static at historically low levels. This continues the longer-term trend which is influenced by the current subsidy regime. However likely changes to subsidy support, post-Brexit are forecast to bring more tenanted land onto the market. The tenanted sector accounts for 35% of land area in England.

The dry weather looks likely to take its toll on the UK cereal harvest. Wheat is forecast to be down around 1m tonnes and barley by up to 750,000 tonnes, it is a similar situation for other European and Black Sea producers. Prices are rising, and more upward pressure is expected due to demand from the ethanol processing plants.

A difficult winter for livestock farmers greatly reduced stocks of fodder. The problem for them has been increased by the dry weather, it is estimated that grass silage stocks are down 66% and rain is urgently needed to replenish stocks and avert a crisis.

Reproduced with kind permission from NIG FarmWeb