December 2009 Archives

With the festive season fast approaching, I thought I'd get my crystal ball out and predict some prices for six month's hence.

It's never an easy task. Just one look at the price graphs at the back of Farmers Weekly is enough to demonstrate the rollercoaster trip that agricultural markets have been on over the past couple of years.

Furthermore, as one leading banker recently told me, "if there's one thing you can guarantee about forecasts, it's that they'll be wrong".

So, spurred on by this vote of confidence, I can now reveal that, at the end of June 2010, the following values will prevail:

Feed wheat (FW ex-farm price) £107/t
Nitram (GrowHow price)           £205/t
Finished lambs (R3L carcases) 440p/kg
Red diesel (FW IPM price)      49p/litre
Bank of England base rate        0.75%
Euro:Sterling exchange rate       86p

But what are your predictions? Why not jot them down in the comment section below, or e-mail them to me at philip.clarke@rbi.co.uk, and I'll come up with a small prize for the closest prediction in six months time. What have you got to lose, apart from your pride and dignity?

The fact that EU farm incomes are on the wane is hardly the most surprising bit of news to come my way in recent weeks.

The latest release from EU statistics agency Eurostat merely confirms what we all know already - that the slump in commodity prices has taken its toll on farmers pretty much everywhere.

According to the statistics, farm income has dropped in 22 of the EU's 27 member states, with Hungary taking the biggest hit, due presumably to the predominance of its combinable crop sector. The UK, in contrast, is one of the few countries to buck this trend.

Two things, however, leapt out at me from the press release.

The first was the accompanying statement from EU farm commissioner Mariann Fischer Boel who , while commiserating with farmers, took the opportunity to sing the praises of the CAP in limiting the damage...

If ever there was a contender for Private Eye's "Muckspreader" column, this has to be it!

It has emerged that the EU is facing a massive increase in sugar production this season, as warm wet conditions have led to a bumper crop. Producer body CIBE reckons the EU as a whole will have a sugar surplus of around 2.4m tonnes.

This is way in excess of the 1.37m tonnes it is allowed to export under the terms of a WTO ruling reached in 2004.

That was based on a complaint by Australia, Brazil and Thailand which had argued that the EU was "dumping" its surpluses on the world market.

But that was in the days when world prices were way below EU levels. The situation is very different today, with the global shortage of sugar leading to a doubling in prices in just 12 months.

The response suggested by CIBE is for the EU to increase the export ceiling for 2010, so that, instead of having to stockpile about 1m tonnes of surplus sugar, processors can sell it to the world market and help relieve the global shortage...

2009 has been a year of ups and downs in the world of agri-business. Prices have reached record highs for some commodities, and dismal lows for others.

Some businesses have gone to the wall, while others have flourished.

But how much do you remember from the past 12 months? Are you a "Business Numpty" or a "Business Genius".

To test your knowledge, I have devised the following quiz:

By Paul Spackman:

It's tantalisingly close. In just a few weeks time the world's largest wheat bio-refinery is set to begin production of bioethanol here in the UK.

The £300m Ensus bioethanol plant on Teesside has been almost five years in the making and was originally due to begin production earlier this year. While the timescale has slipped and the first drops of bioethanol are yet to flow, several thousand tonnes of home-grown grain are already sitting in the silos.

That is encouraging news for farmers who have heard a lot about the potential biofuels could bring to UK agriculture, but have yet to see any real action. Indeed more biofuel projects have probably been shelved over recent years than have got off the ground.

Ensus promises to be different though. Once fully operational, the plant will take over 1m tonnes of UK feed wheat and produce more than 400m litres of bioethanol, plus 340,000t of high-protein animal feed. These are impressive figures and will put the UK firmly on the European and global biofuels map...

Having sat through many pre-Budget reports and Budgets over the years, I can honestly say that today's offering from Chancellor Alistair Darling was one of the least interesting I can remember.

From an agricultural point of view, there was next to nothing. Even the invited experts contributing to our Cover It Live feature seemed to struggle at times - though their input was a good deal more entertaining than Mr Darling's monotonous tones.

Usually with these things it is the case that more substance emerges once the Chancellor has sat down and the accountants have had time to trawl through the press releases.

But even this process seems to have thrown up precious little. In a nutshell, the key points for farmers from today's pre-Budget speech are as follows:

• National Insurance contributions are to rise by 0.5% above a £20,000 threshold, but not until 2011
• VAT to return to 17.5% on 1 Jan, though farmers generally reclaim their VAT anyway
• Empty commercial properties with a rateable value of less than £18,000 will be exempt from business rates for another year (2010/11)
• Earnings from domestic wind turbines and solar panels to be tax free
• State pensions are to increase 2.5% from April 2010...

All eyes will be turned on Westminster at 12.30pm today (Wednesday) as Chancellor Alistair Darling delivers his third pre-Budget statement.

A few things have already been leaked or flagged up, including a new 50% tax on bankers bonuses and a review of public sector pay, as the Chancellor looks for ways of containing the budget deficit.

But what will he have in store for agriculture? For an expert view, why not tune in to our live coverage by clicking on the following window at 12.30pm and seeing what our panel of financial experts make of it all:

Once again large landowners are being vilified for receiving large amounts of taxpayers' money in the form of the single farm payment.

This time it is Lib Dem shadow DEFRA secretary Tim Farron who is wielding his club, pointing out that last year some £120m in SFP was awarded to just 387 claimants in the UK - equivalent to £310,000 each.

He seems to have particular contempt for Sir Richard Sutton, who received a reported £930,000 in SFP last year, despite being on The Sunday Times "rich list".

According to Mr Fallon, this skewing of the single payment scheme in favour of wealthy landowners comes at the expense of small family farms and shows how outdated the CAP has become, (though, interestingly, he describes similar large sums going to organisations like The Co-operative Farms and the National Trust as "well deserved")....

More details have been emerging about how the government might divvy up the cash available for dairy farmers under the EU's new €300m emergency dairy fund.

The aid package was agreed by EU finance ministers in November to help dairy farmers survive the catastrophic drop in milk prices seen during the course of 2009.

Until very recently it was not clear how this money would be shared out, or even if it would be paid at all in the UK. Given DEFRA's record of turning down any discretionary funding, some in the UK were fearing the worst.

But late last week member state representatives met in Brussels and agreed that the money should be distributed according to each country's share of milk production. This would translate into almost €30m (£27m) for the UK, worth an average £1600 per producer...

Bankers' bonuses have been in the spotlight in recent days, as politicians and the media question the morality of multi-million pound payouts to City highflyers.

But it's not just bankers who get bonuses. Here at Farmers Weekly we too get the occasional perk, and I was especially delighted to receive my 2010 Simba calendar today with some lovely pictures of drills and cultivators.

Better still, yesterday three of us were invited to a pre-Christmas lunch with our well-resourced friends at Barclays.

As might be expected, there was a degree of opulence on display. The view from the 31st floor of Barclays' Canary Wharf HQ over docklands and the O2 Arena was spectacular. The food was straight out of Master Chef. And yes, that was an original Lowry on the wall of the private dining room.

The conversation flowed as easily as the wine, covering a wide range of subjects - from the state of the dairy sector, to succession planning (or lack of), to the future of agricultural shows...

There's been a lot of chat in the office in the past few days about how the new agriculture commissioner-designate in Brussels, Dacian Ciolos, pronounces his name.

Instinctively we reckoned it was something like Dace-ian See-oh-loss. At least that was how we referred to him before the weekend.

But further investigation with key contacts on Monday unearthed a range of alternatives, the most reliable of which came from a Romanian source in Brussels. The correct pronunciation, apparently, is Dach-ian Chee-oh-losh.

We have also discovered that he is 40 years old, looks like a Bond villain, is fluent in French, having worked in Brittany for a number of years, and was Romanian agriculture minister in 2007/08.

But more important than this is what his appointment will mean for agriculture, and in particular the direction of the CAP post-2013.

It is no secret that his candidature was eagerly supported by France and Poland, and on that basis alone there is a strong suspicion that he will be less pro-CAP reform that the outgoing Mariann Fischer Boel...