January 2010 Archives

The latest TIFF (Total Income From Farming) figures from DEFRA published this week come as quite a surprise.

OK, everyone was expecting that these new figures would differ significantly from the "first estimates" issued by the department's statistical bods last November.

Then the data seemed to suggest that farm incomes had actually increased by 25% during 2009 - which was plainly total nonsense. At the time on this blog I said that DEFRA's track record of getting it right first time left a lot to be desired.

So the fact that this week's figures suggest UK farm incomes actually fell by 6% in 2009 was not unexpected.

What was a complete surprise, however, was that this turnaround had not come about because of any major revision to the 2009 TIFF figure - which has been recalculated at £4.1bn instead of £4.3bn....

To find the NFU and the CLA at loggerheads over the future shape of the CAP comes as little surprise, given the organisations' track record in this area.

It's a little like history repeating itself, since the two bodies took a similarly divergent view six or seven years ago, when DEFRA was consulting on the best way to implement the Fischler reforms in the UK.

Back then the NFU was arguing for a historic receipts based system of single farm payment - insisting that such a system would minimise the redistribution of support, with the inevitable creation of winners and losers.

In contrast, the CLA advocated a flat rate regional payment, saying it would be simpler to organise and eliminate the need for a "spurious" trade in entitlements.

Sheep values are in the ascendancy with producers enjoying a larger slice of the pie, as the gap between farmgate prices and retail prices narrows.

Finished R3L carcases are pushing close to the 440p/kg peak achieved last spring and are 25% up on year-ago levels in response to tighter supplies.

The cull ewe trade is also booming, with older sheep regularly fetching over £100 a piece in the auction ring, and some of the largest, well-fleshed beasts even topping £150.

Not surprising then that, as with the beef trade last year, some farmers are tempted to sell their female sheep for slaughter, rather than retain them for breeding.

But this is all in stark contrast to the situation in the wool market, where values have slumped in the recession and collecting a fleece has become a loss-making activity...

Farmers Weekly's publisher Trevor Parker approached me at the start of the week and asked me to come up with a current "state of the industry" assessment for a presentation he is giving.

It was a good opportunity to take stock and have a think about where we have come from in the past 18 months and where we might be going. The following is what I told him:

UK agriculture was the best performer in the European league table of farm incomes in 2009. EU farm income figures from Brussels show that the UK is just one of four member states to have seen an increase in farm income in 2009 - thanks in large part to the weakness of sterling. Provisional figures put us up 14%, compared with a 35% decline for Hungary, 25% decline for Italy and 20% declines for France and Germany. DEFRA predicts an 8% fall in UK farm income in 2010, but it will still top £4bn - the second best result in a decade...

Talk about mixing with the great and the good - the delegates list at this week's City Food Lecture really did read like a Who's Who of the food and farming industry.

Supermarket bosses, farm leaders, food processors, academics and political figures filled the lofty chamber that is London's Guildhall - and even a few agri-journalists were allowed to mingle with the crowd.

And, despite the predominance of pinstripes and brogues over boiler suits and wellies, it was a thoroughly enjoyable and thought provoking event.

Former government chief scientific adviser Sir David King is always good value for money, even though his message is now starting to sound very familiar.

His key points included:

There can be little doubt that the bears are winning the day in the grain markets this month.

Prices have been under pressure since the turn of the year, with March futures dropping from £111/t in week one, to £107/t in week two, to just £101 this week - down 10% in a fortnight.

The reason for the fall comes down to two basic factors - supply and currency.

Last week's data from the US department of agriculture came as a series of body blows. Global wheat production was revised upwards by 2m tonnes, and end stocks by 5m tonnes at 196m tonnes - up 61% in just two seasons.

US wheat stocks were also increased by 2m tonnes to 26.6m tonnes - the highest for 20 years - while US maize production was raised by 6m tonnes, and stocks by 2.3m tonnes...

The joy of internet shopping is a relatively recent addition to my life.

I think it coincided with getting married a little over a year ago. Since then I've noticed a marked increase in the number of packages arriving at the door, delivered by some smug looking courier requesting my signature.

Either that or I get home in the evening to find a card telling me the postman "was unable to deliver" a package and I end up having to drive five miles to the nearest Post Office to collect it. So much for convenience!

Fortunately we've not yet got into on-line grocery shopping. I say "fortunately" because, perversely, I actually quite enjoy my weekly trip to the supermarket. If nothing else, it counts as exercise!

But, it seems, it's only a matter of time before even that is done from the comfort of our front room...

If agriculture commissioner-designate Dacian Ciolos was a cricketer, then you'd look no further for someone to open the batting.

His performance on Friday at his so-called "confirmation hearing" in front of the European parliament's agriculture committee in Brussels was confident, patient and effective as he met every delivery with a straight bat.

It was in stark contrast to Mariann Fischer Boel's performance at the same stage five years ago, who was frequently trapped in front of the stumps and failed to spot even the most obvious of googlies. She had to endure the indignity of a second innings before the MEPs were satisfied she was fit for office.

But setting aside the cricketing analogy, this was the first time I'd seen Mr Ciolos in action and I have admit I was impressed, both by what he said and how he said it.

Having studied agriculture at university, worked on farms in Romania and France, done a spell in the EU Commission in Brussels and then served as Romania's agriculture minister in 2008, it was perhaps no surprise that he was extremely well-versed in matters agricultural.

The big issues, such as the budget, food security and the WTO, one would expect any political figure to have knowledge of. But even when it got down to some of the nitty-gritty, such as milk strikes, battery cage sizes, sugar reform and bananas, Mr Ciolos was still in his comfort zone.

As an enthusiastic skier, the sight of snow seldom fails to excite me. But sitting in another two-hour traffic jam on the way to work this morning, even I was starting to feel I'd seen enough.

Many farmers will have reached the same conclusion far quicker, as the cold snap takes a toll on their patience and their businesses.

Precise estimates have yet to emerge as to the overall cost of the "big freeze", though it is likely to run into the £ millions.

As we've been reporting on FWi this week, all manner of costs have gone up. Red diesel has firmed by about 5p/litre, with many farmers now having to pay over 50p/litre. The cost of heating oil has also risen as demand increases.

Animal fodder is getting costlier too, with auctioneers this week reporting a 20%-30% rise in the price of hay. Conventional bales have been touching £4 a bale for top quality meadow hay, with "Claas Quads" making over £50 a bale at Alexanders of Huntingdon's annual sale...

My brother-in-law, who sends me humorous e-mails on an almost daily basis, (though most of them unprintable), has forwaded me the following anecdote:

A man owned a small farm in Ireland. The Inland Revenue claimed he was not paying proper wages to his staff and sent a representative out to interview him.

'I need a list of your employees and how much you pay them,' demanded the rep.

'Well,' replied the farmer, 'there's my farm hand who's been with me for 3 years. I pay him €200 a week, plus free room and board.'

'The cook has been here for 18 months, and I pay her €150 per week plus free room and board.'

'Then there's the half-wit. He works about 18 hours every day and does about 90% of all the work around here. He makes about €10 per week, pays his own room and board, and I buy him a bottle of whiskey every Saturday night. He also sleeps with my wife occasionally.'

'That's the guy I want to talk to...the half-wit,' says the agent.

'That would be me,' replied the farmer...

US biotechnology giant Monsanto is probably revered and reviled around the world in equal measure.

Undoubtedly it has many detractors - especially in the green lobby - but that has not prevented it from winning the prestigious 2009 Company of the Year Award from well-known US business magazine, Forbes.

The award is based primarily on the company's financial performance.

In 2009 Monsanto sold $7.3bn of GM seeds compared with $4bn by second-placed DuPont. Its sales have increased 18% a year for the last five years and in "fiscal 2009" it made $2.1bn profit from a turnover of $11.7bn.

Impressive figures indeed. But as Forbes points out, there is more to the Monsanto story than this.

The company has had to ward off all manner of bad publicity over the years, being portrayed as a "Satan of agriculture" for daring to modify plant genes, and being accused of threatening the world with ecological catastrophe....

The arctic conditions gripping the country have caused havoc for many in the agricultural industry.

Farmers everywhere have had to contend with frozen water pipes, tractors than won't start, dwindling feed stocks and, in some cases, total power failure.

Auctioneers, too, have been forced to cancel their weekly livestock sales as roads have become impassable and buyers and sellers have been unable to make it to ringside.

And even agricultural journalists have, in many cases, been unable to get to their offices and been forced to work from home, (though, as the picture shows, I did give it my best shot!)

But it's not all bad news for business.

According to dairy co-op Milk Link, sales of UHT milk are booming. It has witnessed a 20% increase just this week as people have stocked up with long-life product to see them through the current cold snap...

Time has a habit of passing rather quicker than any of us would like.

It seems only yesterday that EU agriculture commissioner Mariann Fischer Boel signed off her CAP "health check", scrapping set-aside and increasing modulation. In fact it is well over a year ago.

Even more alarming, it is now almost seven years since her predecessor Franz Fischler concluded his own CAP reforms, introducing the single farm payment and the "second pillar" of rural development.

On this basis, it's not overstating things to say that the next round of CAP reform is almost upon us.

Even though it will not actually take effect until 2013, the European parliament has already held its own CAP reform "workshop" in November, with MEPs setting out their priorities for the post-2012 era...