March 2010 Archives

Five minutes after Chancellor Alastair Darling sat down following his Budget speech on Wednesday (24 March), the FW Business desk also sat down and compared notes.

Fortunately we were pretty much in agreement as to what we thought were the salient points to emerge for agriculture. The list was as follows:

• Doubling 100% investment allowances from £50,000 to £100,000 will help farmers buying new plant and machinery
• The increase in stamp duty on properties over £1m to 5% could hit some people buying and selling farms
• Phasing in the 3% increase in fuel duty by 1% on 1 April, 1% on 1 October and 1% on 1 January will soften the blow
• Reducing business rates for one year from October will help smaller, rural businesses
• These businesses may also benefit from some of the £94bn Lloyds Bank and RBS have been told to lend
• Raising the duty on cider is bad news for cider producers and cider drinkers alike
• Providing £100m for repairs to local roads should improve rural infrastructure
• Applying a 50p levy on land lines to gather funds for extending broadband in rural areas by 2017 is another positive
• Raising the ISA limit to £10,200, while not new or specifically agricultural, will benefit farmers with a few pennies to save...

The final Budget before the general election takes place at 12.30pm today (Wednesday).

FWi has arranged for a team of experts who work in the financial sector to provide a running commentary online as the statement is read.

Using a live blogging tool they will highlight the key announcements and share their thoughts on how they might impact on the farming community.

You will be able to follow the discussion as it unfolds from about 12.20pm - and add your own thoughts - using the box provided below.

Egg suppliers are in danger of being tarred with the same brush as politicians, following recent cases of fraud and corruption.

The case of Keith Owen, who was fined over £3m and sent down for three years for selling millions of eggs from caged birds as free range and organic, received widespread coverage in the national media.

The British Egg Industry Council was quick to point out that its British Lion scheme had been tightened up since those offences were committed in 2006, and welcomed the tough sentence handed down in early March.

But then came news a week later that Derbyshire trading standards officers had "issued advice" to nine businesses following spot checks on eggs in the county...

My previous blog posting observed how laid back fertiliser manufacturer Yara seemed to be about being jilted by Terra, its partner in GrowHow, in favour of a better merger off from a rival suitor.

The same cannot be said of dairy farmers involved in another partnership - the Arla Foods Milk Partnership - who have been similarly jilted by supermarket group Asda.

We've taken a number of calls from farmers in recent days, aggrieved by the short notice they have been given of the change, by the cursory nature of the letter they received, the lack of clarity about the criteria used and the fact that they are to receive 1p/litre less for their milk from 1 April.

Asda brushes this all off, saying it's just a review of its supplier base to establish a more consistent core pool of milk producers - something it does from time to time anyway...

One has to admire Norwegian fertiliser manufacturer Yara's sense of "sang-froid" given all that has happened in the past six weeks.

At the time of its initial bid for US rival Terra Industries in early February, the company insisted it was "business as usual" as far as it's UK operations were concerned.

That was fair enough given that the deal was pretty much a done deal and bearing in mind Yara's existing relationship with Terra - the joint venture they have in GrowHow UK.

But then came news in early March that there was a rival bid on the table, from US fertiliser giant CF Industries, and that this bid was a superior bid.

Yara's response to what must have been a severe blow to the corporate knackers was a controlled "no comment" while directors conducted an evaluation.

And now the news has emerged that Terra has terminated its proposed merger with Yara (worth $4.1bn) and entered into a definitive merger with CF Industries (worth $4.7bn)...

Checking through the SPS application form must be one of the most dreaded tasks any farmer has to undertake during the course of the farming year.

And as an agricultural journalist, writing our annual "SPS special" in Farmers Weekly is also one of my least favourite jobs.

First there is the briefing with the RPA - stuck in a small room in Reading with four civil servants, plus two more by video-link from Newcastle, advising me as to this year's changes. (I did feel a bit outnumbered.)

Then there is the job of deciphering my notes and cross-checking this with the briefing notes handed to me at the RPA and the guidance booklet which arrived in the post a few days later.

And then it's time to write it all up - 2500 words of elegant prose on a subject I find, quite frankly, mind-numbingly dull....

The recent document from the EU Commission on the possible consequences of policy change over the next ten years makes for uncomfortable reading.

The report, which is an update of an earlier study in 2006, (the Scenar 2020 study), sets out three scenarios:

• A "reference" scenario, with a static CAP budget, a 30% cut in direct payments and a 105% increase in rural development funding
• A "conservative" scenario, with a static CAP budget, a 15% cut in direct payments and a 45% increase in rural development funding
• A "liberalisation" scenario, with a 55% cut in the CAP budget, the total removal of direct payments, market support and trade barriers, and a 100% increase in rural development funding...

My last blog posting on the recent Andersons spring seminar focussed on how useful and interesting the session was, and how effective the key speakers were.

But three hours is a long time to concentrate when the sun is shining and it's Friday afternoon, and my mind did start to wander a bit during the paper on "Opportunities from Regulation".

Normally when this happens I resort to the list of delegates, and mark a cross by the people I recognise or want to catch a word with at the tea break.

But this time I turned to the back of the conference booklet where my eye was drawn to the "glossary of acronyms", listing many of the different acronyms commonly used in agricultural parlance. I decided to test myself.

Given my 20 years-plus in the industry, I was pretty confident I'd get most of them right...

Yesterday (Thursday) I had the pleasure of attending one of the Andersons spring seminars at Salisbury racecourse on Opportunities in a Changing Agriculture.

Surprisingly it was the first of these annual events I'd been to - and sadly one of the last that well-known agricultural consultant and analyst Francis Mordaunt would be giving before his impending retirement.

Explaining complicated issues in simple and engaging terms is a gift, and one that Francis has in abundance.

In just 30 minutes he gave a crash course on the current state of British agriculture, encompassing most of the external factors affecting it, giving an assessment of the health of the industry and providing some useful pointers as to where we might be heading.

The key points were as follows:

* UK farming has weathered the recession better than most sectors. Total Income From Farming (TIFF) in 2008 and 2009 came to over £4bn each year - well up on the £2-3bn seen in the previous eight years.

* At this level, TIFF was finally in excess of direct payments, showing that farming is making a small profit even without subsidy...

Everyone knows that a weak pound is good news for British agriculture.

Primarily because of the weakness of sterling, farm incomes in England last year were limited to just a 6% fall, despite the slump in global commodity prices, while farm incomes in Wales enjoyed a 60% increase.

So yesterday's jitters for sterling on the foreign exchanges, amid fears of a hung parliament this summer, will have been viewed with some satisfaction by many in the farming industry. (The pound reached a ten month low against the dollar and a three month low against the euro.)

The effect of the weak pound can be clearly seen in latest figures from UK Trade and Investment - the government department responsible for international business development.

These show that meat exports rose by 9% to £1.27bn in 2009, while fruit and veg exports were up 10% to £763m and cereal and animal feed exports were up 3% to £2.35bn...