May 2010 Archives

As predicted in this blog when the General Election was first called in April, a change of government has led to little in the way of change for agriculture.

The "programme for government" published by the new Lib-Con coalition on Thursday (20 May) reinforces the point that the faces may have changed, but the policies have not. 

Cost and responsibility sharing is back on the agenda, as is the "science-based approach" to bovine TB, (no badger cull in sight then). Even the controversial ban on fox hunting looks like staying on the statute book, despite Tory pre-election promises to the contrary.

Warm words on reducing red tape, increasing public procucrement of British food and relaxing planning restraints are also there in abundance in the new policy document. But the last lot said all that too, and not a lot ever seemed to get done...

The EU commission is inviting offers to buy butter and skimmed milk powder out of intervention.

Currently there are some 76,000t of butter and 257,000t of powder in EU stores. First tenders have to be submitted by traders by 1 June, with a decision by the management committee on 3 June (two weeks today).

The EU insists it will fix the price and volume to be released "taking into account the market situation".

Given that commodity markets have started to recover and some of this benefit is finally filtering through to farmers, the hope must be that Brussels market managers act with great prudence.

It must be that time of year - hot on the heels of yesterday's financials fronm Robert Wiseman Dairies come preliminary annual results from Dairy Crest.

Like Wisemans, Dairy Crest has enjoyed a good year of rising sales and rising profits, and has also taken the opportunnity to pay off debts and invest for the future.

Here are the business highlights:

o 5% increase in adjusted profit before tax
o 19% reduction in year end net debt
o Sales of key brands up 9%
o Sales of milk to major retailers up 8%
o New initiatives to generate £20 million annualised cost reductions
o Defined benefit pension scheme closed to future accrual
o 5% increase in final dividend
o Increased marketing investment has strengthened key brands for further growth
o New capital investment programme to improve liquid milk dairies

For more on this story, see FWi later

Robert Wiseman Dairies has just posted its financials for the year to April. Here are the highlights:

• Sales volumes up 9.1% to a record 1.77 billion litres (2009: 1.62 billion)
• Turnover increased by 4.5% to £886.2 million (2009: £847.7 million)
• Operating profit up by 43.1% to £50.3 million (2009: £35.1 million)
• Adjusted operating profit up by 37.8% to £48.4 million (2009: £35.1million)
• Adjusted operating profit per litre of 2.74ppl (2009: 2.17ppl)
• Earnings per share up by 445.5% to 50.13p (2009 : 9.19p)
• Adjusted earnings per share up by 48.3% to 47.22p (2009 : 31.84p)
• Full year dividend of 18.00p per share, an increase of 20% (2009 : 15.00p)
• Cash generated from operations up 23.6% at £83.1 million (2009 : £67.2 million)
• Net debt reduced to £21.1 million (2009 : £25.8 million)

Look out for more on this story later of FWi

Continuing the "learning curve" theme of my last blog posting, earlier this week I received "chapter and verse" on the egg laying industry's number one pest - red mites.

I previously had little idea what they were - though the invitation to the launch event of a new product from animal health company Elanco did contain a few clues.

At least the drops of blood on the invitation and the fact that it was to be held in Warwick castle, with a tour of the dungeons thrown in, suggested they were not entirely pleasant.

The presentations confirmed these suspicions, as poultry vet Stephen Lister of Crowshall Veterinary Services described the "gruesome orgie of blood" that can characterise an infestation of red mites.

Apparently even a mild infestation can involve a staggering 120,000 mites per chicken in a hen house, rising to a phenomenal 500,000 in a severe case...

It's been a month exactly since I took over as editor of Poultry World and, as I predicted at the outset, it's been a steep learning curve.

Just getting to grips with who the key players are, what their inter-relationships are, what processes are involved in both egg and meat production and what the "hot topics" are have been quite a challenge.

True, many of the issues are remarkably similar to those affecting the rest of British agriculture - the constant interference of politicians, the restrictive nature of EU regulations, "gold plating" by UK civil servants, the threat of substandard imports and concerns about the public perception of the sector, to name but a few.

There are important differences too, not least the fact that the poultry sector is far more integrated than the rest of British agriculture and has had to evolve in the real market, without the benefit of taxpayer support...

Just as the threat of a WTO deal never quite goes away - talks are always "stalled", not "abandoned" - so the threat of a bilateral trade deal with the Mercosur countries has a habit of cropping up from time to time.

Now is just one of those times, as the EU Commission has decided to re-launch free-trade negotiations with Brazil, Argentina, Uruguay and Paraguay that stalled in 2004, and then stalled again in 2006.

As ever, the trade-off is between the EU's desire to gain access to emerging markets for things like telecommunications and financial services, and the Latin Americans' desire to ship more cut-price beef, poultry and grain to lucrative markets in Europe.

The stakes are undeniably high, with EU exports to the Mercosur region currently valued at about €27bn and Mercosur exports to the EU valued at about €35bn - figures that would grow exponentially if a free-trade accord could be struck...

The unwritten rule that Tesco sets the price and everyone else follows suit has been blown well and truly out of the water with the recent run of milk price rises.

Tesco, which bases the price it pays to its 800 dedicated suppliers on the cost of production as estimated by Promar, actually cut its rate from 1 April reflecting predicted farmer savings on feed and fertiliser.

The result was a 0.47p/litre drop to 26.9p/litre for those signed up to Promar's costings service.

In the past, this might have triggered a domino effect, with other buyers following suit.

But the reverse has been true, with Wyke Farms, Arla Foods, Glanbia, Milk Link, First Milk and Belton Cheese all increasing their prices for May and June by between 0.25p/litre and 0.75p/litre...