November 2010 Archives

The Co-operative has switched to 100% British wheat in all of its own-brand sliced bread.

The move, said to be a market first, means some 14,000t of flour will be sourced annually from up to 4,000 farmers in England, Wales and Scotland. It will go into The Co-op’s premium Truly Irresistible, standard and Simply Value ranges, equating to approximately 7.9m loaves a year.

Elizabeth Bailey, product manager for bakery at The Co-operative, said: “This is a major initiative for The Co-operative and a great move for British farming. We’re proud to be sourcing 100% British wheat for these essential items.”

Pigmeat production across Europe could fall by almost 3m tonnes over the next three years, the National Pig Association has warned.

A survey of member states suggests production will fall by 4-5% a year to 2013 as producers battle against problems including low prices, high feed costs, the European stalls ban, currency volatility and nervousness of banks.

At least a third of European producers will have difficulty converting from stalls to loose-housing by 2012; something that typically costs over £400 per sow place, the NPA says. It says the 1999 stalls ban in the UK caused the national herd to almost halve during the following ten years.

NPA general manager Barney Kay said the problems facing the European industry might even be understated.

“Many continental producers do not know themselves yet whether they will convert to loose-housing by January 2013, or cease production by that date, or continue to use stalls and hope to avoid detection.

“Their decision will be influenced by several factors, including the size of next year’s wheat harvest, exchange rates, the economic outlook for the eurozone, and the attitude of banks to lending money.”

The UK’s Muslim community accounts for only 3% of the population but consumes 20% of all the lamb sold in England and a growing quantity of beef. A new report from EBLEX aims to help specialist abattoirs and butchers as well as mainstream retailers and processors develop this important market. 

The report gives an overview of the Halal market and provides an insight into preferences, perceptions and motivations of Muslim consumers when buying meat.

Northamptonshire based Weetabix Food Company is committing to using 100% British wheat for its Weetabix product, also to sourcing it from within 50 miles of the firm’s Burton Latimer production facility to keep food miles down.

Supplying Weetabix is financially attractive for growers, according to David Elderkin of Openfield. Volumes were increasing substantially year on year in a three year agreement. Growers are restricted to seven varieties and must be part of the Entry Level Scheme. Maize must not have been grown on the wheat land in the past three years.

ASDA has boosted sales of its Extra Special beef range by 250% with a television advert featuring Perthshire producer Adrian Ivory, winner of Farmers Weekly’s Farmer of the Year and Young Farmer of the Year Awards, 2008. Well done Adrian - hope you’re getting a decent beef price too.

Since the advert has been screened, sales of all Extra Special meat products, including beef, pork and lamb have grown by more than 175%, says the retailer.

ASDA’s recent purchase of discounter Netto means that it will need an extra 10,000 animals a year. It also plans to introduce visual image analysis (VIA) in some abattoirs from early next year to take any real or perceived human error out of carcass grading.

Farmers looking to buy single farm payment entitlements might have to pay more this season, according to Cheshire consultant Rostons.

It says the trading window between entitlement statements being issued and the 3 April 2011 deadline for submission of any transfers on the RLE1 form will be shorter this year than in 2009, which could exaggerate demand and push prices up.

The Rural Payments Agency said last week that 2010 entitlement statements would be available in electronic form from 8 December and hard copies from later in the month, into early January, whereas most of last year’s statements were received by the end of November.

Rostons said entitlements were currently trading at just under face value; for example, the ‘flat rate’ lowland entitlement, worth £207.37/ha, was trading at around £200/ha.

Volatility continues in the wheat market with prices falling at the end of last week and continuing down early this week. November 2010 London feed wheat futures closed at £159.75/t delivered on Tuesday, £4/t down on the previous day and a full £13/t down from the contract high established just a week earlier. But by late this afternoon, it had recovered by £4.25/t.

Profit taking by traders was seen as one of the main reasons for the fall. The possibility of an interest rate rise in China also played a part in commodity price falls.

Wheat prices are still heavily influenced by maize prices but the outcome of Australia and Argentina’s wheat harvests will play an increasingly important role over the next few months, say traders. Nevertheless the EU still looks short of wheat, especially if exports continue at  current levels.

UK grain consumers are expected to be running minimal stocks of grain by the end of the cereal year in anticipation of new crop coming in at lower prices.

How many times do we hear calls for the industry to work together? The latest comes from industry body Dairy UK, which has joined the milk margins debate by urging the industry to stop focussing on who makes what margin from milk and join forces for a sustainable future

It says farmers, processors, retailers and representative organisations must form “genuine supply chain partnerships” in order to improve competitiveness and efficiency.

The organisation acknowledges there is no “magic bullet” solution to the challenges the sector faces, but says mutual respect is needed to improve opportunities for everyone.

Surely being open about who makes what margin is part of that? There’s plenty of information out there about farmgate margins from milk, but the further you delve into the rest of the supply chain, the murkier it gets. Things are improving, but it’s slow progress.

Surely if collaboration is going to work, everyone - from farmers to supermarkets - must be more open. After all, mutual respect works both ways.

To make a quick check on the impact of price or production cost changes on your net margin, have a look at the HGCA’s neat and extremely useful sensitivity calculator on www.hgca.com.

All that is needed is to enter area, yield history, fixed and variable growing costs and a selling price to get a chart showing the resulting net margins.
 
The tool highlights loss making combinations in red and can take account of any grain already sold, helping to identify target price levels for remaining tonnage. The sensitivity calculator works for feed wheat and oilseed rape and immediately shows the effect of changes in any of the main variables of crop production and output.

Farming unions have rubbished a British Retail Consortium report that claimed supermarkets were shielding customers from rising commodity prices.

The BRC report said overall shop price inflation increased from 1.9% in September to 2.2% in October, while food inflation rose 0.4% to 4.4%. “Wheat is up 47% compared with a year ago, affecting the price of staples such as bread and some meat products, as feed costs work their way up the supply chain,” the BRC said.

“Shop prices are rising but retailers are shielding customers from the full impact of the increasing commodity costs that are causing that inflation.”

But both NFU Scotland and the Ulster Farmers Union said the report was misleading and it was the margins for processors and farmers that were being squeezed as retailers protected theirs.

“This idea that the farmers are getting substantially increased sums of money while the retailers’ margins are being squeezed is just laughable,” NFUS vice president Alan Bowie said.

“Retailers make massive margins on food that have been built up over the years. They have much more flexibility than farmers do to react to fluctuation in prices. They are trying to lift the retail price under the rouse that they are paying processors and farmers more, which we know is simply not happening.”

British Sugar’s parent company, Associated British Foods, has announced a “record” set of results for the last financial year.

Group pre-tax profit for the year to 18 September was up 26% on last year at £825m, on turnover 10% higher at £10.2bn.

Four out of five ABF business segments reported record profits and agriculture almost equalled last year’s record.

In a year in which British Sugar effectively cut the price paid to growers with its new pricing formula, ABF said there was a “substantial” improvement in profitability of its sugar business, which grew revenue by 32% and operating profit from £168m to £240m.

Sales were boosted by a full year’s contribution from Azucarera in Spain, which ABF acquired last April, but the firm said there was also good growth in its UK and Chinese sugar margins.

“Favourable growing conditions and improved beet yields led to production of 1.3m tonnes of sugar which was 9% more than the previous year. Profit and margin were also significantly ahead.”

Excellent factory performance, firmer sugar pricing, a stronger euro and 120,000t of non-quota exports to the world market also boosted the results.

Are you happy with the price for sugar beet or is British Sugar cashing in at growers’ expense? Tell us what you think in the FWi Forum.

British pig exports to China have moved a step closer after a trade mission to the country resulted in two landmark agreements.

The first was the formal agreement of the export health certificate for export of pig meat from approved UK plants.

The second deal signed by business secretary Vince Cable re-opened the export of British breeding pigs to China - home to half the world’s pig population. The deal was said to be worth around £45m to the UK pig industry over the next five years.

BPEX chairman Stewart Houston welcomed the news and said it offered “enormous opportunities” for the pig meat industry, particularly for fifth quarter parts of the carcass that commanded a premium in China.

“We are very grateful for the hard work and spirit of co-operation shown not only by the Chinese but also Defra’s international animal health division and the British Embassy and UKTI team in Beijing, to bring these negotiations to a successful conclusion.”

Talks had been temporarily halted during the 2007 foot and mouth outbreak.

Another agreement also reached during the visit saw Chinese and British authorities agree that only whisky produced in Scotland will be marketed in China as Scotch. It is hoped this will act as a catalysts for sales of home-grown barley.

The Rural Payments Agency has announced the new flat rate values that will be used for the 2010 English single farm payment.

Based on the exchange rate of €1 = £0.85995 set on 30 September, the payment for non- Severely Disadvantaged Areas is £207.37/ha; upland SDA, other than moorland, £167.50/ha; and upland SDA moorland, £29.36/ha. These values exclude modulation and any penalties that may be applied.

The flat rate makes up 75% of the 2010 payment, with the historical element accounting for the remaining 25%. Last year these proportions were 60% and 40% respectively.

The RPA said Entitlement Statements confirming the number and value of each farmer’s SPS 2010 would be made available on SPS Online by 8 December, while paper copies would be sent out in late December and the majority by mid-January 2011.

The NFU has urged the Home Office to back down over proposed changes to the Misuse of Drugs Act that will unfairly penalise industrial hemp growers.

It says new licence fees, due to be introduced on 15 November, threaten the survival of a re-emerging industry.

Under the 1971 Act all cannabis varieties are controlled as a Class B drug and no distinction is made between those with high levels of the psychoactive compound Tetrahydrocannabinol, and varieties with negligible levels used for industrial hemp.

The licence fee to cultivate hemp has been set at £580 for first-time applicants, £326 for renewals if a compliance visit is not needed and £1,371 if the Home Office decides a visit is required. It is estimated 90% of renewal applicants would be processed without the need for a visit.

“These licence fees are potentially the bale of straw that will break the industry’s back,” NFU Vice President Gwyn Jones said. “We are urging the Home Office to review this situation and to remove industrial hemp from the MDA as the regulation is not only costly to government and farmers but is doubling up on existing controls with no clear justification for its existence.”

The European Commission needs to be careful about how it releases cereal intervention stocks onto the market, NFU Scotland has warned.

Yesterday (2 November) the Commission announced 88,112 tonnes of soft wheat and 2.71m tonnes of barley from intervention would be sold through a tender system in a bid to calm spiralling feed grain costs.

But NFUS vice president Allan Bowie said there was a delicate balance to be struck between taking the pressure off rising livestock feed costs and undermining the grain market.

“This announcement is not a surprise and there is a feeling that it has already been factored into the market. However, its implementation may still take a degree of management if volatility is to be avoided,” he said.

“The release of intervention stocks should free up supplies of grain for livestock businesses across Europe and with careful management, the impact on the cereal sector will be muted.”