December 2010 Archives

Meat quality and “locally produced” are two of the most important considerations for consumers when eating out, according to EBLEX research.

The factors were highlighted by three separate focus groups interviewed in London, Birmingham and Manchester during October.

Taste, texture and cut were the most important reasons for choosing beef or lamb from the menu. For beef, size, trim and preparation were rated next most important, and for lamb it was type of dish, country of origin, trim and price.

Many respondents wanted to know where meat came from, as they felt local sourcing supported UK farming, showed environmental responsibility and meant meat was fresher.

Respondents were prepared to accept more inconsistencies in the shape and size of locally sourced meat, than from mainstream branded restaurants.

Final results from the Scottish Government’s 2010 agricultural census, published today (16 December), confirm the country’s barley area slumped this year, while there was a slight recovery in cattle numbers.

The final figures were relatively unchanged from provisional results released in September, and put the total cereal area down by 22,393ha (5%) on 2009, at 426,390ha, largely due to a massive 41,786ha decrease in the amount of barley grown. This was partially offset by an increase in the area of wheat and oilseed rape.

The total number of cattle increased slightly to 1.83m, largely due to the first rise in beef numbers for five years, while the sheep flock declined 2.5% to 6.75m. The pig herd grew by just over 3% to 409,287 and the total poultry flock increased by 1.27m (9.6%) to 14.6m.

French analyst Strategie Grains has made an early stab at the size of the 2011 harvest, putting the soft wheat crop (ie excluding durum) up 7% on this year at 136.5m tonnes. The estimates are based on yield trends and an expected 500,000ha increase in area in response to higher prices, says HGCA.

The biggest output increase is likely to be in Germany, which suffered very wet harvest weather this year, although bigger crops are also expected in France and the UK. EU barley production is likely to rise by 5% to 55.5m tonnes and maize to increase to 58m tonnes from 54.7m tonnes in 2010.

 

It’s that time of year when everyone starts having a stab at what they think will happen in the New Year. The latest crystal ball gazing is from economist Jeremy Cook at foreign exchange brokers, World First.

He reckons sterling, compared with the euro and US dollar, could be the best of a bad bunch of currencies next year.

For the euro, economic pressure and uncertainty is likely to continue across the eurozone in 2011, particularly structural issues in Portugal, Spain and Belgium. His “fairly conservative estimate” for the pound: euro rate in 2011 is £1 = €1.28 (£0.7812) - currently £1 buys € 1.17.

The US dollar is also predicted to remain weak as the Federal Reserve continues its second round of quantitative easing. An exchange rate of £1=$1.74 is predicted next year - currently £1 buys $ 1.56.

But with rising unemployment and high inflation, the UK economy isn’t exactly in the greatest shape itself and who really knows what will happen in such volatile times?

ADAS has teamed up with solar photovoltaics developers, Enfinity, to find sites for large field-scale (25-30 acres) solar energy parks.

The consultancy firm uses GIS computer mapping to identify suitable sites, before landowners are approached. The search is focussing on southern England and south Wales initially, with preferred sites being flat, having good electricity connectivity and minimal visual impact.

So far, 12 potential sites have been identified, according to ADAS consultant Jon Abbatt, who is leading the project.

“We have already started the planning permission process on four of the sites, which after working closely with the relevant planning authorities we hope to have approved in the first half of 2011. Our plan is to develop 50MW of solar parks next year.”

The NFU has held an urgent meeting with Arla Foods UK chief executive Peter Lauritzen to discuss concerns about the price paid to its farmer members.

Dairy board chairman Mansel Raymond said he left Arla in no uncertainty about farmers’ anger at their milk price, which was way off the 37.9 cents per litre (equivalent to 32.2p/litre) that Danish and Swedish farmers received from Arla Amba.

“We know that we operate in a different market place, but it’s sickening for farmers to watch commodities outperforming liquid milk prices for over a year. On top of this, the cost of milk production is rocketing, creating a 3p/litre profit gap and widening by the day.”

But, Arla insisted its farmers were getting a good return and Mr Raymond said he was surprised to be told Arla members were not unhappy with their milk price.

“Arla reports that the market place is tough; that they understand the short-term pressures, but are taking a longer-term view,” he said.

“There’s no denying that Arla certainly has an ambitious and impressive growth strategy. I have no doubt that the longer-term opportunities for Arla suppliers are very positive - investment in Westbury, the expansion of Cravendale, and plans to build a brand new dairy - but it’s disappointing that Arla seems to adopt such a short sighted view on the here and now.”

Mr Raymond will meet the Arla Amba chief executive in Denmark in January to discuss these issues further.

Commodity price volatility is to be examined as part of an EU Commission review of its Markets in Financial Instruments Directive (MiFID).

As part of a consultation, the Commission is seeking opinions on how commodity futures and options markets work and their impact on commodity price volatility. It will consider whether position limits should be used to limit the activity of users of these markets. The deadline for replies is 2 February 2011 and legislative proposals are due in spring next year.

 

Construction of a new 43,000t dockside grain storage and handling facility at Montrose in Scotland has started this week.

The project, part of the Montrose Port Authority’s quayside development, is a joint venture between local farming group Angus Cereals and Openfield. It has been supported by a £2.26m grant from the Scottish Executive.

Their aim is to professionally condition, segregate and store a range of crops from farms across the region, mostly within a 5-30 mile radius of Montrose and it is hoped the first 25,000t of storage will be ready for next harvest.

Angus Cereals chairman, Jim Cargill, says the facility will improve efficiency and save cost for growers by reducing the reliance on ageing on-farm grain drying and handling facilities.

The standard VAT rate rises to 20% from 4 January. In the farm office the rate change is most likely to cause problems on fuel scale charges simply because it is likely to be forgotten about, warns Faye Armstrong of Cumbria accountant Dodd & Co.

 

For those who want to take advantage of the current lower rate, sending or receiving an invoice in advance or paying in advance can legitimately secure the 17.5% VAT rate, even if the goods are delivered or the services are supplied on or after 4 January.

More fuel has been thrown into the milk price debate after New Zealand dairy giant Fonterra increased its forecast milk price for the 2010/11 season, from $6.60 to $6.90 per kilogram of milksolids.

It predicted a continuation of high international dairy prices into next year, underpinned by strong demand. “International dairy market prices have generally held up better than initially expected,” chief executive Andrew Ferrier said.

But, while global fundamentals may be strong, there’s still no sign of any much-needed increase for UK prices. The market indicator measuring returns from butter and milk powder (Actual Milk Price Equivalent) was 28p/litre last month, some 2p above Defra's average UK farmgate price.

If you're a student, watching the tuition fees debacle and wondering how you'd ever pay down your graduation debt (and I can tell you exactly how that feels, if you've time).

Or if you're a parent, quaking at the thought of how you'll ever be able to give your children a university education,

Then you probably won't want to hear about the chance to study at the world-ranked Cranfield Business School on a scholarship worth £33k. It truly sounds like an opportunity far too good to miss, and one lucky individual in farming will win it.

The charity MBA Agri-Farm Scholarship was set up 5 years ago in the name of John Bennet, founder of Belton Cheese, and is supported by Genus and Dairy Crest. It offers one lucky recipient the £33,000 scholarship fund up-front to complete an MBA at Cranfield wither full-time for one year or part time over two.

And Cranfield's Master of Business Administration course is ranked number one in the world by the Wall Street Journal, number one in the UK by The Economist and one of the world's leading business qualifications by the Financial Times.

Interested? Email fwbusiness@rbi.co.uk in the first instance, giving information about your background and aspirations.

So just what do you do in a situation like this? Wait for commodity markets to climb higher or stick a flag in the sand now? There are plenty of farmers that will say 'hold off, its got further to go yet', but, when pressed, can't read the market any better than the rest of us. Clarity and pragmatism are key.

United Oilseeds' latest bulletin has both these attributes:

Positive Market Drivers - Ukraine OSR area seen down in 2011. Increased biofuel
crush margins in EU. China set to import 54mil/t of oilseeds. Yield worries in Oz due
to floods & drought. Reduced EU crush for OSR 10/11.

Negative Market Drivers - Record crops of soybeans in US & S America for
2010/11. Better weather in S America giving ideal drilling conditions, German
2011 crop may not be as low as originally thought. Int rate hike by China.

United Oilseeds' Opinion: The usual round of reports keep weather, quality & yield worries to the fore, this is helping to keep most markets positive. Osr prices are at contract highs, but
many commentators think the price needs to go higher to limit demand. However
with good gross margins available it cannot wrong to take some cover at these

As a strategy, that makes far more sense to me than sitting with your fingers crossed...

Solar PV has grabbed a lot of headlines recently, especially as the UK’s first ‘solar parks’ come closer to being built.

But, the future for farmers is likely to centre around rooftop systems, if a recent survey by Solarcentury is to be believed. It suggests over 80% of farmers want solar PV on their roofs within three years and just 20% are interested in field-scale systems.

Now, Solarcentury is a specialist supplier of solar kit for buildings, so the survey may need to be taken with a pinch of salt, but the findings are hardly surprising given the complexity, security and planning issues that surround field-scale solar parks.

Rooftop schemes need careful thought as well though, for they may not be right for everyone. After all, solar may be flavour of the month, but it is still only one of many possible renewable energy options for farmers.

Last month, you may recall, the Food Standards Agency casually asked the red meat industry how it would feel if they passed on the costs of meat hygiene inspections, instead of picking up the £32m bill themselves. It won't surprise readers to learn that slaughterers and meat processors weren't exactly keen on this plan. None less so than the Scottish Association of Meat Wholesalers, whose barely contained wrath made their position very clear indeed. In the detail, FSA questions whether processors who have had their approval withdrawn or revoked, and have appealed against the decision, should be allowed to continue trading. “SAMW totally disagrees with this," thunders a press release. "The proposition has all the hallmarks of a contrived outcome. It sets out the desired verdict then scours the field for the supporting justification. It therefore lacks intellectual rigour and credence and, furthermore, is founded on false premise."  I get the feeling they mean it...

Higher grain prices will pave the way for a “real farming profit” for arable producers in 2011, whereas the associated rise in feed costs has left the livestock sector reeling.

That’s the main conclusion from the latest (71st) edition of the Agricultural Budgeting and Costing book, which has just landed on my desk.

It predicts feed wheat gross margins will be up by over £150/ha from the May 2010 edition at £673/ha. In contrast, the gross margins for lowland autumn calving suckler herds and spring lambing flocks have been revised down by £51/head and £3.50/head respectively.

Pig producers are particularly hard hit, and will be left with virtually no margin once overheads, rent and finance have been included, it suggests.

Go to http://www.abcbooks.me/cms/

“But I thought you were doing that….!” - famous last words perhaps, but in the case of at least one farming family things have turned out alright.

The normal routine for this family is to sell grain early in the season but this year, Dad thought son was taking care of it and, yes, you’ve guessed it, son thought Dad was doing the selling. So, it was drinks all round when they recently discovered that neither had done the deed.

It’s just a good job they hadn’t both sold it early on ….

 

The first of four annual hay, straw and fodder auctions held by Tayler & Fletcher of Stow-on-the-Wold in the Cotswolds has seen record prices achieved for all commodities.

The star lot in last Friday’s auction (26 November) was an entry of MF187 bales of meadow hay which sold for £116 per bale. There was also competitive bidding for conventional bales with seed hay reaching a top price of £395/t. Conventional wheat straw bales topped £77/t and there was a top price of £35 per bale for MF190 barley straw bales.

“We certainly did not expect to receive such strong and competitive bidding across all commodities,” Rose Simmons of Tayler & Fletcher “Hopefully this marks the beginning of a very buoyant season.”