March 2011 Archives

A little bird drew my attention to an interesting story about Dairy Crest increasing its “Milk & More” doorstep milk price by 3p/litre this week. The move apparently means DC has increased its consumer price by 6p/pint or 10.56p/litre since last autumn.

DC blamed “significant increases” in the costs of milk, packaging, energy and fuel. Few can disagree with the latter, but dairy farmers may well feel aggrieved by being partly blamed, especially as those on Milk & More contracts have only seen one price increase of just 0.46p/litre - and that didn’t come until April.

Seems strange that producers supplying supermarket giants such as Tesco can get almost 30p/litre, yet those supplying milk for doorstep delivery - perceived by many consumers to be better for supporting farmers - get somewhat less. Perhaps there’s another increase around the corner DC?

Got a query on filling in your SP5 form for the 2011 single farm payment claim? Try posting your question on our forum where RPA staff are on hand to provide the answers.

They’ll be regularly checking the thread and answering questions to help you complete your forms, either on paper or electronically, as quickly, easily and accurately as possible.

Woodland, common land, stock numbers, grazing licences, land use and non farmed land  all feature in the questions raised by users so far. 

Russia’s grain export ban is to stay in place until autumn when the size of the country’s harvest can be assessed, said its agriculture minister last week.

The ban was introduced last summer when it became clear that drought would significantly reduce the size of the Russian grain harvest, which turned out 35 to 40% lower than had been expected.
 
Estimates of the likely size of this year’s Russian grain crop vary between 75 and 85m tonnes in a country which would like to see a 90m tonne harvest. Trade estimates reckon that the grain harvest will need to top 86m tonnes for the export ban to be lifted.

A late spring, severely reduced farm cash flow and high fertiliser prices are limiting factors in achieving that target. News of the extended export ban will make a nervous grain market even more jittery. 

A valuable concession reducing the tax paid on income from mineral royalties is under threat. Last week’s Budget signalled Government plans to abolish a range of tax reliefs in the 2012 Finance Bill after consultation.

Half of the income from mineral royalties is currently taxed at income tax rates and the other half at the 28% capital gains tax rate, which meant a considerable saving for many landowners and farmers, said Carter Jonas partner Paul Malam.

“The present tax system for mineral royalties has been in place for a considerable period and recognises the unique nature of minerals extraction in that the asset is depleted over time,” he said.
 
The announcement on mineral royalties contradicts recent advice on the relief from the Office Of Tax Simplification at HMRC.

The deadline to buy single farm payment entitlements for 2011 use is 3 April 2011. However, in order that payment can be cleared, the last safe trading date is around 28 March, says George Paton of Webb Paton.

Supply of entitlements for sale has been short this year, with English non SDA entitlements changing hands for £250/ha in the last two weeks. Chester based Rostons also reports brisk trade. 

The Sterling:Euro exchange rate is at its lowest for four and a half months, with one Euro worth almost 87p which is better than the rate set for 2010’s single farm payments.

Whether you have chosen to take sfp in Euro or not, the rate can be protected relatively easily and cheaply, says Tom Barclay at currency broker WorldFirst. He has seen more sfp claimants moving to protect their payments against adverse currency movements in recent weeks by fixing their Euro exchange rate in advance.

The global share of private/ own label food products is set to double over the next 15 years to 50% of the retail food market, according to a Rabobank report.

A number of factors will drive this growth from the current 25%. In particular, the report said there would be continued industry consolidation in developed retail markets of Western Europe, US and Australia, combined with adoption of modern retail in developing markets such as Russia and Turkey.

It also highlighted consumer acceptance of own brands following the recession, further growth of the hard discount segment, and professionalization of private label supply.

But while major “A-brands” were predicted to hold their market share, the growth in private labels could put the squeeze on smaller, often local, “B-brands”, Rabobank said.

Dairy Crest is to increase its farmgate prices next month, following higher returns from cream and butterfat markets.

A letter to suppliers said those on non-aligned liquid contracts would get a 1.1p/litre price increase from 1 April, applied through additions to the liquid base price and an adjustment to its butterfat premium. This takes the standard litre price to 26.74p/litre, matching the high last seen in January 2009.

Suppliers on Dairy Crest’s “milk&more” contract will also receive an extra 0.46p/litre on the base price from next month. The contract monitors the average “basket price” of DC, Arla and Wiseman and only adjusts prices once there has been a 2p/litre movement in this average.

The Co-Operative has become the latest supermarket to set up a dedicated milk supply group.

From this August, it will source all of its own-brand conventional milk requirements (around 363m litres) through Robert Wiseman Dairies - Wiseman currently supplies around 75% of this milk, with Dairy Crest making up the remainder.

The dedicated group will be made up of 350 dairy farmer members from the Wiseman Milk Group, who will benefit from a “premium farm gate milk price”.

The Co-op said the supply group would reflect its commitment to animal welfare, environment and biodiversity on the farms selected for the scheme.

Producers who want to supply the London 2012 Olympic Games and companies which win Olympic contracts need to register on CompeteFor

The games will be Red Tractor Assured and the London Organising Committee for the Olympic Games is expected to announce shortly which firms have won catering contracts, says BPEX.

LOCOG uses CompeteFor as a brokerage service to match buyers with potential suppliers and to enable businesses to compete for contract opportunities linked to the games and other large public and private sector buying organisations. Registration is free.

North west accountant Dodd & Co’s annual farm profits survey shows the extent of dairy farming losses even before the grain price rises of this summer.

Fifty specialist dairy farms in Lancashire, Cumbria and Dumfries and Galloway with year-ends from February to April 2010 made a loss of 0.22p/litre after drawings and tax.

This is a stark contrast to 2009, when they had been running at a surplus of 3.11p/litre. The average milk price in the sample was 23.97p/litre, down from 26.61p/litre in 2009.

The survey also reveals that on Scottish farms in the sample, the sfp was worth 2.2p/litre more than on dairy farms south of the border. The survey includes further results for 50 livestock farms.

Carlisle-based H&H Group has reported a strong set of results for the six months to 31 December 2010.

Turnover was unchanged on the previous year at just over £5m and pre-tax profit for the six month period stood at £627,000- the Group’s second-highest figure at this stage of the year.

Turnover for its livestock auctions business, Harrison & Hetherington, was down slightly due to marginally lower prices and a reduction in sheep numbers, reflecting the background of nationally lower numbers of breeding sheep and cattle.

The Group declared an unchanged interim dividend of 6.5p per share.

Last October H&H Group reported a record £1.37m trading profit for the year to June 2010, up 40% on the previous year. Overall turnover was more than 5% higher at £9.5m.

If you pay money into a pension, you need to make the most of the annual pension allowance before it is cut dramatically next month, NFU Mutual has warned.

In the current tax year, individuals can pay up to £255,000 into a pension and qualify for tax relief, but from 6 April onwards this limit will be reduced to £50,000.

“Every year the government helps you boost your retirement savings by adding money to your pension fund in the form of tax relief when you make contributions. However, under the current rules, the old adage of ‘use it or lose it’ applies so it may be worthwhile taking a look at your annual pension contributions now before the end of the tax year,” pension specialist Jane Mulford said.

Robert Wiseman Dairies is to close its Okehampton dairy in Devon and its distribution depot at Cupar in Fife.

Production at the Devon site will end next month and could lead to 67 redundancies. RWD hopes some will find jobs at other sites, such as its upgraded dairy and distribution facility at Bridgwater, Somerset.

Closure of the Cupar depot will also take place in April, resulting in a further 67 possible redundancies. Distribution of milk from the site will transfer to depots in Whitburn and Aberdeen.

Shropshire-based Belton Cheese has agreed a new £1.5m deal to supply Tesco with three lines for its “Finest” cheese range.

The lines include Rinded Red Leicester, Rinded Double Gloucester and Cheshire and will all carry the Belton Farm sub-brand.

“Their [Belton’s] ability to produce consistent award winning cheeses, handmade on the farm, using locally sourced milk makes them a perfect and welcome addition to the Finest food family,” Tesco’s senior cheese buyer David Harman said.

Grain trader Wessex Grain has announced a £2.5m improvement of its grain storage facility in Somerset.

The project, due to be completed in time for this harvest, will increase storage capacity at the 50,000-tonne Henstridge site by another 23,000 tonnes and also upgrade its grain handling, control and monitoring systems.

It has been partly funded by the Rural Development Programme for England.

“Clearly this is a significant investment for Wessex Grain,” managing director Simon Wilcox said. “We are grateful for the European funding that we are receiving, and we have been supported in our application for this by both our farmers and customers, who can see the real benefits of increased, quality grain storage capacity.”

Oat supply and demand is set to remain tight for the remainder of this season with stocks forecast to fall to the lowest levels for several years across the EU, says HGCA.

The EU oat crop was down by 12% in 2010, while the UK crop fell by 8% and prices have risen.  The English winter oat area sown by December was down 19% at 67,000ha (165,557 acres), according to a Defra survey, with higher wheat and barley plantings taking area away from the crop. This is the smallest English winter oat area since December 2004 and the spring oat area is also expected to suffer competition from other cropping.

However the EU oat area on an early estimate from Strategie Grains will rise by 7% to 2.9m ha (7.16m acres), with much of the increase expected to come from lower fallow levels, especially in Finland and Sweden.