April 2011 Archives

Associated British Foods, the parent company of British Sugar and Frontier, has recorded further growth in revenue and profits, despite setbacks from a disastrous UK beet campaign.

Interim results for the 24 weeks ended 5 March 2011 show pre-tax profits increased 7% to £353m, on group revenue up 9% to £5.2bn.

Higher world sugar prices benefited ABF’s sugar operations, particularly in China, while its Primark business also recorded strong revenue growth.

But the group confirmed that 14% of the 2010/11 beet crop had been unprocessable, resulting in a net profit reduction of some £20m in the full year. “Most of the increased processing costs together with the higher cost of third party purchases will be borne in the second half and will only be partly offset by increased prices,” it said.

Operating profit from its Agriculture business, which includes Frontier and KW Trident, was 50% above last year at £18m, on revenue 17% higher at £507m.

The recent rush by solar power developers to find suitable sites for their systems has seen some attractive deals being offered. But one company has gone a step further in trying to attract farmers with suitable sites.

EOS Energy is offering to pay the tuition fees for farmers’ children going through agricultural college in return for renting a site for solar panels on the farm. It’s an interesting ploy to get new business, but does rely on farmers having a child of that age, who is interested in going to ag college. I wonder if they’ll chip in something towards the beer money too?

Rising land prices mean that landowners who get divorced could face a hefty payout and be forced into significant debt, one law firm has warned.

Claire Lawson at Manchester-based Pannone said a double-digit rise in the price of commercial farmland in some parts of the UK last year had prompted fears that it could form a greater percentage of assets being fought over by divorcing couples, especially as other items had dropped in value.

“We have had a number of farmers and their spouses approaching us for advice in recent months. Some have explicitly mentioned the increase in land prices and wondered what effect it may have on a settlement and their business.”

Because money is often tied up in the land and farming business, farmers may have to borrow heavily in order to fund any large divorce settlement, she said.

Good news if you like facts and figures about the red meat industry - EBLEX’s weekly market reports are now available free through its website.

Previously the UK Market Survey and EU Market Survey had only been available by paid subscription to beef, sheep and pig industry, levy payers.

EBLEX says that making the publications more accessible to producers, processors and retailers alike is part of ongoing work to add value to the beef and sheep industry and ensure up-to-date information is available to help make business decisions.

Go to www.eblex.org.uk/markets/ and click on UK & EU Market Surveys to request a copy.

Farmers in New Zealand are more confident about their businesses than for several years, according to a Rabobank survey, with sheep and beef producer confidence at a 10 year high.

The latest survey, taken late last month, shows that slightly more than half of New Zealand farmers expect the agricultural economy to improve over the next 12 months, significantly up from 29% with that view just three months earlier.

Higher commodity prices and improving global economies are the reasons behind the change of sentiment, with record high lamb prices, low numbers and improved beef prices too.

More than a third were expecting to invest more in their farms, while 86% expected the price of their land to stay the same or increase over the coming 12 months. The survey interviews a panel of about 450 farmers each quarter.

United Oilseeds is to make its fifth consecutive profit share payment to farmer members, following another strong set of results.

Some £320,000 will be paid out across the co-op’s 3200 members, taking the total returned over the last five years to £1.59m.

During the financial year ending 30 June 2010, United Oilseeds Marketing made a pre-tax profit of £770,000 from an annual turnover of £100.8m. Results were boosted by rising oilseed rape prices and continued growth in trading membership, managing director, Chris Baldwin said.

As the debate about large-scale farming rumbles on, it was interesting to read an article about concentration of the US pig sector in the latest AHDB market survey.

It says the pig sector there is becoming dominated by large-scale producers, the biggest of which, Smithfield Foods, has a sow herd of 880,000 sows - about double that of the entire UK herd. The top eight producers all hold more than 100,000 sows.

The clamour for economies of scale is a reflection of the difficulties they’ve been having with pig profitability caused by high feed costs - something UK producers are all too familiar with. Just goes to show, even if we aren’t prepared to go down the large-scale farming route, others certainly are.

We may be in a time of rising costs and cash-strapped consumers, but that hasn’t stopped Tesco from posting profits of almost £4bn.

Preliminary results for 2010/11 show group sales were up 8.1% to £67.6bn, while underlying profit before tax rose 12% to £3.8bn. Its UK sales were up 5.5% to £44.6m, while UK trading profit totalled £2.5bn.

All that in the face of “challenging conditions”. With little immediate economic improvement on the horizon, the supermarket said it remained focussed on gaining customer loyalty through lower prices and promotions. Good news for shoppers, but yet again, farmers and growers will hope they aren’t the ones who end up paying the price.

Looks like anyone planning to buy some farmland will have to dig a little deeper into their pockets this year.

Knight Frank says English values rose 3% in the first three months of 2011 to a record high of £5991/acre. That’s 11% higher than a year ago.

Exact figures probably need to be taken with a pinch of salt as they are only based on land sold by one agent in what has been a pretty quiet year so far, but the upward trend is true enough.

With improved prices in many sectors, especially arable, demand from farming buyers and investors looking for a “safe haven” is strong, yet supply remains limited. An interest rate rise could see more land coming onto the market, but there is little sign of that just yet.

Helius Energy has secured funding for its £60.5m biomass project on Speyside in Scotland.

The 7.2MW Combined Heat and Power plant is a joint development with The Combination of Rothes Distillers. It will be the first such project to use both distillery co-products and woodchip from sustainable sources to generate enough energy for 9000 homes.

Steam from the process will also be used to evaporate liquid residues (pot ale) into Pot Ale Syrup, a concentrated organic fertiliser for local farmers.

Moray Council granted planning permission for the site in 2009 and construction is now due to start within 12 weeks. The CHP plant is scheduled to be commissioned during Q3 2012 and fully operational during the first half of 2013.

UK biodiesel consumption fell by a third (34%) in the first quarter of 2011, according to HM Customs figures.

Some 147,404t of biodiesel was consumed between January and March, down from 223,745t during the same period last year

HGCA said the fall was due to high vegetable oil prices putting pressure on producer margins and greater availability of ethanol, which had displaced biodiesel consumption - UK biofuel inclusion targets for transport fuel are based on total biofuel inclusion and do not require a specified type.

Figures suggest increased UK bioethanol capacity meant the proportion of imported fuel ethanol fell to 72% during April to October 2010, down from 86% (391m litres) in the year to April 2010.

Milk Link has started work on the first phase of a £4m upgrade at the Cornish Country Larder Trevarrian Creamery in north Cornwall.

The co-op acquired the speciality soft cheese producer in January as part of a drive to strengthen its British cheese offering.

The upgrade will increase production and maturation capacity at the creamery and is expected to be complete by this autumn.

Farmers employing staff have been urged to watch out for PAYE changes coming into effect this spring, or face unwelcome fines.

From April, employers with fewer than 50 staff must file their starter and leaver forms (P45s, P46s and related pension information) online to HM Revenue & Customs, otherwise penalties will apply.

Also, HMRC will start charging penalties for employers who submit their Employer Annual Return to HMRC after the 19 May deadline. Until now, concessions gave employers extra time before charging a penalty.

Almost all farmers and landowners could be affected by the changes, but many with poor internet access would be disadvantaged by the push to online forms, said Andrew Arnott from Saffery Champness.

The fall in annual inflation to 4% last month has surprised many financial gurus, but the most surprising thing from a farming viewpoint was that lower food and drink prices were the cause.

In fact, the Office for National Statistics said the 1.4% decline was the “largest ever” monthly fall in food and non-alcoholic beverages prices, with the most significant drops in the fruit and bread & cereals categories, down 4.7% and 2.6% respectively.

Coming at a time of generally firmer commodity prices, especially for wheat, the ONS said supermarket discounting was largely responsible for keeping a lid on shop prices.

That may be good news for shoppers, but it highlights the growing disconnect between what happens at the farmgate versus the tills. Times may be tough, but I dearly hope farmers aren’t left to pick up the bill for this supermarket discounting.

The UK has just sent its first shipment of UK milling wheat to Turkey, representing the latest in a number of unusual export destinations this season.

Gleadell loaded the MV Catalina (pictured below) with 7,200t of ukp milling wheat at its Immingham facility on the Humber estuary.

“This shipment to Turkey is a pointer to the future and shows that there are markets out there that we can find if the quality and price is right,” said Marc Rogerson, Gleadell trading manager.

Other unusual markets UK wheat has found this season have included Algeria, Tunisia, Morocco and Mauritania.

“With global production and quality becoming increasingly unpredictable due to climatic and political factors, overseas customers are exploring non-traditional suppliers for their wholegrain requirements,” added HGCA exports manager Sarah Mann.

“It is worth growers considering growing quality wheat for the export market, suitable varieties are easily identifiable by the uks and ukp logos on the HGCA Recommended List.”

Plans for a new pig processing plant in Scotland were hinted at during the annual meeting of marketing co-op, Scottish Pig Producers, writes Eddie Gillanders. This could cut haulage costs for producers currently sending pigs to England for slaughter.

The UK’s largest pork producer, Tulip, owned by the Danish Crown Group, is believed to be in negotiation with Paisley meat wholesaler, A P Jess, to lease a moth-balled abattoir at Brechin, Angus to process up to 2500 pigs a week. However neither party has confirmed that a deal is in the offing.

“A new specialist pig plant would enable all pigs produced in Scotland to be slaughtered in Scotland and would have welfare advantages as well as reducing haulage costs,” said SPP managing director Gordon McKen.

SPP handles the marketing of 9000 pigs a week in Scotland and Northern Ireland. Most are processed at Vion’s Broxburn plant for Asda but the plant also recently started contract slaughtering more than 1000 pigs a week for Morrisons.

Agricultural buying group Anglia Farmers has taken on the business of Eastern Machinery Ring, forming a new business group called AF Land Services.

The merger of the machinery ring, subject to shareholder approval, will allow Anglia Farmers to expand its contracting, machinery hire and labour-only services for members.

Anglia Farmers has been providing the administrative function for EMR and its predecessors for a number of years.

All EMR staff have been retained as Anglia Farmers employees.

Members of Mole Valley Farmers have shared in a £1.06m rebate following the cooperative’s strong financial results last year.

A number of events were held at branches across the southwest where shareholders collected vouchers and were able to take advantage of special offers on purchases.

It is the fourth year MVF has delivered a rebate to its members and a total of £2.5m has now been given back since the scheme’s launch.

We’re all very aware of how soaring feed costs have squeezed livestock margins, but this graphic from BPEX clearly shows the tough situation for the pig sector.

It suggests the gap between average prices and cost of production means producers are losing over £20 per pig.

There’s been a bit of an improvement in prices recently, but that’ll need to continue for a long while yet if pig producers are going to overcome the dramatic rises in costs - especially as most pundits predict the bullish grain market is set to continue.

Robert Wiseman Dairies says increased sales volumes, brand growth and strong cream prices should help keep profits “in line with expectations” this year.

The company’s financial year ends tomorrow (2 April) and a pre-close trading report was upbeat about performance, despite intense market competition and higher costs.

Sales volumes had increased due to extra volumes to Tesco last December, while its “Black and White” range of fresh milk products also did well in the convenience sector - Nielsen research suggested it was Britain’s 36th biggest brand last year, up 10 places from 2009.

Wiseman also recently announced an increase in the volume supplied to The Co-operative Group, and from August it will supply own-brand milk to around 4,000 Co-op stores from a group of dedicated farmers.

Completion of work at the Bridgwater dairy last autumn increased its capacity to 500m litres, while sites at Okehampton, Devon and Cupar, Fife, will close this month.

Wiseman’s preliminary results for the year to 2 April will be announced on 17 May 2011.