November 2011 Archives

United Oilseeds says its turnover has rocketed by 47.1% in the past year on the back of higher commodity prices and membership growth, Nick Fone writes.

The company saw approximately £148m pass across its books this year, up from £50m just five years ago.

That’s reflected in profit too, which stood at £819,000 for the year-ended 30 June 2011, 6.4% more than last year. Good news for United Oilseeds’ trading members who will receive a bigger than usual payout based on that performance - last year that sum totalled £325,000.

The company estimates the area of oilseed rape planted this autumn is up by 8.3% on last year, taking the UK total to 763,000ha (1.89m acres). Its 2011 harvest survey shows rape yields averaged 3.99t/ha (1.61t/acre) this year.

The pressure may have come off some commodity prices recently, but food price inflation remains at a 20-year high, according to research from the University of Exeter Business School and Nottingham University.

They estimate the higher food costs will push the average cost of a Christmas dinner for six people to about £74, some £3.70 higher than last year.

The research says the drivers of food inflation are distinct from overall inflation and centre on high, volatile world agricultural commodity prices, rising oil prices and the low sterling exchange rate.

“Food price inflation in the UK is well above the OECD European average, meaning poor families in Britain are most dramatically impacted by increasing food costs because it accounts for a higher percentage of overall household spending.”

A scheme to attract new entrants into Scottish agricultural and rural businesses has been launched by Scottish Land & Estates, NFU Scotland, Forestry Commission Scotland and The Crown Estate.

The initiative aims to provide a broader range of assistance for people getting into the sector, other than traditional tenancies. Options under consideration include a mechanism to match specific skills of potential new entrants to opportunities that become available; a training package to develop land-based skills; and a system of ongoing support for new starts over their initial years in the sector.

There have been informal discussions with government about the initiative and formal proposals are expected shortly.

“I truly believe that there are opportunities in the industry and younger operators out there who are ready, willing and able to take advantage of them when they are presented,” Alan Laidlaw, The Crown Estate’s head of new business development said.

“We need to ensure that a positive future for food and farming is embraced and that land opportunities, in whatever form, are made available to the best business operators.”

Farmer-owned supply co-operative AtlasFram Group has announced its best ever results for the last financial year.

The Group’s financial reserves rose to a record £2.5m for the year to 30 June 2011 on turnover that was 21% higher at £168m.

All divisions recorded increased volume as its 1060 members bought more through the co-operative, although the livestock and energy supplies departments performed particularly well.

The formal alliance with ADM Direct also proved successful, giving AtlasFram’s grain marketing department a significant boost.

Richard Anscombe, chief executive said: “The UK is now just a small part of a truly global marketplace and our domestic agricultural sector is becoming less important to increasingly-large international suppliers and end-customers.

“To remain competitive, farmers will have to work together more closely through a strong, stable cooperative which purchases the inputs they require, achieves the best returns for their combinable crops and provides impartial advice to enable them to operate more profitably.”

Changes to VAT and business investment tax relief could do much to stimulate the rural economy, says Mike Harrison of accountant Saffery Champness.
 
On VAT, the Chancellor could use his autumn statement on 29 November to introduce a reduced rate for property works to boost maintenance and extension work in the building trade, he says. 

Tourism could also be encouraged through a reduced rate of VAT, encouraging more holidays at home and in the countryside to aid the rural economy.

Although larger companies will benefit from lower corporation tax rates from April 2012, there was nothing to help partnerships or sole traders cope with the reduction in capital allowances next spring, so the Chancellor could offer these businesses enhanced allowances to stimulate investment, suggests Mr Harrison.

Diversified businesses could also be helped if the tax rules were changed to allow losses in one business to be offset against the profits of another.

Mole Valley Renewables has joined forces with the renewable electricity supplier Good Energy.

The company has been chosen as the Feed-in Tariff licensee for Mole Valley’s Farmers Power Station, which pays members with installations of over 30kW for the electricity they produce.

The Farmers Power Station was created last year and is a “virtual power station” made up of individual renewable energy generators combining their power production to maximise the unit price for energy export. Its energy projects currently generate 1.5MW, with a further 3MW in orders and 14MW in the pipeline.

Rising costs are set to push the average cost of production for feed wheat up to £130/t for 2012, according to the latest forecast from Agro Business Consultants.

The November edition of its costing book shows that costs including rent and finance charge are up about £6/t on 2011, although with a predicted selling price of £140/t, feed wheat is still profitable without support.

Oilseed rape was also likely to give a decent margin. Costs were set to rise by £13/t to £320/t, but this was still £25 below the budgeted selling price.

But margins for feed winter barley were less promising as costs were predicted to total £153/t, over £20/t above the expected selling price.

There was also inflationary pressure in the livestock sector. For example, production costs for a year-round calving dairy herd were put at 25.6p/litre, up by just over a penny from the current year.

Go to www.abcbooks.co.uk to find out more about the book and order a copy.

In a bid to increase fresh milk consumption, Robert Wiseman Dairies has invested £2m in a joint venture with New Zealand dairy business A2 Corporation to launch a range of products next summer suitable for people with self-diagnosed intolerance of milk.

The range of “a2 Milk” products comes from cows selected to produce only the A2 beta-casein protein. The milk has been available for several years in Australia, where it is said to have improved symptoms among people with self-diagnosed intolerance of milk but are not medically diagnosed as being lactose intolerant.

“By introducing a2 Milk alongside our existing range of fresh milk products we have an exciting opportunity to bring people back to dairy and grow the market for fresh milk in Britain,” Billy Keane, managing director of Robert Wiseman Dairies said.

Gleadell Agriculture has announced it is to buy the specialist pea and bean seed company Dunns (Long Sutton) Ltd.

The company said it had reached “agreement in principle” to buy the holding company of Dunns, Tabmellow Ltd, subject to the necessary legal procedures and expected the deal to be completed within the next three months.

"The companies have traded together for over ten years and see clear benefits for Dunns from the support provided by Gleadell’s shareholders Toepfer International and Invivo,” a Gleadell statement said.

“In addition, Dunns’ expertise in both the seed and pulse sectors will provide good synergy alongside Gleadell’s international export pulse trading activities and growing seed business."

The Welsh sheep flock has increased by 5% to 8.6m over the past year, according to provisional results from the June 2011 Agricultural and Horticultural Survey for Wales.

A 10% increase in lamb numbers to 4.34m drove the increase, while the breeding ewe flock remained unchanged at around 4.1m.

There was a slight fall in the total number of cattle and calves to 1.12m, after a 1% rise in the dairy-bred females was more than offset by a 3% fall in non-dairy breeds.

The cropped area increased slightly, as more cereals were planted at the expense of oats, maize, bare fallow and other crops which all recorded slight falls in area.

Potato production in Great Britain is estimated at 6.053m tonnes from the 2011 crop. This is an increase of 3.5% on 2010, with average yields at 47.9t/ha, compared with 46.1t/ha last year.

The yield increase of 3.9% was on a slightly lower area of 126,328 ha, which is down by 0.4% on 2010, says the Potato Council.

Potatoes are the world’s sixth largest crop by volume, with more than 325m tonnes grown worldwide. Top producer is China with almost 69m tonnes, then India, which grows 34m tonnes. While consumers in Britain eat about 92kg of potatoes each a year, those in Belarus top the consumption league at almost 189kg a year.

Essex-based pre-cast concrete company Milbank has formed a partnership with the German silage clamp construction specialist Böck Silosysteme.

The deal has resulted in the formation of a new company, Bock UK, which offers a range of silage clap services, including design, manufacture, installation and maintenance, including coverings.

The company believed demand for silage clamps in the UK would be boosted by the demand from biogas plants using energy crops as the main feedstock. Böck installed the UK’s first silage clamp of its kind at Future Biogas in Norwich and three more have followed in partnership with Milbank.

“Although the Bock silo system (known in Germany as the traunsteiner silo system) is commonplace in Europe, it is only recently that the UK market has seen the benefits,” Sean Milbank, managing director of Milbank said.

Grants of between £2,500 and £25,000 are available to farmers, foresters and horticulturalists for investment in green projects and new machinery.

The funding comes from a £20m DEFRA initiative to help rural businesses improve profits and reduce their impact on the environment.

Projects under The Farming and Forestry Improvement Scheme will fund green schemes to save energy and reduce carbon emissions. Support is also available for cutting dependence on artificial fertilizers through better use of manures, for improving soil quality, better animal health and welfare, saving and recycling water and more efficient timber processing.
 
The grants will be allocated between now and December 2013 and will cover a maximum of half of the total cost of projects in uplands areas and a maximum of 40% of the total cost in non uplands areas.

It’s been a good year for farmer-owned agricultural suppliers ACT, which has announced record results.

The co-operative made a pre-tax profit of £2.4m on record sales turnover of £108m in the year ending 30 June 2011. It has allowed the company to pay out a £1.1m trading bonus to its 5000 farmer shareholders, the nineteenth year of doing so.

ACT managing director John Hamilton said the performance was driven by a 10% increase in fertiliser and feed volumes, with particularly strong growth in Scotland. There was also the “largest ever” annual sales of forage seeds.

“This demonstrates that farmer-owned co-operatives can trade competitively and deliver good service and good value,” he said.

Got a view on a college or uni where you can study agriculture or a related topic? If so, share it and you could win £200 - we're collecting reader opinions on the best educational establishments and courses.

FW’s Farmlife section this week looks at "10 of the Best" places to study these subjects. We want to hear whether you agree or disagree with the comments we’ve made and to gather opinion about the other establishments you think we should have included.

There are lots of quick and easy ways that current and past students, parents and staff can give opinions and contribute reviews. Find out more on p72 of this week's issue or at www.fwi.co.uk/studentspecial

Production costs for British pig producers increased by nine percent last year and were above the European average, according to BPEX.

Its annual InterPIG report found that the cash cost of production, excluding finance costs, was 125.5p/kg in 2010, 10p/kg higher than the previous year and 9p above the EU average. The increase was largely due to increased feed costs, which came on the back of the rise in grain prices.

But while costs were up, there was some good news in the report. Physical performance, such as litters/sow/year and mortality had improved and this trend looked to have continued into 2011, senior analyst Mark Topliff said.

“It highlights just how important it is for the industry to achieve two tonnes of pig meat per sow per year. The 2TS campaign was launched in May 2010 with the objective of closing the gap in competitiveness that this report highlights.”

Administrators have been appointed at MF Global UK Limited, a UK-based broker-dealer whose business includes commodity futures and options.

Richard Fleming, Richard Heis and Mike Pink of KPMG have been appointed as joint special administrators at the company, which is a wholly owned subsidiary of MF Global Europe Limited. This in turn is a subsidiary of US-based MF Global Holdings Limited and which filed for Chapter 11 bankruptcy protection on 31 October.

“There has been no indication to date that the issues flagged in the US regarding client’s monies not being properly separated have extended to the UK entity,” said a spokesperson for KPMG. “Our priority is to minimise the disruption to clients.” The business employs 725 people in the UK.

The EU’s sugar sector is seeing unprecedented volatility resulting from the combination of rising global sugar prices coupled with the consequences of the recent restructuring and downsizing of EU sugar production.

Further challenges lie ahead, says a Rabobank report. The current EU sugar regime officially remains in place until September 2015. Companies in the industry are likely to face a more open, competitive and possibly quota-free environment after this date, says the report.

New players could enter the market and while large and diversified processors will probably grow, smaller operators in areas where the competitiveness of beet is questionable relative to that of other crops will face a much less certain future.

The main variations in arable farm profitability arise from changes in crop yields and price.

A sensitivity analysis can help businesses identify the true and combined impact of these variations on profit, says HGCA. It can also help to identify target price levels for unsold crop.

The HGCA’s website offers a free sensitivity tool which can be used for any crop to check the impact of price, input cost and yield changes. Growers need to have their own crop area and yield information to hand to use it, plus up to date price information.        

What is land worth in your area? Details of sales completed between January and the end of June this year and agents’ opinions are included in the latest edition of Farmland Market. It also takes a look at what’s happening in land markets across eastern Europe, Argentina and the US.

The county by county listings of individual farm, land and woodland sales are the most comprehensive available. Farmland Market is published twice a year, in spring and autumn, by Farmers Weekly, in association with RICS.

An annual subscription costs £95 (£65 for RICS members). Contact Subscriptions Manager, Farmland Market, Reed Business Information, Rockwood House, Perrymount Road, Haywards Heath, West Sussex, RH16 3DH, tel 01444 445566.

Are you paying too much for your farm inputs? You can check what you're paying against the rates others are being charged by submitting the prices you pay to the NFU/Farmers Weekly Inputs Price Monitor at www.fwi.co.uk/nfu-IPM.

Results are published monthly and anonymously. The more contributors we have, the more reliable and useful the data.