Recently in EU policy Category

Duties on certain cereals imported into the EU have been suspended in a bid to ease rising feed grain prices.

The suspension relates to existing tariff rate quotas for low and medium quality wheat and barley, worth €12/t and €16/t respectively (£10-13). These tariffs will be reduced to zero until at least the end of June 2011.

“I hope this proposal will reduce tensions on the European cereals market,” EU agriculture commissioner Dacian Ciolos said. “While prices remain high on world and EU markets we have an obligation to do what we can to help ease the situation until the end of the marketing year.”

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.

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 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.

Defra will have its budget cut by almost one-third, after chancellor George Osborne unveiled his spending review at lunchtime today.

The department faces cuts of about £240m a year over the next four years, reducing its overall budget by 29% to almost £1bn.

It’s still unclear how this will actually affect farmers and as with all these things, the devil will be in the detail that emerges over the next few days.

What we do know is that environmental schemes (namely ELS and HLS) and ‘green’ energy should escape relatively unscathed...

So the exchange rate that will be used to convert this year’s single payment from euros to sterling has been set.

The rate of €1 = £0.85995 wasn’t quite as good for UK farmers as last year’s bumper €1 = £0.91 and SFP cheques will be worth around 5% less as a result. But, timely weakening of the pound just before the rate was set means this year’s rate is still more favourable than those used in 2005 to 2008.

Indeed, the timing of sterling’s weakening was uncanny. After firming for much of the summer, the pound fell throughout last month on the back of dodgy economic forecasts, reaching its recent low-point almost exactly as the crucial 30 September deadline arrived.

It’s small consolation to farmers facing hefty increases in costs this winter, but every little helps. Now it’s just question of when the money arrives.

The European Commission has already said the UK won’t be one of the 10 member states that will get early delivery of single payments to help alleviate income pressures - ironically, partly due to the better income conditions afforded by the relative weakness of sterling.

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So farmers are feeling more optimistic. That, at least, is one of the observations in the latest State of the Countryside report from the Commission for Rural Communities.

I say one of the observations, because it is a mighty long report, running to over 200 pages, (including annexes), and covering a wide gamut of subjects, from rural housing and transport to recreation and community living.

But in the section dealing with farming and forestry, (pages 148 to 162), the report does indeed indicate a growing level of confidence.

Quoting from the Farmers’ Voice survey by ADAS, it shows that 39% of farmers are happy to continue farming compared with 26% in 2007, and 17% want to grow their businesses, compared with 11% in 2007.

There is also a growing willingness for the younger generation to want to take over the farming business in due course, with 28% saying they would compared with just 16% in 2005...

Remember the price spike of 2007 and 2008?

It does seem quite dim and distant, though a quick glance at the Farmers Weekly graphs confirms that wheat prices really did climb to £180/t and oilseed rape really was fetching £380/t.

Heady days! But what were the causes?

The perceived wisdom at the time pointed to a host of factors including supply shortfalls, low stocks, increasing demand for food, high oil prices, growing demand for biofuels, the strong US$, the activity of speculators and attempts by some governments to limit exports.

Of these, industry representatives and politicians were often quick to play down the role of biofuels and play up the role of speculators.

 Until the financial crisis came along and bankers stole their mantle, hedge fund managers really were the scapegoat of choice...

As predicted on this blog in May, the EU Commission is taking "a little and often" approach to the release of butter and skimmed milk powder from intervention, so as not to weaken the dairy markets.

Today (Thursday) has seen the first release of stocks, with the commission accepting bids for 11,551t of butter at prices between €3450/t and €3851/t. But it rejected bids for another 60,930t, and rejected all bids for SMP, because the prices were too low.

With some 76,00t of butter and 257,000t of SMP taken into intervention last year, there is still clearly a long way to go before stocks are cleared.

* See FWi Business for full story later

The EU commission is inviting offers to buy butter and skimmed milk powder out of intervention.

Currently there are some 76,000t of butter and 257,000t of powder in EU stores. First tenders have to be submitted by traders by 1 June, with a decision by the management committee on 3 June (two weeks today).

The EU insists it will fix the price and volume to be released "taking into account the market situation".

Given that commodity markets have started to recover and some of this benefit is finally filtering through to farmers, the hope must be that Brussels market managers act with great prudence.