Success – but not victory yet
Yes, the Intervention Board is making some welcome changes on cereal intervention. But it is still nowhere near enough. Debbie Beaton reports on our campaign for a fair deal.
WE asked the Intervention Board to eliminate the 500t lot size for wheat – and it has. The minimum lot size is now 100t – the same as barley. We asked for more in-situ storage to avoid nonsensical lorry journeys up and down the country, and it has responded by increasing the payment for in-situ storage by 10.5%.
It is a move in the right direction and thanks must go to the many hundreds of Crops readers, and the NFU, who supported the Crops campaign and lobbied the ministry for a fair deal on UK intervention.
But the changes that the Intervention Board has made so far are nothing if the charges for testing intervention grain in this country are not overhauled, say some traders. David Balderson, chief executive at Viking Grain, is one such voice: "It is time the system was busted wide open."
The problem at the moment is that the intervention board has contracted only one laboratory – CCFRA in Chipping Campden – to do all the testing on grain destined for intervention. The test fees are £404.50 plus VAT for each 500t offer. The charge will be the same for offers of the new minimum lot size of 100t. And if five offers of 100t each are put forward, the test fees will be five times £404.50 plus VAT.
The recent move to lowering the minimum tonnage is therefore a nonsense unless the test fees are set at more reasonable, and commercial, levels, says Mr Balderson. Thats an opinion disputed by the Intervention Boards Alan Butler: "Our procurement department scrutinises the test fees from Campden very carefully; we dont just accept the figure without satisfying ourselves that it is justified."
Investment in the testing procedures is cited as another reason for the current fees. Yet they are several times higher than anywhere else in Europe. So are UK growers being ripped off, or do foreign governments subsidise intervention?
Not an easy one to answer, acknowledges Dalgetys Gary Hutch-ings: "I am not surprised by the test charges. The zeleny and machinability tests require a heavy investment. Just simple tests on moisture cost about £18 a sample – so it can all add up when you take into account the many criteria required."
Mr Balderson, however, reckons that the commercial rate for such tests is nearer £10. So if zeleny, protein, moisture, bushel weight and hagberg were tested the total would only be £50.
This does exclude the machinability test which is really at the heart of the contention. It is a dough test which many regard as a lottery with UK grain. "Machinability is a test of appeal and needs to be implemented only when the zeleny score is below 30," points out Mr Balderson. "We do not offer wheat into intervention unless we are sure it wont need a machineability test."
CCFRA is the only laboratory approved by the board to test machinability. But since this test is only needed in a handful of cases surely it would be sensible to allow other laboratories to test the other quality criteria? After all, it would ease delays and build healthy competition, points out the NFUs Richard Butler.
The board states: "We cannot implement that without making sure of proper sampling standards; it must be a system that cannot be challenged. However, we are examining the whole issue of charging and investigating the opportunity to open up the tests to more UK, and also overseas, laboratories."
A decision is unlikely before the end of this month however.
More immediate is the boost to payments for in-situ storage from 1.9p/t per day to 2.1p/t per day. This will come into effect for the new trading year of 1 November. Although welcome, the NFU believes this is still nowhere near commercial levels and is unlikely to make it attractive to many co-ops.
Richard Butler points out that in France and Germany, 60 and 80% respectively of intervention grain is stored in situ, compared with 0% here. "Apart from the logistics, the situation here is a lost opportunity for the UK to invest in better grain storing facilities – as Germany and France have done."
In France and Germany the commitment to in-situ storage has led to millions being invested on ultra high-tech facilities and a guarantee of so many days use: "Not only has investment poured into the infrastructure of those countries, but lorries are kept off the roads," he adds.
"We need a proper review of what is happening in the rest of Europe and pick out the best parts for here – and that is what we believe the Intervention Board is promising," points out Richard Butler.
The Intervention Boards move to Newcastle upon Tyne is also causing concern. Not one member of staff from its Reading headquarters will be going to Newcastle when it moves there this month.
The NFU argues that even if the paperwork is done properly, practical and experienced people – who are aware of logistics of moving grain from one end of the country to the other – are needed. "The NFU will be meeting the new team at Newcastle in the near future and offering practical help through providing on-farm sites to assist training," says Richard Butler.
The danger of lack of experience is not just hype. Mr Balderson confirms that his co-op members had grain being constantly rejected on moisture content grounds. An investigation revealed that the spears being used to the test the grain were far too short, and were only sampling grain from the top of the heap, which was wet.
In two years time intervention prices will fall by 15% which will put more pressure on domestic markets, says Mr Balderson: "Unless staff have the experience or training needed to run the board in Newcastle, there is a very real danger of UK wheat not being allowed this last gasp market and worse still being bought at a discount, exported and going back into intervention on the Continent. "
• Crops will continue to campaign on your behalf for a better UK deal on intervention with an insight on the French system next issue.