12 December 1998

UPBEAT ON TAXING ISSUES…

Confidence in the future of arable farming was the prime theme underlying both Crops Conferences in England and in Scotland.

DANISH DILEMMA – INPUT TAXES

ZERO tolerance is the nightmare scenario that could be sprung on growers if the UK follows the Danish lead on reducing potential groundwater pollution from pesticides and nitrogen fertilisers.

Danish farm adviser Jakob Kjaersgaard, who spoke in both Scotland and England, listed the commonly-used herbicides and fungicides – Butisan, Benazalox, Reglone, Alto and Ronilan among them – which Danish producers cant use.

IPU is expected to join that list shortly because the Danish approach is one of no risk at all to ground water, or the product must be banned.

Using the Danish model, a typical UK cereal grower would be faced with a huge change in pesticide use, said Mr Kjaersgaard. The latest Danish action plan has a spray target equivalent to 1.35 full dose applications. The typical East Anglian programme is currently around seven full dose applications. In addition, Danish growers have 2m crop-free zones and 10-30m buffer zones for pesticides alongside rivers and streams.

From this year, the Danish grower pays 56% on insecticides and 33% on other agrochemicals.

Mr Kjaersgaard warned that trials work showed it was possible to cut back on chemical and other inputs, including seed rates, while maintaining gross margin, but very much at the expense of any safety margin for growers.

Slurry and other liquid manures can only be applied from 1 February to harvest, except for an extension to 1 October from winter rape and grassland. No applications are allowed from 1 October to 1 February. Solid manure can be applied from harvest to 20 October on fields which will have a crop the following winter, and after 20 October to bare soils.

BRUSSELS BRIEFING

LINSEED and proteins will be the losers and wheat and oilseed rape the winners from Agenda 2000 – should current area aid proposals go through.

Reform of the CAP by 2000 is inevitable for a number of reasons – EU expansion, world trade negotiations, the US Farm Bill, pressure on the CAP budget and public opinion, said Francis Mordaunt, of farm business consultants Andersons.

Changes will increase the value of cereals aid in 2000 by about 14% and oilseed rape by about 23% over the 1999 levels. Gross margins for cereals will go up by 5-6%, and for oilseed rape by 7%, although linseed will lose about 35% in gross margin and peas and beans about 9%.

He warned that the change of government in Germany could mean their farm minister, who will be EU Agriculture Council president from 1 January 1999, will be particularly supportive of cross-compliance and payment ceilings.

As proposed, the ceilings will hit English farms at 256ha (630 acres), 267ha (660 acres) in Scotland non-less favoured area, and 293ha (724 acres) in Wales non-LFA.

BANKERS DRAFT

THE worst year for British farming in the present agricultural cycle is coming to an end, and the next two years can only be better for farm incomes, said John Page of Barclays Bank.

"We see some recovery in 1999 and 2000 brought about by the fall in the value of sterling against the euro," insisted Mr Page.

Barclays has predicted a 12% rise in farm incomes during 1999 and a further 24% to £2,450m in 2000. "While these rises will still be very modest compared with the big falls between 1996 and 1998, some individual farms will no doubt do better than this, others not so well. Taken overall we see British farming as a whole pulling through the present recession ready to take on whatever challenges the next decade presents."

The advent of the euro on January 1 will present UK arable farmers with an opportunity to increase their profits, suggested Mr Page. By taking payment for goods in euros, spending that money on goods at euro prices, and borrowing at the 3.5% euro interest rate, farms can gain an advantage without exchange costs.

"We have calculated that a 1,000-acre arable farm growing combinable crops could increase its profit after finance costs and drawings from £33,150 to £52,340 by moving about a third of its business from sterling into euros. More intensive arable farms could well save more."

NEW TOOLS, RULES?

BY SHOWING they can follow voluntary schemes to safeguard the environment from pollution by pesticides or fertilisers, growers will make it difficult for the Government to impose unfair or unwanted restrictions on input use.

ADAS national fungicides specialist Bill Clark said that even just doing simple things – flushing out spray tanks or washing down sprayers – properly to avoid point source pollution would help avoid a Danish-style clampdown. "I am sure that if you dont make voluntary systems work then legislation will come down on you like a ton of bricks," he warned.

Recent trials on a two-spray strobilurin fungicide programme costing around £65/ha gave significant yield increases. The strobilurins were instrumental in producing higher yields than even the best of the latest generation triazoles could show.

Best profitability was coming from using full rate strobilurin doses rather than trying to cut back on application levels.

MAKING THAT SALE

STERLING cant take all the blame for difficulties in the UK grain market, said Dalgety Groups Gary Hutchings.

Competitiveness is the key factor to cereal export success and the UK simply cant sell grain more expensively than the French. However, Mr Hutchings was also in buoyant mood and predicted a recovery in the world feed wheat price to around $140-150/t next year. "We are well placed in the UK to compete at world prices," he insisted.

This did not mean that world markets would return to stability. For instance, the La Nina weather phenomenon was already said to be on its way. In circumstances of potential market turmoil, growers had to look at risk management and consider partnerships too for marketing their crops.

He added his voice to calls for the UK arable farming industry to demonstrate it could be responsible so that unwelcome legislation can be avoided.

FENTONS FUTURE

HOW many arable farmers can say they never borrow and would not even consider paying over the odds for the field over the hedge?

Humberside farm manager John Fenton can. And just to underline the tightness of his management of 875ha (2,150 acres), he revealed his average growing costs for 10.2t/ha winter wheat crops in the four harvest years from 1994-97 were £62.16/t.

Because he knows exactly how his costs break down, Mr Fenton, who has budgeted at world market prices since 1986, said he could trim back still further without hitting yields. This could be done by greater use of soil nutrient testing to get fertiliser applications more accurate, particularly after break crops, by cutting P & K, by group buying of pesticides or importing direct from abroad.

On his heavy land, operating costs for establishment, spraying fertilising and harvesting could be almost halved in 2000 from £302/ha using his current system to £155/ha using a system of broadcast seeding from the back of the combine.

THIRSTY CHINA PUTS SHINE ON EXPORTS

MALTING BARLEY MARKETING TO 2005

NEW parts of the world are learning how to party and UK malting barley exports could well be one of the beneficiaries.

Although the prospects are limited for growth in beer production in western Europe, where the beer drinking habit is strongest, the likes of China has "massive potential" for increasing consumption from the current 20 pints per head of population, said John Calder, of Matrix Trading.

Although a global financial crisis could have an impact, malt demand is currently estimated to increase by 300,000t/year – worth an extra 400,000t of malting barley every year. Mr Calder, who is a director of IM Cowe and helped set up the Leith malting barley export facility in Scotland, said Europe was best placed to capitalise on this increase in demand.

While Australia and Canada have been the main suppliers of malting barley to China in recent years, the yield and quality of their supplies is prone to wild fluctuations because of the extremes of weather affecting either country. With normal harvest and growing conditions, Scotland has the potential to produce an exportable surplus of up to 250,000t of malting barley.

NEW CHEMISTRY FOR HOW LONG

THE jury is still out on the durability of the extra effects over disease control produced by the new strobilurin chemistry, suggested Huw Phillips, of Scottish Agronomy.

The strobilurins, azoxystrobin (Amistar) and kresoxim-methyl (Landmark) have shown benefits in barley but their clear-cut advantage is in winter wheat, he said. However, much has also been made of the green leaf retention and golden ear characteristics resulting from the new chemistry.

"It will be interesting to note whether this effect is durable or merely the same characteristics observed when MBC and triadimefon programmes were first introduced to cereals," said Mr Phillips. "History would suggest that these more spectacular visual effects may disappear over a relatively short period of time as leaf surface saprophytes adjust to the new chemistry."

MORE SCOTTISH SEED?

THE BARGAIN made between seed potato grower and ware grower needs to be built on regular communication and an understanding of the role of both sides in trading and making the best use of seed stocks.

David Hudson, technical director of Sutton Bridge Ltd, said ware growers had a wish list for the seed they buy but their suppliers could also expect care to be applied to delivered seed.

Ware growers would like their seed producer to plant late and lift early on lighter soils in the kinder climatic areas of Scotland; handle potatoes gently; force ventilate and refrigerate stores to keep disease and sprouting under control; and to make available field and storage records. Seed growers should also have a quality control system to identify and act on problems before seed is despatched, and samples of any uncomfortable lots should be made available in advance.

In return, Scottish seed growers expected their delivered seed to be stored and handled carefully right up to planting. They could also expect a more realistic attitude to price in relation to seed quality, and a written specification which included all the ware growers expectations. Ample notice of changes in variety and technical changes should be given.

THE REAL WORLD

PARTNERSHIP, co-operation and opportunity mark out the way ahead for East Lothian grower James Logan.

That is taking the chance to expand your businesses, working more closely with processors to understand their requirements, and combining with other farmers to gain both market strength and reduce costs through sharing machinery or contract farming agreements.

Farm sizes will be larger in future and fewer people will be involved in agriculture but Mr Logan, who farms in a family partnership, said opportunities had to be taken. Last year he was one of 13 potato growers to set up a co-op with a marketing agent who employs an agronomist to advise on growing a total of 152ha (375 acres) of Lady Rosetta for processing.

More recently an agronomy group started with five friends has led to the formation of a farming company, Law Farmers, to market the groups farming expertise and taken land on contract farming agreements or similar arrangements. For their existing combined land holding of 1,280ha (3,200 acres) they had 27 tractors and six combines as well as other duplicated machinery and staff so expansion to make better use of these resources was the best option.