Archive Article: 1997/12/13

13 December 1997

Growers may not have gained much Government reassurance at the Crops Conference in Cambridgeshire but speakers from the industry were resoundingly positive.

FEARS for the financial future of the arable sector in the face of a strong pound and low cereal prices were sidestepped by Lord Donoughue, the Minister for Farming and the Food Industry.

Before Lord Donoughue delivered his keynote speech in St Ives, conference chairman Tony Pexton highlighted falling farm incomes this year, the threat to exports from the UKs strengthening currency, and worries about the Governments changing priorities for food and agriculture.

However, the Minister was not deflected from his speech on Government attitudes to CAP reform, the environment and research.

He did pledge support for cereals exports into developing markets in China, Brazil, North Africa and Saudi Arabia. But, in response to a question from Norfolk farmer Anthony Gurney, he declared there was nothing to be done immediately about the strength of sterling which he judged to be no bad thing. "In time, the currency will adjust," he suggested.

Lord Donoughue also reminded growers that protests of the type which had seen Irish beef dumped in the sea would not serve them well. Agriculture represented just 1.8% of the population and would do better to link with the food industry as a whole to take advantage of its strength as 10% of the UK economy.

His vision for a modern, efficient European agricultural policy induced a gradual reduction in aids which had to be fully decoupled from production. "There is no justification for permanent compensation in respect of a one-off cut," he added. "Obligatory set-aside should be abolished – production constraints are not relevant in a free market."

Growers were further reminded of the Governments commitment to sustainable development. "For farming this means ensuring the right balance is struck between the need to produce sufficient high amounts of food at a competitive price and the need to protect the environment."


IN a grain market that can readily lose £30/t, a premium of £3 to buy insurance in the form of a futures option is a worthwhile cost, argued Jon Duffy of grain traders and shippers Gleadell Banks.

The option premium will vary according to the volatility of the market and how far ahead the grower wants an option to purchase. Mr Duffy reminded growers it was their responsibility to decide when it was worth exercising the option and locking in at a higher guaranteed price in a rising market.

He classed the majority of cereal growers as either "artists" or "scientists" when it came to selling grain. Artists relied on gut feel and instinct and often had to struggle for a living, while scientists studied information carefully before acting and usually had a comfortable life.

Too many growers followed the artistic approach last year and let prices fall away from them. But those who read the market scientifically saw a record UK crop and sterling on the rise. These growers started selling early and kept on selling.

An alternative approach favoured by Mr Duffy was the merchant-administered grain pool, but only when growers had sufficient confidence in their merchant. "It cant be wrong to give a proportion of your crop to the trade, but make sure that trust is there," he said.

Whichever method of grain marketing was chosen, the grower should make sure that whoever takes on the role is "hungry".

"Somebody who has only committed grain to sell might not fight as hard as someone who is also trying to trade."

As well as protecting their market by hedging or options, he urged growers to spread their bets by growing a range of varieties – provided they were kept separately.


TO BE in the game, you have to abide by the rules. Thats how cereal producer Richard Beldam sees the Assured Combinable Crops (ACC) scheme.

Financially, there may be no advantage to membership but it could prevent crops in the future from being subject to discount or a no-sale, he told the conference.

Presenting ACC as a brand image would, he suggested, gain the confidence of consumers and make it less attractive for supermarket or other major buyers to switch abroad whenever there was a price advantage for non-assured supplies of cereals.

"Dont regard ACC as a problem but as an opportunity and a challenge," he urged. A challenge, moreover, that may well already be met on many farms complying properly with current requirements for record keeping, hygiene and pesticide safety.

However, ACC could operate only with independent external verification; a voluntary scheme of checking would quickly fall into disrepute.

Mr Beldam agreed growers would have to take a more disciplined approach, particularly to record keeping which would be essential for demonstrating action taken and provide an authoritative background to the reasons for that action. "A farm diary will be more than adequate provided it contains the right information."

However, field information might include label numbers, seed cleaning and treatment data, application records for fertiliser and pesticides, and soil nutrient status.

Storage will be particularly important. Recording must take into account cleaning and hygiene, weekly condition reports, load origins by field, and storage applications. All equipment should be maintained and calibrated properly, and staff hold any appropriate certificates.

MAFF codes on soil, water and air should be followed, and ACC members will have to demonstrate they have considered the environmental impact of their farming activities. Mr Beldam suggested many growers already practise their own versions of integrated farming which could help maintain ACC status.

In most cases involving professional growers, the ACC requirements would be met because most of them were already legal necessity. He felt most growers with modern stores would require only to replace inexpensive items such as light fittings or improve their vermin control.


ANOTHER £10/t off wheat production costs? David Stormonth of Brown Butlin thinks £55/t could be a target for most of the industry.

"If todays standard is around £65/t, then it should be reasonable for growers to aim for and easily achieve £60/t as a start," he said.

Variable costs (seed, fertiliser and chemicals) have stayed fairly constant at £30/t. Operational costs (cultivations, drilling, spraying, spreading and harvesting) come to about £35/t at present.

Growers had to be sure that any reduction in inputs did not reduce yield as well as costs. Careful consideration of seed inputs might be worthwhile for some but potential savings are small. A 10% saving in seed costs could increase the gross margin by just 0.7%.

Likewise, saving 10% on fertilisers was worth just 1.4% on the gross margin, assuming no yield reduction. And just 1.8% is added to the gross margin by trimming 10% off crop protection costs.

"Overall, the gains from cost saving with the inputs that actually make and protect crops are small and could put the process that creates yield at risk," said Dr Stormonth.


NEW technology and price movement will be the bulwark for oilseeds production which is threatened with a major support reduction under Agenda 2000 proposals.

If accepted as it stands, Agenda 2000 will knock between £185/ha and £249/ha off area payments in 2000 (see table). Oilseeds specialist Kerr Walker highlighted how growers could overcome this assault on their profitability.

Price would be determined by the world market which he pointed out was elastic in its demand for oilseed and oilseed products. Admittedly, any major contraction in EU production would likely have a fairly strong price effect on the world price. Any increase would have to be considerable to balance out the loss in area aid.

For growers, however, the maintenance of a competitive position for oilseed rape in the rotation might be determined more by progress with hybrids and genetically-modified varieties.

Hybrids offer a higher yield potential than conventional types, said Dr Walker. Commercially, varietal association hybrids such as Synergy and the spring rapes Concept and Triolo appeared to perform well. Self-pollinating restored hybrids, however, offered the same benefits of increased vigour and yield without concerns of uncertain pollination.

These included the winter types Pronto and Artus and the new Hyola spring rapes and Superol. At current prices, growing hybrids made clear economic sense to Dr Walker.

"With hybrid seed, albeit at a low seed rate, costing £59/ha and conventional seed costing £39/ha, then the additional cost would be met by a 4% increase in yield (assuming an average winter crop of 3.5t/ha sold at £150/t)," he said.

Official approval is still awaited for GMO varieties but he suggested there were clear attractions in adopting herbicide-tolerant varieties which did not show phytotoxic reactions, even to multiple doses of herbicides. Flexibility in application timing may be useful to growers who might otherwise have to apply other herbicides at busy times or only when the crop was at certain critical stages.

Potential drawbacks in herbicide-resistant volunteers or cross-pollination with weeds so far appear to have only slight risk. Of greater concern was the public perception of genetic modification and possible consumer resistance to oilseed products.

Growers would also need to consider their strategic approach to herbicide-tolerant crops of more than one type. Where oilseed rape or sugar beet with a tolerance were to be used in the rotation, they could choose to use the same herbicide resistance for both crops or choose one tolerance for one crop and another for the second crop.

As yet, there was insufficient evidence to suggest which approach was the more attractive to the grower, said Dr Walker.


CONDITION stable but could do better – much better, suggested Jonathan Hough, French-based farmer and consultant.

The patient? French agriculture which has been painfully adjusting to the MacSharry reforms of 1992 without the benefit of a strong green currency to shield the worst effects.

Coupled with the bureaucracy and complexities of French law, farming in France is far from simple, but even Mr Hough had to concede the professional farmers had survived for some years at the £80/t barrier and would still be in business for some time to come.

While it is difficult to adapt cropping to suit lower grain prices, he admitted that French growers had several strings to their wheat bow which were not available to British growers. South of Paris it is possible to grow high quality grain such as a durum or improving wheat – high protein and high Hagberg hard types for mixing into grists.

Durum wheat is fetching around £130/t (FF1,300/t) this year for yields of 4t to 6t/ha (1.6-2.5t/acre). A small niche market at £120/t exists for improving wheats which yield 5t to 7t/ha (1.6-2.8t/acre).

Mr Hough said there were never enough processing contracts to go round for potatoes which do not really form part of the daily French diet. A change in buying habits has also stimulated a decline in vining crops, such as peas and beans for canning and freezing.

Oilseed rape gross margin in his area south west of Paris comes to about £645/ha (FF6,454/ha) but it can be difficult to cover costs on industrial rape grown on set-aside where the gross margin is nearer £380/ha ((FF3,824/ha).

Over the past five years, Mr Hough estimated farm income, after rent and finance, had improved to FF964/ha (£96/ha) from FF807/ha in 1992. Rent for a 100 to 180ha farm growing combinable crops, sugar beet and some vining crops stayed at FF950/ha but French growers have reduced their finance charges substantially.

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