Scots suckler quota soars

30 July 1999




Cross-Channel signs lift wheat

By Robert Harris

SIGNS of a better quality wheat harvest across the Channel coupled with a weaker £ helped to raise UK prices this week.

Wheat values off the combine rose about £2/t to about £72/t ex-farm near ports. Currency movements, which saw sterling lose 3% against the k in the past few days, also helped oilseed rape values edge up to average £102/t, but that is not enough to tempt farmers to sell.

French combines have all but cleared southern wheats, and about a quarter has been cut in the Paris basin. "Yields are below last year, but still good," reports Robert Kerr of Glencore Grain.

He predicts French output will hit 36.2m tonnes this year, slightly down on last years record crop. "The crucial thing is quality. Last year a lot of wheat did not make intervention standard. Wheat traded at up to $7/t (£4.30/t) below intervention. If this is a quality year – at the moment we believe it is – that will at least put a floor in the price."

Better quality would also boost French export prospects, says Cargills Ian Wallis. "The key question is whether this rally is sustainable," he adds. "Huge stocks across Europe and the prospects of another big crop are expected to put pressure on values as new crop becomes available."

UK crop quality also looks favourable, provided the weather stays good, says Gerald Mason of the Home-Grown Cereals Authority. This, a smaller export potential and extra demand from drought-hit southern EU countries – traditional UK markets – is adding market support.

The Middle East and North Africa have also been hit by dry weather. Iran has already purchased 300,000t of French wheat, and a repeat order was confirmed midweek. "This will help keep the French price up, which indirectly helps the UK," says Mr Mason.

World prices are also rising, with US soft wheat worth about $90/t (£57/t) and Chicago wheat futures up 8%, partly due to the likelihood of further food aid to Russia.

Meanwhile, the oilseed rape market remains slow. Much of the crop has been cut in the south, but little is sold.

"Quality looks good, with few red seeds or admix. Yields are generally favourable, edging towards 30cwt and certainly above the five-year average," says Mr Kerr.

But record soya crops in South America and the US, and the biggest ever oilseed rape harvest in Europe, coupled with a slump in demand from the far east and Russia means UK values have tumbled £50/t on the year.

"Many farmers have decided they will not sell at these levels. They are either keeping it on farm, or sending it to a third party store. Half the seed was sold forward or spot last year. Today, up to 80% is unpriced," says Mr Kerr.

With only £1 carry a month in the market recovery will be limited, he adds. "But when a market has dropped £50/t and then stabilises, volatility is bound to increase. And once farmers get into wheat, prising oilseed rape out of them is going to be very difficult."

Oracle milling wheat gets a final inspection as the combine moves in at Peter Eatons White House Farm, Tolleshunt DArcy, Essex. The second wheat yielded 8.4t/ha (3.4t/acre). "I sold last years crop at a £5-7/t premium and I wish we could get that now because we need it," he says. Interest from merchants has been mixed: "The trade is slipping and they know it." Another 160ha (400 acres) is left to harvest."

Liking people is another prerequisite. "You have got to like the public. And remember that standards of customer care are continually increasing – so peoples expectations are rising.

"So, not only have you got to like people, youve also got to be able to bite your tongue every now and then," says Mr McTurk. "If you dont like the public, you are never going to please them."

Consider, too, whether your family are willing to get involved. Farmshops are time-consuming and the whole family will probably need to pitch in at busy, and sometimes unsociable, times. Some customers also prefer dealing with the farmer or a member of his family than, say, a manager or an employee. "It needs the personal touch."

This helps to contribute to the authenticity of the farmshop. People also like it when they can see tractors working in the background or cows in neighbouring field. "They like nice scenery. They like animals.

"They like, too, traditional-looking buildings, rather than purpose-built ones. They just have a different feel."

So, consider what you can offer – what, to use the jargon, are your USPs. Your unique selling points.

"It can be anything – freshness, a beautiful barn setting, a lovely view. It might be wonderful chickens or spectacular vegetables. Theyre all USPs.

"What can you give visitors that someone else cant? If they can see the cabbages coming off the field, a few minutes before they buy them, they know theyll be really fresh. And freshness is one area which gives you an edge over the supermarkets."

Think about what retail outlets are nearby. And, when it comes to supermarket competition, be realistic. "Theres no way any farm shop could compete with, say, baked beans or toilet rolls. When it comes to the mass-produced items, you have to know when you are beaten.

"But in the fresh produce sphere, theres no reason why you cant compete – and beat the big retailers – on price, quality and service."

Plan ahead and grow slowly, advises Mr McTurk. Dont introduce too many product lines – some farmshops, for example, have a massive range of bought-in delicatessen lines rather than fresh fruit and veg. "Without the freshness you are really just a shop that happens to be on a farm, rather than a farmshop."

Planning permission is something to consider early on. "Your problems may have only just started." But in practice it might not be as bad as you fear and a planning officer at the Local Authority will talk to you "off the record" about your proposal.

It will increase the chances of getting permission if there is a local demand for the produce you grow. There might, for example, no longer be a village shop and you will be satisfying a need of the local community.

"What planners are so scared of – quite rightly – is that a project will develop into a mini-supermarket."

Remember, though, that you may not need planning permission. Circumstances vary but its often only if youre making alterations to a building or start buying in – or processing – produce for resale that you get into planning issues. "Nobody can stop you opening your gate and selling your own fresh produce."

[IN A BOX]

Consider:

Location

The public

Planning

Family

Competition

Leasing value drop

MILKquota leasing prices have fallen sharply this week.

Values went into free fall to 5.5p/litre for 4% supplies, says Peter Weston-Davies of the Farm Consultancy Group, possibly triggered by Midland Co-ops big milk price cut last week.

"Once it broke the 6p floor it started to fall rapidly and could do the same if it breaks through 5p /litre," says Mr Weston-Davies. Although not willing to speculate where leasing prices will stop, he says a future announcement from the Intervention Board on whether super-levy is to be paid will determine where prices go. "Some will want to get cover."

Michael Seals, a Staffs-based analyst, believes that prices should continue to fall. "Economic logic should dictate that it should continue downwards, particularly when milk prices are where they are."

The rapid drop in values is pure reaction to the falling milk price and further pressure could be added if more cuts are announced this autumn, says Mr Seals.

Scots suckler quota soars

SUCKLER cow quota values are scaling new heights in Scotland.

Prices of up to £280 for LFA quota have been recorded. A recent auction in Aberdeen saw Scottish LFA quota average £241, about £50 more than had been expected.

The leasing value at £70 was about £20 more than anticipated and twice the rate of last year. Highland and Islands quota was even dearer at £245. Non LFA quota averaged £237 to buy and £75.70 to lease.

Suckler cow premium is currently worth £103 a cow with an extensification supplement of up to £41. Basic rates will rise to £132 next year, £155 in 2001, and £179 in 2002.


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