9 April 1999

Producers take smaller share of retail milk price

FARMERS share of the retail milk price has fallen by 20% in the past three years, according to research from consultants Brown & Co.

The farmgate milk price fell 5.8p/litre between December 1995 and December 1998 to 19.25p. But over the same period, the retail price slipped just over 3.5p/litre to 59.5p/litre. This means a dairy farmer receives the equivalent of 32% of the retail price compared with 40% three years ago.

"For the UK dairy producer, the challenge must be to redress this balance and secure a greater share of the net retail margin," says Brown & Cos Rob Hughes. The recent trend to small producer groups must be reversed, and processors need to invest in processing capacity, he adds.

Key areas

According to the British Retail Consortium, falls in farmgate prices cannot be matched by lower retail prices, with raw milk only accounting for a small part of the total costs. Bottling and transport are key areas, especially after rises in vehicle excise duty and diesel prices, says a BRC spokesman.

But Jim Begg of the Dairy Industry Federation questions whether the reports findings are representative. "You have to be wary of taking selective points, and should look at this on a long-term basis."

He also questions the studys recommendation that extra processing capacity is needed. "That would be a retrograde step. Surplus capacity means lower farm prices." &#42

Lamb trade worry

DEEP concern about prospects for the lamb trade this year have been expressed by Scottish NFU president, Jim Walker, and Scotch Quality Beef and Lamb Association chairman, John Ross.

"We both see it as a top priority to get light hill lambs exported early in the season and we will be having talks with exporters to see what we can do to boost the trade," Mr Ross said on Tuesday in Edinburgh.

Lambs must be cleared in August and September to prevent a complete collapse on the home market later in the year, Mr Walker added.

Increased ewe numbers and reports of a high percentage of twin lambs on the hills is adding to the pessimism, compounded by the continuing strength of sterling which is hampering all sheep exports. &#42

Takes some beeting… Cyril Fresher checks the drill as the last field of sugar beet goes in at Paul Fishers Stow Fen Farm, March. About 36ha (90 acres) of the crop are grown on the Cambs farm. "We cant grumble – you will make money at that level," says Mr Fisher of British Sugars recently-announced April payment of £31.61/t.

Rising fuel costs might threaten farmers pockets

By Robert Harris

SPIRALLING fuel costs are forcing hauliers to push for higher transport rates which could leave farmers picking up the bill.

The governments fuel duty escalator which raises the price of derv each year by inflation plus at least 6% is to blame. This "green" measure, designed to cut emissions, resulted in a hike of 11.7% in last months Budget, more than 6p/litre.

Hauliers cannot afford it, says Penny Mordaunt of the Freight Transport Association. "Duty now represents 90% of the cost of fuel. The latest increase will add £625m to the transport industrys bills. Unless something is done, 26,000 jobs will be lost from haulage, and 53,000 from the wider economy."

The extra duty will cost grain haulier D Christmas Transport of Aldington, Kent £40,000 a year. The company runs 20 trucks which shift 280,000t of grain annually.

"If we do not get an increase in rates soon, we wont be here," says David Christmas. "We need a 6-7% rise just to stand still." This would add 40p to the £5.75/t the company charges for a typical haul to Tilbury, Essex. "Farmers will have to pay a lot more unless they support us and lobby the government."

Input costs could also be affected. John Taylor Transport of Ashford runs fertiliser, mainly from Avonmouth and Cheshire, to the south-east, for £8 and £12/t, respectively. "We have asked fertiliser companies for 8% more," says Brenda Taylor.

Dalgety reckons the rise in fuel duty will lift haulage costs by up to 6%. "That is the equivalent of 24p/t across a range of bulk feeds," says logistics manager, Andy Dowd.

Raw material hauliers supplying the firms mills are asking for 4-6% more, he adds. Whether the company recoups the cost from customers remains to be seen. "At the moment we are soaking this up. Ultimately, I suppose it always gets passed on."

The NFU is so concerned it has joined the "Fair Play on Fuel" campaign run by the Road Haulage Association and the Freight Transport Association. "We take this threat very seriously," says head of technical development Andrew Opie. "Transport costs are a major consideration for all growers. We appreciate the problems that hauliers are having, but farmers cannot afford to bear any more costs.

"There is real concern that if fuel costs continue to go up, there could be a shortage of hauliers at peak times," he adds.

Transaction, the hauliers lobby group which brought central London to a standstill last month intends to repeat the exercise in several UK cities on Monday. "We think the government has made a big mistake. All we want them to do is rectify it," says spokesman Frank Steers. &#42


Fuel duty increase may hit farm prices

Fuel costs have shot up since the Budget as green taxes start to bite; hauliers are trying to raise transport charges to cover the extra costs, which could leave farmers facing higher bills……………….page 19

Oil leak

Oilseed area aid could fall more sharply than expected, according to the first legal documents on Agenda 2000; but economists reckon oilseed rape is still worth growing and it could even outperform wheat………………………page 20

Quay to success?

Southern co-op SCATS will be looking to buy an extra 200,000t of grain this year following its acquisition of Continental Grains deep water export business at Southampton……………page 22

Marts lose out

Scottish auction marts are suffering from the agricultural crisis; throughput is down by almost a third to its lowest level for more than two decades, and rumours about possible mergers in the trade are rife…………………….page 23

Successful sales

The rest of last years lambs and some heifers kept for finishing at Gelli Garneddau, our adopted farm in Wales, have been sold; thoughts are turning to this years crop………page 24

Mint condition

NEW-season lambs are making better-than-expected prices as wet conditions slow down growth rates. Few are coming to the markets and trade may take a while to build… 31

See more