Farming Update July 2019 – Caleb Roberts


The milk processor co-operative, First Milk, has announced a reduction in prices to producers as from June. Prices have been stable since February. The co-operative has 2,200 members and blames downward pressure on the UK dairy market. Prices across the UK are around 27-29p per litre with a rise in production of 1.1% in the year to date. Meanwhile Arla has confirmed that its price will be unaltered for June.

Following the recent £1bn sale of Dairy Crest to the Canadian company Saputo, it has been announced that the Dairy Crest name will disappear in July and the company will be known as Saputo Dairy UK.

Defra has released figures for organic farming in the UK for 2018. These show that the amount of land farmed organically has reduced by 8.4% to 474,000 hectares, representing 2.7% of total farmed land. Around 70% of organically farmed land is down to pasture and the fall is mainly in this low production land. There was a small increase in the amount of land proceeding towards conversion to full organic.

Registrations of new tractors rose by 35% in April to 1.606 units, the highest figure for seven years. The rise in the year-to-date is 1.6%.

The profitability of UK farming fell by 17% to £4.7bn in 2018. Gross output rose by 2% to £26bn with small increases in both the livestock and arable sectors. However, both sectors suffered with adverse weather conditions and an overall 8% rise in input costs, mainly fuel, feed and fertilisers, hitting finances.

A recent analysis of 15 major dairy producing countries compares production costs and profitability. A high level of international trade means that UK farmers are competing in a global market. The analysis showed that lower overhead costs were a major factor in profitability and that the UK had higher machinery costs, spending more than twice as much as the others and margins suffered accordingly.

New Defra rules mean that farmers, in England, who charge the public to attend events will need to obtain a licence from their local authority. An inspection will be required, and the licence will cost £260 but may vary between authorities.

Responding to calls in the media for people to eat less meat for environmental reasons the Pasture-Fed Livestock Association highlights the fact that all systems do not have the same impact. Cattle and sheep that are 100% grass-fed benefit the countryside, overall without the higher carbon footprint of feed grain production.

Exports of British cheese reached a record £665m in 2018 with exports to Asian markets growing at an unparalleled pace led by China and Malaysia with combined imports of over £11m. The USA imports £50m, the EU remains the largest export market and cheddar the most popular cheese with 48% of the market. Export growth has continued into 2019 at 14% for the first quarter.

The Welsh Government has announced that the current Basic Payment Scheme will end after 2021. It will be replaced by a new post-Brexit scheme targeting biodiversity, carbon emissions and clean air. Farmers are concerned that incentives are needed to safeguard food production with current subsidies accounting for 80% of incomes, on average.

The National Audit Office (NAO) has warned Defra that it must carefully approach its roll-out of the post-Brexit subsidy scheme. There will be less than one year for farmers to consider important choices. The NAO points out that agriculture contributes over £8bn to the economy and employs 470,000 people. It estimates that 42% of farmers would make a loss without direct subsidy payments.

The milk processor, Arla, has announced that prices for July will remain unchanged, for the sixth month in a row. A sign of the present stability in the market although volumes are rising throughout Europe with the UK forecast to reach a 29-year high. Arla currently pays producers 30.22p/litre for conventional milk and 41.47p/litre for organic.

Defra is moving forward with the, previously announced, six-monthly TB tests for cattle in High Risk areas. In addition, £300,000 has been allocated for badger vaccinations to create buffer zones around those High Risk areas. Farmers can apply for grants of up to 50% of the cost of the vaccinations.

Food and drink exports to China have received a boost with finalisation of the protocol opening up the market for beef products, worth up to £230m in the first five years. Exports of pork are also set to rise with China now importing food and drink products worth over £600m from the UK.

Reproduced with kind permission from NIG FarmWeb



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