AgriFacts March | April 2022
Your monthly roundup of news, prices and other farming matters
Market Commentary Grain markets are experiencing significant volatility, with high prices being fuelled by declining global stocks and a series of unprecedented events over the past few seasons. Markets have contended with Brexit and the uncertainty that came with it; the resolution of which overlapped with the emergence of a global pandemic. Today, the escalating conflict between Russia and Ukraine is amounting to tragic events between two of the world’s leading grain exporters and, unsurprisingly, interrupting supply. With so many catalysts, to say that markets have been turbulent would be an understatement. Over recent weeks we have seen price swings that have never been experienced before. Wheat markets started this season at values of around £190/t in August 2021, at which point prices already felt relatively supported following a decline in global stocks from the previous season. From there, markets started to rise as it became apparent that both Canadian and US crops had been impacted by the dry growing season and suffered significant production downgrades, leaving the US with the smallest crop since 2002. European crops fared much better, but stocks had started at a low level due to the difficult season that came before. Russia, which had at one point expected to achieve a record crop, also saw production downgrades as a result of dry weather. This led to the implementation of export taxes and quotas in an effort to protect its domestic supply and keep a lid on flour prices. The result was a well-supported market, underpinned by diminishing global stocks. It is therefore to be expected that the Russia-Ukraine conflict would send grain markets into a chaotic run, with values gaining by 40% over a five-day trading period at one point. Wheat futures rose to their highest on record during the first half of March, with Paris futures exceeding €400/t and London futures rising above £300/t, breaking the previous record set in 2008.
Together, Ukraine and Russia account for around 9% of global wheat exports, 19% of global corn supplies and 80% of world sunflower oil exports. With Ukrainian ports effectively shut down and sanctions on Russia increasing, an anticipated 11 million tonnes of wheat supply must now be ruled out of the world balance sheet, ultimately forcing importing nations to look elsewhere. Unfortunately, there is no easy fix as grain stocks across the world are already well accounted for. India has a surplus and is anticipated to ship more wheat than it has historically, and EU supplies are in demand. In amongst all this, it is not just immediate solutions that are needed to meet export demand. With Ukrainian and Russian wheat and corn supplies unavailable, there are now increasing questions about 2022 harvest prospects. For Ukraine, it is not clear whether farmers will be able to drill spring crops or apply fertiliser and other inputs to winter crops. With production looking lower EU members are now asking if set-aside land can be brought back into production in order to boost EU supplies of wheat, corn, other grains and oilseeds. Waiving the set-aside rules could increase the cultivated area by 10-15% and there have also been calls for aid to help farmers with soaring fertiliser costs. At some point, high prices should start to ration demand and better harvests will arrive to replenish global stocks. However, in the short-term, high volatility can be expected to continue. Zoe Andrew Key Account Manager Grain Frontier Agriculture Ltd
Market Prices Month (ex farm) Midlands
Feed Wheat
Feed Barley
Oilseed Rape
Currency
November 2022
£254/t
£234/t
£632/t
£/€ = 1.20
Milk Data
Avg Monthly Price
UK Farmgate Milk Price
35.46 ppl
Fuel/Straw/Silage
Price
Fertiliser
Price
Red Diesel
N/A *
34% N AN (bags UK) £/tonne
£925.00
Big sq Baled Wheat Straw
£48.00/tonne
0:24:24 blend (bags) £/tonne
£675.00
Big Bale Hay
£66.00/tonne
20:10:10 blend (bags) £tonne
£825.00
p/kg dwt
Finished Steers
Finished Lambs
Finished Pigs
412.00
565.10
136.24
** The fuel market is too volatile to state a figure. Thecurrent current fuel market is too
Farm Business Review Fisher German are currently providing free advice and support to farmers under the AHDB’s Farm Business Review Service in partnership with SRH Agribusiness. This advice is funded by DEFRA under the Future Farming Resilience Fund and is available to all Basic Payment Scheme (BPS) claimants. The scheme is designed to support farmers through the early years of the agricultural transition. This AHDB service is designed to help farmers to better understand the impact of the BPS payment reductions, explore the resilience of their business to change, and review some Key Performance Indicators that are relevant to their business. Based online, the tools provided can be reviewed beyond the meeting to provide further support.
In addition to gaining access to the online tool, we will meet with you to discuss the agricultural transition and what this would look like for you; ways that your business may need to adapt to change; and review alternative income streams such as grant funding and diversification. By undertaking a Farm Business Review, Farmers could unlock one of three further funded support options of either a Carbon Audit, access to AHDB’s Farmbench, or an Agri Business Appraisal. The current round of reviews are available through to the end of June 2022 – please get in touch with Robert Browne or Becky Williams if you would like to learn more about how you can apply.
Delinking & Lump Sum DEFRA has released its response to the lump sum and delinking consultation, providing some clarity on the future of Basic Payment Scheme (BPS). Further infor¬mation is available here. For farmers seeking to leave the industry, the lump-sum payment can be applied for from April 2022 until 30 September 2022. The lump-sum payment is a one-off receipt, claimed instead of future annual BPS claims. The amount is based on 2.35 x reference amount, and is capped at £99,875. The reference amount is the average BPS payment in 2019, 2020 and 2021 ignoring any progressive reductions. Payments will be made as soon as entitlements are surrendered, and the land has been transferred.
Delinking will happen in 2024. The reference years for calculating the area of BPS receivable from 2024 onwards have been set as the average of the claimed area in 2020, 2021 and 2022. Thereafter, provided a claim (of any size) is made in 2023, a claimant will be eligible to a payment from 2024 onwards regardless of whether or not they are farming the land then. Whilst this provides some much-needed guidance, serious consideration must be given to any potential changes in land occupation over the next two years. The RPA have stated that some business mergers, splits and inher¬itance cases will be allowed for. 2023 will be the last year of entitlement trading. Contact us for further advice.
Key Dates Date
Regulation
Restriction
15 March
RPA
Basic Payment Scheme (BPS) 2022 application window opens.
15 March
RPA
Countryside Stewardship and Environmental Stewardship annual revenue claims open.
31 March
RPA
If you hold a water abstraction licence, expect to receive your annual bill (or first part-charge if you hold a twopart tariff agreement) for the forthcoming financial year.
1 April
Cross Compliance
You must not burn heather, rough grass, bracken, gorse or vaccinium on land, other than in upland areas, from this date.
1 April
Cross Compliance
If you hold a winter or all-year-round water abstraction licence (authorising abstraction outside the period April to October), the Environment Agency will make actual abstraction return forms available to you from 1 April. You will have 28 days to send your readings to the Environment Agency.
16 April
Cross Compliance
You must not burn heather, rough grass, bracken, gorse or vaccinium in upland areas from this date. The burning season is from 1 October to 15 April for upland areas and from 1 November to 31 March for land not within an upland area.
30 April
Cross Compliance
For any land located in a Nitrate Vulnerable Zone (NVZ), you must have recorded the number of ‘specified’ livestock kept on your farm during the previous calendar year and calculated the amount of nitrogen they produced by this date. You must also record the number and type of livestock in a building or hardstanding during the previous storage period.
16 May
RPA
The deadline for Basic Payment Scheme (BPS) 2022 applications without penalty is midnight on 16 May (including young and new farmer applications). This is also the deadline to transfer entitlements and to have the land at your disposal.
16 May
RPA
The deadline for Countryside Stewardship and Environmental Stewardship revenue claims without penalty is midnight on 16 May. This is also the deadline to transfer entitlements and to have the land at your disposal.
Fisher German recently launched a new podcast series. Each episode will be hosted by a Fisher German expert and joined by a guest speaker. The series will cover a range of topics, including the road to net zero, how we make agriculture sustainable, effective stakeholder management and how we ensure we are complying with biodiversity net gain. The first and second episodes are available now on Spotify, Apple Music, Google Podcasts and Amazon Music
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