Agrifacts November 2018

AgriFacts November 2018 Your monthly roundup of news, prices and other farming matters

Market Update It’s only a few weeks to the half-way mark through the 2018/19 grain marketing season and we in the UK have just witnessed a significant spike in grain price volatility; firstly a big price push higher through the harvest period, then more recently, sharply lower. The relative calmness of prices through the last few seasons had to come to an end at some point.

There are many individual reasons for the pick-up in volatility, but the overarching one is that the world’s grain ‘pantry’ is being depleted; farmers around the globe haven’t managed to grow sufficient grain this season to meet the increased needs demanded by the world population. As such, the trajectory of world stocks of grains are in decline. In principle, the lower the level of stocks, the higher the level of volatility (and visa versa).

Partly as a consequence of this price volatility, the UK has witnessed the [impending] closure of an entire grains industry, and not an insignificant one either; the grains ethanol industry. It does make one wonder how for the most part farmers appear able to withstand the vagaries of hi/low prices season after season and generation after generation, and yet planning for a multi-hundred million pound investment failed to look at the history books regarding price volatility and enact some form of long term risk management planning. They won’t be the last one….

and parts of the Black Sea region ongoing dryness has been a significant issue, with delays to seeding and poor crop development. In the US rains have stalled progress, with some planned area likely to go unsown. Sub-optimal conditions prevail either side of the Atlantic, then.

Since world grain stocks are unlikely to be rebuilt to a ‘comfortable’ level in a single season and world grain stocks are relatively low at present, one has to assume heightened volatility will remain a feature of our markets going forwards. Throw into the mix undesirable and largely incalculable risks such as Brexit, Mr Trump’s insatiable appetite for midnight tweeting and the ongoing trade war between the US and selected others, including China and we have a recipe for additional instability from the shadowy world of ‘outside markets’.

All these features combine to pose both opportunities as well as threats to buyers and sellers. As the Vivergo and Ensus closures unfortunately demonstrate, being prepared for downside risks is a key requisite for any successful business. Armed with high quality market information and the ability to understand and act upon it is, and will continue to be, a vital business prerequisite going forwards into the season ahead.

Rupert Somerscales ODA-Agri

The northern hemisphere has largely completed its grains harvests, to varying degree of success and as such attention is turning towards prospects for the 2019 season and where prices may eventuate. The process starts with analysts busying themselves staring into updated weather maps, week after week, looking at how favourable or otherwise conditions have been for winter plantings and development. Currently, across Continental Europe

Month (ex farm) Midlands

Feed Wheat

Feed Barley

Oilseed Rape

Currency

Nov 2018

£155.00/t

£155.00/t

£317.00/t

£/€ =1.15

Dec 2018

£166.00/t

£156.00/t

£318.00/t

€/£ = 0.87

Jan 2019

£167.00/t

£157.00/t

£319.00/t

$/£ = 0.76

Milk Data

Avg Monthly Price

UK Farmgate Milk Price

29.73 ppl

Fuel/Straw/Silage

Price

Fertiliser

Price

Red Diesel

63.9p/litre

34% N AN (bags UK) £/tonne

£291.50

Big sq Baled Wheat Straw

£55.00/tonne

0:24:24 blend (bags) £/tonne

£287.00

Big Bale Hay

£100.00/tonne

20:10:10 blend (bags) £tonne

£285.00

p/kg dwt

Finished Steers

Finished Lambs

Finished Pigs

364.7

389.3

145.2

Red Tractor’s new inspection regime

Subsidies - Basic Payment Scheme 2018

Red Tractor has announced that they will be increasing the number of unannounced inspections on farms that fall short of meeting their standards, using a new risk-based scheme.

The RPA have now confirmed the payment rates for 2018 BPS claims, which are noted in the table below, and based on the recently set 2018 exchange rate (€1 = £0.89281). Please note that these payments will be subject to Financial Discipline Mechanism deductions, but the RPA have not yet confirmed this % deduction.

The reasoning behind these changes comes as a result of the need to maintain consumer trust and promote the high standards of UK farming and food production.

However, farmers should note that this change will only affect those poor performing farms, so a vast majority of farmers will not experience a change.

Red Tractor are also launching modular standards from 2019, which will recognise farmers who put more emphasis on animal welfare or the environment, which in turn will allow them to access more markets.

These modular standards will be supported by a consumer labelling system which will improve clarity for shoppers, however the core standards will continue to remain at the heart of Red Tractor.

Region

2018

2017

2016

Non-SDA (Severely Disadvantaged Areas)

£231.71

£230.48

£225.86

Upland SDA, other than moorland

£229.92

£228.39

£224.24

Upland SDA moorland

£62.70

£63.66

£59.24

Farmers are being warned to be wary of fraudsters who are targeting businesses to steal their EU farm payments due to start being paid on 3 December. Farmers should be wary of suspicious calls, texts or emails as criminals have been known to pose as banks.

Grant funding - RDPE Countryside Productivity Small Grant The RDPE Countryside Productivity Small Grant scheme is expected to open early Spring 2019. We expect the application process to be broadly in line with previous years.

The scheme provides funding for farmers to purchase equipment to improve the productivity of their farm. The scheme is different to other parts of the Countryside Productivity scheme as it uses

an online application process and is targeted at supporting investment for specific pieces of agricultural equipment. If you are planning to purchase any livestock equipment in the next few months we recommend you consider the grant.

If you require any further information, please contact a member of the team today on 01858 410200.

Key Dates Date

Regulation

Restriction

1 November

Cross Compliance

You can burn heather, rough grass, bracken or gorse, other than in upland areas

1 November

Countryside Stewardship

Hedgerow gapping-up (BN7) and Planting new hedges (BN11) work can commence

30 November

Cross Compliance

Expect to receive your second part charge if you have a two-part tariff agreement for your water abstraction licence

1 December

Cross Compliance

You need to carry out your annual inventory of sheep and goats

1 December

Countryside Stewardship

Begin to spread supplementary feed mixture, for the Supplementary Winter Feeding for Farmland Birds (AB12), at an average rate of 25kg on the ground at least once a week from 1 December

fishergerman.co.uk 01858 410200 farms@fishergerman.co.uk

Fisher German is a limited liability partnership, registered in England and Wales.

Registered number: OC317554 Registered office: The Head Office, Ivanhoe Office Park, Ivanhoe Park Way, Ashby de la Zouch, Leicestershire LE65 2AB Regulated by RICS Fisher German LLP has tried to ensure accuracy and cannot accept liability for any errors, fact or opinion. Please do not use this as all the advice needed to make decisions.