Agrifacts June 2020

AgriFacts June 2020 Your monthly roundup of news, prices and other farming matters

Market Prices Month (ex farm) Midlands

Feed Wheat

Feed Barley

Oilseed Rape

Currency

June 2020

£156.92/t

£122.92/t

£313.77/t

£/€ = 1.13

July 2020

£158.31/t

£122.31/t

£314.46/t

€/£ = 0.89

August 2020

£160.85/t

£121.15/t

£314.92/t

$/£ = 0.80

Milk Data

Avg Monthly Price

UK Farmgate Milk Price

24.56ppl

Fuel/Straw/Silage

Price

Fertiliser

Price

Red Diesel

49.98p/litre

34% N AN (bags UK) £/tonne

£198.00

Big Sq baled wheat straw

£52.00/t

0:24:24 blend (bags) £/tonne

£244.00

Big bale hay

£53.00/t

20:10:10 blend (bags) £/tonne

£218.00

p/kg dwt

Finished Steers

Finished Lambs

Finished Pigs

323.17

424.78.10

161.10

Market Update This time last year few of us would have anticipated dealing with extreme soil saturation followed by dryness, interspersed with a pandemic of the humankind. Ultimately everyone involved in UK agriculture has had to become adaptable, and even more resilient while digging extra deep for that ‘can do, will do’ approach. The question now is what does the future hold and how will markets adapt? In the last few weeks we saw the publication of the UK Global Tariff schedule – a document we expected but how could it ultimately affect UK farmers and consumers?

The answer to that is nobody knows until we see some trade deals. If we hit worst case – 1st Jan 2021 with no trade deals life could be very interesting. If the UK wheat crop comes in as currently anticipated – 10/11M/mt and there are no additional Tariff Rate Quotas for the UK then imports of wheat could dry up or be limited to high quality milling wheats – circa 15.11-15.91 dry matter protein as per the tariff.

The problem here is that wouldn’t allow for German milling wheat imports and / or French – neither of which would make the high protein requirements for tariff free entry but would be liable for a £79/mt tax, just like feed wheat. As a reminder, in 2012/13 the UK imported over 1M/mt of German milling wheat, but more averagely imports circa 323k/mt. If lower grade milling wheat can’t be imported to supplement a potentially small and / or poor quality UK harvest what happens to UK milling wheat premiums and the price and quality of bread?

On a similar tack, the current Tariff schedule would allow for unlimited quantities of maize to be imported into the UK. On the face of it there seems little to be concerned about – after all no tariff on goods we can’t produce sounds logical. BUT what that argument fails to realise is that maize is almost a direct replacement for UK feed wheat in many cases. Also, the EU has a legislation in place which restricts how cheaply maize can be imported and the UK currently doesn’t see this as necessary post 1st Jan 2021.

Issues which currently need a conclusion – A trade agreement with the EU would probably solve the lower grade milling wheat issue BUT when will the details of an agreement be known and signed off? If the UK leaves the back door open to endless maize imports, will the EU want a trade deal with us? After all we could use maize for ethanol, starch, distilling and animal feed then trade those ‘manufactured final products /goods’ direct to the EU, which could be seen as undercutting their producers.

Nothing in the current environment is easy but we need to keep the focus. A lack of understanding around the products and commodities we produce, the impact of a bad trade deal or lack of understanding about a trade tariff schedule won’t help any of us or the markets in these testing times.

Cecilia Pryce l Compliance, Shipping and Research l Openfield

Woodland Carbon Guarantee The Woodland Carbon Guarantee (WCaG) is a £50million incentive scheme to accelerate woodland planting across England through the trading of carbon units, captured through woodland. Unlike other schemes that contribute towards establishment and maintenance of woodlands, the Woodland Carbon Guarantee provides the ability to sell sequestered carbon to the government. However, other grant schemes such as Countryside Stewardship and Woodland Carbon Fund can run alongside the Woodland Carbon Guarantee.

The money received is per unit of carbon, the value of one carbon unit is obtained through government led reverse auctions. The Woodland Carbon Guarantee is set to run until 2055/56, with auctions occurring six monthly commencing early 2020.

If successful in the auction, the price obtained per unit of carbon (protected against inflation) will be guaranteed for the duration of the scheme (30-35 years), providing a secured income for the woodland. The first auction completed 14th February 2020, with an average price of £24.11 for accepted bids.

The second auction is set to run from 8th to 19th June 2020, the deadline for registration for this auction is Friday 5th June. The budget for the second auction is £10 million, a reserve price will be set but not published. A competitive element has been added to this auction, the number of Woodland Carbon Units (WCUs) purchased will be limited to a maximum of 90% of the entered. Landowners must also register for the Woodland Carbon Code, which both validates and verifies the project and provides a measure for the quantity of carbon sequestered.

RPA Site Inspections RPA farm inspections resumed on 1st June, following a pause during Covid-19 lockdown. Inspections will initially prioritise Countryside and Environmental Stewardship. The RPA have confirmed that they will follow social distancing rules at all times and will undertake remote inspections where possible.

Agriculture Bill The Agriculture Bill passed through the House of Commons on 13th May, and now starts its progression through the House of Lords. An amendment to ensure food imports meet UK production standards was tabled but not passed. There is concern that without legislation, sub-standard imports will undermine the high standards of animal welfare, food safety and environmental protection that UK farmers must meet. The industry continues to lobby for this amendment to the legislation, before trade deals are negotiated.

DEFRA statistics – Total Income from Farming 2019 The latest DEFRA statistics release indicates that 2019 Total income from Farming (TIFF – a measure of the total profit from all UK farming businesses) increased by 8% to £5,278 million compared to £4,968 million in 2018. This was mainly due to the more favourable weather conditions in 2019 resulting in higher crop yields, despite lower commodity prices. Farm input prices were largely consistent with previous years, although good forage growth and lower feed prices helped to offset lower livestock values. However the 2019 figure is still slightly below the 8-year average TIFF of £5,333 million. The full DEFRA statistical release is available at: https://www.gov.uk/government/ statistics/total-income-from-farming-in-the-uk

Key Dates Date

Regulation

Restriction

15th June

RPA

BPS application deadline and CSS /Entry Level Stewardship (ELS) & Higher-Level Stewardship (HLS) revenue claims deadline.

30th June

RPA

Mid-Tier Countryside Stewardship Scheme (CSS) application pack deadline.

30th June

RPA

Deadline for making certain changes to a submitted BPS application, or CSS/ELS/HLS revenue claim already submitted by midnight on 15 June.

31st July

RPA

Deadline for submitting application for a 2021 Mid Tier Countryside Stewardship/ Wildlife offers agreement.

1st August

Cross Compliance

If you have been granted a derogation by RPA, you may be able to cut or trim hedges throughout August, to sow oilseed rape or temporary grassland.

1st August

Cross Compliance

Start of closed period for applying organic manure with a high readily available nitrogen content to tillage land on shallow or sandy soils except where crops will be sown on or before 15 September.

fishergerman.co.uk 01858 410200

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

farms@fishergerman.co.uk

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