Category: Arable

UK Arable Situation

Whilst the barn is not as full as most years, because of low cropped areas and poor yields, those whose wheat remains unsold have been making money from it.  In fact a tonne of wheat has risen by £25 per tonne since harvest.  This means,  for an average yielding hectare of a meagre 7.2 tonnes this year, a rise of approaching £200 per hectare.  That sounds easy, but of course, a large percentage of the wheat never got drilled, and probably, a greater percentage of it than usual was forward sold.  Nevertheless, it is some comfort for those holding stocks.  The AHDB’s Cereal Quality survey confirms the proportion of quality wheat (full specification) is lower than usual too at 32% compared with the 5-year average of 37%.

Feed barley remains at a hefty discount to feed wheat of over £40 per tonne, with lots sloshing around the system.  Not only did the total barley area come close to the wheat area, but the malting varieties in East Anglia averaged high nitrogen levels (1.89%), slightly above the standard for export brewing (1.85%) meaning much is feed barley grade.  Nitrogens were lower in Scotland.  French malting barley is excellent this year.

This time last year, we reported how the British drilling season had halted with only half the winter crop in the ground, many farmers having shut up shop till spring, and many with serious concerns about flea beetle in their oilseed rape.  Conditions have been substantially better this year, but still not great.  Whilst not as wet as 2019, rain has caused several disruptions and drilling is a few percentage points behind where farmers would ideally like to be.  Some establishment has been slow because of waterlogged soils, especially in the heavier land areas.

We also mentioned some farmers had publicly stated they would not grow oilseed rape again.  This does appear to have been carried out, with perhaps even less OSR planted than was harvested in 2020 (quite a drop, because as much as a quarter was written off before harvest).  Establishment is quite good, but on the basis that every year now, some will be lost, we could have an OSR harvest smaller than we have had since the 1980’s.  In terms of planted area, it will remain larger than oats, pulses and maize, but OSR is of less importance in the UK rotation now than just a few years ago.  Pulses appear to be compensating for the lost area, but only partially, with other changes such as increases in second wheats and oats (particularly spring).

Pulses are have a small surge in popularity, both on the back of the point made in the previous paragraph, but also as new crop prices are strong, especially peas.  Both Blues and Marrowfats are offering excellent prices for those who can get a contract and a half decent clean yield at circa £270 and £320 per tonne respectively.  Old crop premiums are not as good though.

Glyphosate

The use of Glyphosate is likely to be extended until 15th December 2025 in Great Britain after Brexit.  According to Darren Flynn, head of the Chemical Regulation Division (CRD), all active substances due to expire between 1st January 2021 and 31st December 2023, will be given a 3-year extension under the new GB pesticides regulations.  As the current EU expiry date for Glyphosate is 15th December 2022, the three year extension should apply to it.

The three year extension is being allowed so the new GB Active Substance Renewal Programme has time to be developed.  But it should be noted, the Health and Safety Executive continues to have the power to review approvals at anytime if new evidence shows a substance is harmful to human health or the environment.  The extension only applies to Great Britain and not Northern Ireland as the NI Protocol to the Withdrawal Agreement means the EU’s Plant Protection Regulations will continue to apply.

Sugar Beet Harvest

British Sugar is forecasting a reduction of ‘well over’ 10% in sugar production for the current campaign compared to last year’s 1.19m tonnes.  The update was announced in its parent comapany, Associated British Food’s, annual results.  The 103,000 hectares of sugar beet grown in England this year, struggled when planted due to the dry spring and has suffered from virus yellows throughout the growing season.  Without neonicotinoid seed treatments, there is very little in the chemical ‘tool box’ to control virus yellows.

It is a similar story in continental Europe.  EU sugar prices have been on the rise this year, due to a reduction in stocks following two years of decreased production.  Looking ahead, EU sugar production for the 2020/21 campaign is forecast to decline again due to reduced yields.  As in the UK, this is due to a combination of adverse weather conditions throughout the growing season and the prevalence of virus yellows.  EU production is estimated to be below consumption for the next marketing year.

In France, where there are reports yields are down between 25-50%, there has been an easing of the neonicotinoid ban to try and save the sector.  In the UK, industry has been lobbying Defra to try and get a similar derogation, but there has not been any response as yet.

Ban on Urea Fertiliser?

Defra has launched a 12-week consultation on reducing ammonia emissions from urea fertilisers.  The consultation, which closes on 26th January 2021 sets out three policy options which it has identified will lead to reduced emissions from solid urea fertilisers:

  • A ban on solid urea fertilisers
  • A requirement to stabilise solid urea fertilisers with the addition of a urease inhibitor, to slow the conversion of urea to ammonia
  • Restricting the spreading of solid urea fertilisers so it is only allowable from 15th January to 31st March, when the soils are cold, which reduces the ammonia loss.

Defra’s preferred option is a ban on solid urea fertilisers as this will give the greatest ammonia emission reductions.  Liquid urea fertiliser is not affected.  The full consultation can be found at https://www.gov.uk/government/consultations/reducing-ammonia-emissions-from-urea-fertilisers

Pick For Britain

Despite widespread publicity through the Pick for Britain campaign, UK residents made up only 11% of the seasonal workforce in the fruit, vegetable and flower sectors this year.  This figure comes from the NFU 2020 Seasonal Worker Survey, completed by 244 horticultural growers who employ over 30,000 temporary staff.  Whilst the caricature is of the ‘workshy’ Brit, in reality many of these jobs are in remote rural areas only offering guaranteed work for three to six months – not always an attractive proposition.  There is thus a tendency for UK residents to leave if they get a ‘better offer’.  The Survey found that first-time UK resident workers stayed for nine and a half weeks on average, compared to just over 14 weeks for first-time non-UK workers and 18 weeks for returnee non-UK workers.  The latter category are the most valuable to growers – as well as staying the longest and so minimising re-recruiting costs, they will also already have the skills and knowledge to be productive from day one, and not require extensive training and supervision.  With the end of the Transition Period on the 31st December, free movement for EU national will cease and the 89% of seasonal workers coming from this source will no longer be an option for growers.  The NFU and other industry bodies are campaigning for a massive increase in the Seasonal Agricultural Workers Scheme (SAWS) from its current 10,000 per annum to 80,000.

Grain Market Update

The UK had a record-breaking cereals harvest in 2019.  No records have been broken this year, perhaps apart from the percentage of oilseed rape written off or the percentage decline in wheat crop from one year to the next!

According to provisional Defra estimates, the total wheat and barley crop was over 18.5 million tonnes – nearly 6 million lower than last year, and all of that decline was because of less wheat (the fall in winter barley was more than compensated for by the rise in spring barley).

The chart shows the main combinable crop areas for the UK for a decade. Under ‘normal’ conditions, crop areas vary slightly from one year to another according to shifting market requirements and other economic influences as well as perhaps a small weather effect.  About once every 7 or 8 years, we see greater shifts in cropping because of inclement weather covering large proportions of the country.  That is not to say we can predict when the next weather event will be of course.

The change in the crop rotation was clearly dramatic, and the amount of resultant crops for marketing is equally unusual.  Whilst farms have a different make-up of the crops they want to sell, the market demands are much the same.  There is a mis-match, which will drive imports and exports to balance supply and demand and is also causing sharp price movements.   Prices for wheat have spiked in recent weeks, having risen by over £20 per tonne for since harvest.  The unusual market also explains why barley has not followed suit as it often does, instead, a price spread over £40 has emerged as evidenced in the graph below.

Demand for malting barley is slim, as Covid restrictions close pubs and bars throughout the country and beyond, reducing their already severely reduced requirement for beer.  The considerable pile of spring barley is finding ample buyers but for feed.  Prices have picked up a little but continue to trade at considerable discounts to wheat in many parts of the world. The new crop price spread is smaller but still £15 to £20 per tonne.  The figure below shows delivered feed wheat and barley prices in UK and illustrates the growing spread between the two crops.

The oilseed rape market for anybody who has any to sell, is thin and, as usual, is led not by OSR, but the soy and palm oil markets.  The lack of OSR in this country has very little impact on prices.  Global vegetable oils are highly susceptible to currency markets and political moves, particularly regarding the relationship between the US and China.  Brexit has little impact on the oilseeds markets as they have no tariffs.  Brexit negotiations affect these markets more because the strength of Sterling changes according to trade deal news.

The pulse trade is small at the moment having become slightly overpriced to other protein markets.  Overall bean quality is not great this year, lowering the overall crop value.

 

Crop Areas and Production

Harvest 2020 was, as expected, poor.  The wet weather in Autumn 2019 affected drilling; there was a large swing to spring plantings, but for some these were affected by a dry spring.  The table below summarises the arable results from the June 2020 Survey of Agriculture and Horticulture, showing planted areas in the UK for main crops, and estimates for crop production.  The data is provisional, with final results expected December 17th.  Wales does not produce provisional results, so 2019 data has been carried forward to allow UK figures to be presented. 

Wheat plantings were down by 22% even after many tried to drill winter seed well into February.  With yields also significantly reduced, production is provisionally reduced to just over 10 million tonnes.  Spring barley was the biggest winner due to the severe autumn and winter weather, with over 1 million hectares planted; up 55% on 2019 levels.  But the dry spring reduced yields, particularly for those with lighter land, meaning although the total barley planted area was 22% higher, total production was just 3.9% more than last year, when yields were high.  Some turned to oats as an alternative break crop to OSR, resulting in a 16% increase in the area but, again, yields were poor, resulting in a 5.5% reduction in production compared to 2019.

Winter oilseed rape continues to struggle with cabbage stem flea beetle, with many in the East and East Midlands experiencing widespread crop failures and the crop which did survive did not yield well.  The result is a 39% year-on-year reduction in production and that was following a poor year in 2019.  Planting conditions appear to have been more favourable for OSR this coming season, but there is anecdotal evidence that many have decided OSR is too risky, especially with costs being front-loaded, and are planning on alternative break crops.  Indeed, our own Loam Farm has switched away from OSR to more spring cropping and oats (see June’s article).

The wet weather and failed OSR fields resulted, unsurprisingly, in an increase in the fallow area and as a last resort, some planted maize, which continues to increase as more goes to AD plants.  But the field bean and combining pea areas have also risen by 38% and 27% respectively.  With these being looked at by some as another alternative to OSR, could we see these areas increase further over the coming year?

Potato Update

Growers are harvesting a potato grown under the shadow of Covid-19 and very extreme weather conditions.  The AHDB estimates a British potato area of 119,000 hectares, down 1.0% on last year.  Average yields would deliver a crop of 5.4 million tonnes; slightly more than the flood-impacted crop of last year.

National yields are likely to be average at best.  In the Eastern maincrop area, irrigation was vital to cope with the driest spring on record and hot and dry periods during summer.  More rain in the west and north of the country mean that yields were better in those regions.

Prices have started the season on a weak note with little expectation for better returns later in coming months.  The AHDB free-buy price is below £100 per tonne for the first time since the 2017/18 season.  There is demand for pre-pack material, but chipping potato sales are under pressure because of continued disruption in the fish and chip shop sector.  There will be fewer processing potatoes available this season because of reduced contracts.

Fresh retail potato consumption was up more than a fifth in the 12 weeks to 9 August, according to Kantar figures for the AHDB, with annual sales 8.4% higher as shoppers continued to buy more staples as they worked from home.  Out-of-home sales were given a boost by the Eat Out to Help Out scheme, although the exclusion of takeaways meant fish and chip sales did not benefit.  There will be fears that new Covid-19 restrictions could hit demand for potato products again, although frozen chips do have the benefit of a long freezer-life and being good value.

Potato planting in mainland Europe has increased a little, although that increase is confined to fresh table potatoes, with a cut back in the processing potato area.  Table potato prices are under pressure in most countries and while processing prices are very low (around €30 per tonne free-buy) there are signs of increases later in the season.

As if Covid-19 and the weather were not enough to contend with, this season also sees the banning of storage chemical CIPC and desiccant Diquat.  On top of that, a No-Deal with the EU could mean that the UK is unable to export fresh potatoes to the Union as it does not have third-country phytosanitary status yet.  However, as a net importer of potatoes and potato products, the UK could be less hit by the imposition of tariffs than the EU.

Grain Market Post Harvest Update

The combinable crop harvest is all but finished; the combine harvester has returned to its shelter where it spends over 90% of its time.  The few days of work it does is critical but inevitably hugely expensive.  It is a shame there is not a cheaper way to get crops threshed and off the field.

Wheat prices for 2020 harvest have shot up in August and September, from a recent low of £161 per tonne to today’s high of £182 per tonne (November 2020 Futures position).  Publications from the US Department of Agriculture have been showing an increasing global wheat crop size, bearish for wheat prices, but a larger decrease in maize production.  This is the underlying fundamental affecting the base of all grain prices.  Despite the recent reduction in forecasts, output is still 50 million tonnes higher than last year, so the market will not be struggling to source grain, suggesting that unless the local shortage is the main driver, the price spike could be short lived.

This sort of price has not been seen for feed wheat for a couple of years when it reached £193 per tonne for November on the Futures.  Consider however, that it was only above today’s level for a month and the same could happen again.  Once the feed compounders start switching to feed barley which is trading at a phenomenal £40 per tonne discount, then it will generate a cap in the market.  As far as the calorific content of the grain is concerned, barley calculates at about 9 to 10% less than wheat, meaning its proportional value to wheat at £180 should be about £160 per tonne.

The large discount for barley probably exceeds most predictions, but the wheat-barley spread was always likely to have grown this season, with the large barley crop harvested and small wheat crop.  We have also seen a poor quality barley harvest.  Whilst there will be enough malting barley for making malt for the beleaguered brewers, most of the surplus cannot be shipped as malting, so instead finds its way into the considerable feed barley pile.  Scotland is the odd one out and had a good harvest with ample high quality, low nitrogen malting barley, suitable for the malting sector and for shipping down to England.

Is there more barley than wheat?  Well, no, but the demand for wheat is higher than for barley (pigs and poultry eat mostly wheat), the demand for feed barley is limited (sheep and cattle do not eat so much grains) and our export outlets also better developed.  The UK will be importing considerably more wheat than it exports this season, and that will cause interesting logistical issues as our ports are not so well adapted at importing than exporting grains.

Overall oats appear to have harvested in reasonable condition.  Pulses on the contrary have a high percentage of insect damage.

The last fortnight of dry conditions has facilitated a neat end to what began as a tricky harvest period.  It is currently raining hard outside my window, which is now a comforting sight for many who were thinking a drop of rain will start the drilled seeds growing.