Category: Arable

Like many real-life farms across the country, Andersons’ Loam Farm is also having to deal with the effects of the very wet autumn.  This has led to budgets for harvest 2020 being reworked to accommodate more spring planting.  Of the usual 300 hectares of wheat that this farm plants each autumn it has been assumed that half will not get in.  The farm is planning to grow 150 Ha of spring barley instead.  The resulting figures are shown in the table below – figures for the past two harvest are shown along with the pre-rain budget for 2020 and then the current one.

* result   ‚~ estimated   #ƒ budget

It can be seen that profitability was forecast to decline for the coming harvest anyway.  This was partly as a result of yields reverting to the mean after the wheat and beans produced higher-than-average figures for the previous harvest.  But costs were also projected to rise for the present cropping year.

With the farm now planning to grow a substantial area of spring barley, it can be seen that the overall output drops from the original budget as the revenue from the crop will not be as large as from winter wheat (despite some malting premium being assumed).  Output has also been reduced by the forecast oilseed rape yield being decreased – some of Loam Farm’s OSR crops are looking sickly in the wet ground.  Variable costs decrease as spring barley is a cheaper crop to grow.  No change has been made to overheads as it is assumed that cost structures will not change in the short-term.

Overall, the wet autumn means that profitability looks set to be reduced compared with initial estimates.  However, the change is not massive, which highlights the fact that spring crops don’t always affect overall performance too much if they are done well, simply because of how expensive it is becoming to grow winter crops.

Loam Farm is a notional business, located in East Anglia, which has been running since 1991 and tracks the fortunes of arable farming.  It comprises a 600 hectare (1,480 acre) combinable crop farm running a usual rotation of milling wheat, WOSR, feed wheat, and spring beans.  Of the cropped area, 240 Ha are owned and 360 Ha rented on FBTs.  There is a working proprietor plus one full-time man and harvest casual.

The wet October has frustrated potato lifting, with some growers still expecting to be harvesting at the end of November when crops will be vulnerable to more rain or frosts.

Early season conditions in the east of the country were, if anything, a little dry, while crops in the west and north of the country have had too much rain throughout the season.  The poor weather will lead to pressure on potato supply for the second year running and prices are starting to increase sharply already and are expected to rise throughout the season.

The AHDB estimates that 2019 GB plantings are just shy of 119,000 hectares, up only marginally on the 2018 figure.  Yields are likely to be below the long-term average and it is unlikely that a national crop of more than 5.2 million tonnes will be delivered.  The wet harvest will mean that good quality material will be in particular demand.

The European crop suffered from drought and heat in the first part of the season which damaged yields and made early harvesting difficult.  Heavy rain in the last six weeks has now delayed lifting and a significant shortage is likely.  This is supporting prices and demand for imported potatoes.

The UK has benefitted from EU import demand over the last year, particularly from Poland.  Exporters feared that a No-Deal Brexit would bring trade to a halt because, after departure, the UK would be treated as a third country supplier without EU export certification.  It was unknown as to how long it would take for the UK to gain certification.  However, sales of around 20,000 tonnes to the Canary Islands would have been protected by a separate arrangement as would seed potato exports to Egypt and Morocco, which have agreed to recognise the UK’s export status even outside the EU.

The UK has had a record-breaking cereals harvest in 2019.  According to provisional Defra estimates, the total crop was over 25 million tonnes – the highest in the last two decades, and possibly of all time.  It is thought to be 22% higher than the 2018 figure.  In contrast, the oilseed harvest is down 13% on the year and at its lowest level since 2004.

The figures come from the June 2019 Survey of Agriculture and Horticulture, showing planted areas in the UK for main crops, and also estimates for crop production.  The key results for the arable sector are summarised in the table below.  The data is provisional, with final results expected before the year end. Wales does not produce provisional results, so 2018 data has been carried forward to allow UK figures to be presented.

2019 data is provisional

The figures indicate that wheat production in the UK is 20% larger than in 2018.  This is a combination of a larger planted area (+4%) and much better average yields than last year (+16%).   Barley output has increased by even more, with production almost 26% higher year-on-year.  The area recovered after its slight fall in 2018, and yields were high.  A closer look at the split between winter and spring tells us that the winter crop area has dramatically increased from the low point seen last year to its highest planted area since 2003.

The oat area has continued its upward trend the last five years, with a good yielding harvest up nearly a fifth on last year at 6.0 tonnes to the hectare, resulting in the overall production of oats being up by more than a quarter at 27.2%.

The rise in the various cereal areas has been largely because of the decline in OSR plantings – as can be seen from the table, other break crops such as linseed, pulses or roots have hardly changed at all.  The UK oilseed rape area has fallen to its lowest level since 2002 and down 9.2% on 2018’s crop area.  With yields in 2019 nothing spectacular, overall output has dropped by 13% year-on-year.  Total UK OSR production is over a third lower than its recent high-point in 2011.  The lack of pest and disease control continues to cause problems in oilseed rape production, with anecdotal evidence that flea beetle has continued to be an issue this planting season, becoming more prevalent across the UK. 

As we have outlined in previous articles, the large amount of grain availability is weighing on cereals’ markets and has contributed to the slide in prices seen over the last few months.  Conversely, the relative scarcity of oilseed rape has helped support values.   This is probably not sufficient compensation though to generate a turn round in OSR plantings for next season, with another likely decline expected. 

As growers in England start to lift potatoes into store, the AHDB has updated the 2019 planted GB potato area.  The revised figure puts the area at 118,950 hectares, 1% higher than last year, although this still remains one of the lowest on record.  According to the AHDB the majority of the increase has been seen from smaller growers increasing their area and is likely to be due to last year’s higher prices.  A fuller analysis of the potato market will be included in next month’s Bulletin.

The British Society of Plant Breeders (BSPB) has published it royalty rates for Farm-Saved Seed for 2019/20.  This covers autumn 2019 and spring 2020 plantings. The rates can be found at http://www.bspb.co.uk/farmsavedseed/combinable-crops-payment-rates-and-eligible-varieties.php

The beet price for the 2020 crop will be £19.60 per tonne.  This compares to the current price of £19.07.  Similar to the 2019 crop price, this has no crown tare deduction and is paid on the current sugar content payment scale; this is equivalent to a price of £20.99 per tonne on a crowned basis.  NFU Sugar and British Sugar have also announced the three year contract offer for 2020-2022.  This has been set at £20.45 per tonne, again with no crown tare deduction.  This is equivalent to a price paid on a crowned basis of £21.90 per tonne in year one and £21.18 per tonne in years two and three.

There will be a bonus mechanism for growers under both contracts; this triggers if the EU-reference price for white sugar reaches a certain price.  For the one-year contract the ‘threshold’ remains at €375 (reduced from €475 in 2019), growers will receive a 15% share of the price above that level.  The threshold for the three year contract will be €400.  If the EU-reference reaches this level, growers under the three year contract will receive a 25% share of the price above the threshold.  Other points which have been agreed include:

• Market bonuses will be paid in two instalments (if they are triggered).  The first will be paid as soon as the beet volumes have been finalised
• The paid mileage cap at Newark will reduce to 55 miles in 2021 and 50 miles in 2022.  For all the other factories it will remain at 60 miles.

Growers will have received a letter outlining the above information.  Contract offer documents will be posted out to during the end of September and the beginning of October.

Germany looks set to ban the use of Glyphosate by the end of 2023 when the EU’s current approval for the chemical’s use expires.  Reports suggest it will start phasing out the world’s most widely-used herbicide from 2020, initially with a ban on domestic use and in parklands.  The decision comes after Austria announced a total ban in July; the first EU Member State to end the use of the chemical completely. Germany’s decision to phase-out the use of the weedkiller is due to claims it is a contributing factor to a decline in pollinating insect numbers and concerns it can cause cancer in humans.  The German-owned company Bayer who acquired Monsanto, the creator of Glyphosate, argue the chemical can be used safely and that it is ‘an important tool for ensuring the sustainability and production of agriculture’.