Category: Dairy & Livestock

The UK will still be allowed to continue to export live animals and animal products to the EU even if we leave with a No-Deal.  This comes after the EU’s Standing Committee on Plants, Animals, Food and Feed (SCoPAFF) confirmed the acceptance of the UK’s listed status application after it met the health and biosecurity assurances required for a third country.  However, third country listed approval only allows animals and animal products to continue to be exported.  If we leave with a No-Deal, there will be new requirements, which the UK will have to adhere to.  These include tariffs and non-tariff barriers, such as going through the correct EU Border Inspection Post and the requirement to have a signed Export Health Certificate.

British beef farmers will be given a much needed boost by the news exports of British beef to China have been given the go-ahead.  China imposed a ban on imports of British beef back in 1996 following the BSE outbreak.  Defra has confirmed shipments will begin again in the next few months after the Chinese authorities have cleared four beef sites for export with further sites being reviewed.  The announcement follows several years of engagement between the UK and Chinese government officials, culminating in extensive inspections by the Chinese authorities.  It is estimated the beef industry will benefit by £230 million.

Is the GB pig price finally starting to see a significant increase?  With all the problems of African Swine Fever (ASF) in China and EU pig prices rising, we had been expecting the GB price to have made a noticeable improvement before now.  Admittedly, the GB SPP has been steadily increasing since April, but plateaued from July through to September.  But for the week ending, 5th October, the EU-spec GB SPP recorded its largest weekly increase since June, up by 1.11p to 155.32p per kg.  This is now 8.53p per kg ahead of the price recorded for the same week last year.  In addition, estimated slaughterings reached 184,000 head for the week, some 3,200 more than the previous week and 11,600 up on the same period in 2018.  Meaning there is real demand in the market, not just a lack of product.  High EU prices are driving exports and keeping import prices high, all supporting GB prices.

Tomlinson’s Dairies of Wrexham has ceased trading.  Highlighting the current problems in the UK liquid milk sector, the 10th biggest liquid milk processor has given its 30 farmer suppliers immediate notice to quit.  It is understood half of these have already been taken on by Yew Tree Dairy, but the fate of the rest is not known.  The company had been under financial pressure for some time, after expanding significantly to take on a Sainsbury’s liquid milk supply contract.  Whilst it had recently been given an extension to this contract, it was unable to continue trading; Muller will take up this contract with immediate effect.  The position of suppliers is unknown as it appears some are owed significant sums of money.

The main categories of UK livestock have all shown a small decline over the past year.  These are the results of the provisional June 2019 Survey results recently published by Defra.  the table below summarises the figures;

2019 Data is Provisional    Poultry figures for 2019 not yet available.

The total number of cattle and calves has dropped to its lowest level since the basis of data collection changed in 2009.  The fall has been driven mostly by a decline in the beef sector, with the beef breeding herd continuing its historic decline.

The sheep breeding flock has also recorded a year-on-year decline.  This may be producers retrenching ahead of a possible Brexit.  However, the June figures tend not to be the best guide to future breeding intentions as the Survey occurs before autumn cullings and sheep sales.  The December figures provide a better indication of the coming lamb crop.

Total pig numbers have decreased slightly from 2018, although they are still higher than any other year since 2004.  The breeding herd is static.  The full Survey results can be found at https://assets.publishing.service.gov.uk/government/uploads/system/uploads/attachment_data/file/837834/structure-jun2019prov-UK-10oct19.pdf.

Natural England (NE) has published information on the badger control licences for 2019.  29 existing areas will receive reauthorisation as well as 11 new sites.  The new zones include areas in Avon, Cheshire, Cornwall, Dorset, Herefordshire, Devon (2), Staffordshire (2) and Wiltshire (2).  However, the edge area county of Derbyshire has not been included in the new cull zones.  To the dismay of those who had put the application together, it was turned down at the last minute.  NE has not given an explanation as to why the application, which met with all the criteria and protocols and had been approved all the way along, was turned down at the last hurdle.

There is not a lot of movement in the milk price currently, which is probably not a bad thing for producers, as the price remains reasonably good.  At the latest Global Dairy Trade (GDT) event, the average price index saw a respectable 2% increase to average €3,303 per tonne; the first rise since the end of July.

At home, deliveries continue to be very strong.  Cumulative production to the end of August is 2.2% ahead of last year.  Even so many processors have announced they are standing-on with their price for October including; First Milk, Barber’s (Cheese), Saputo, South Caernarfon Creameries and Glanbia Cheese.

When UK milk prices do generally start to move, it is expected to be downwards.  Some processors have already announced reductions;

• Wyke Farms will reduce the price it pays to suppliers by 1.5ppl from 1^st October
• Both Joseph Heler (Cheese) and Payne’s Dairies have announced a 1ppl reduction from the start of October.

UK beef prices show no signs of improvement (see Key Farm Facts for details).  Prices declined further during September, rather than improving as many had predicted.

The forecast decline in production in the second half of the year has not (yet) occurred.  Slaughterings are running close to last year’s levels, despite predictions of lower numbers coming forwards from the summer onwards.  In addition, average slaughter weights are up (+2%) meaning the availability of product is higher.  Increased supply is meeting quite weak demand with consumer purchases of beef still lacklustre.  (Whether any of this lack of consumer demand is due to the stream of messages about GHG emissions from red meat is not clear.)  There has also been a shift from high value cuts (steaks and joints) to lower-value products (mince and burgers).  Also affecting the market has been Brexit, with the stockpiling and subsequent destocking as various deadlines have come and gone.  Finally, in September, the slight strengthening of Sterling will have put downwards pressure on prices.   With previous predictions of an upturn in the market having proved incorrect, it would be brave to forecast when beef producers might see an increase in values.  However, if the threat of No-Deal recedes then consumers may feel more confident and the run-up to Christmas could see some uplift.

Last month’s Bulletin set out that lamb values had remained firm, despite Brexit uncertainty.  Prices remain close to last year’s values and the five-year average, despite some evidence that more lambs are being marketed ahead of the 31^st October Brexit deadline.  As the autumn sales progress prices for both store lambs and breeding ewes have remained (surprisingly) strong.

Andersons’ Friesian Farm model is showing decent returns so far for 2019/2020.  The latest figures are presented in the table below.  The first two columns show the results for 2017/18 and 2018/19.  In 2017/18 profits bounced back after losses in the previous two years following the milk price slump.  In 2018/19, the margin dropped following the late, wet spring and summer drought.

The last two columns are the budget for the current year, 2019/20 and the forecast for 2020/21.  So far the 2019/20 year is showing a reasonable result.  Even though some processors have announced price cuts for September/October, with further reductions likely for the remainder of 2019, the milk price has been relatively consistent until now and the average for the year is not expected to be far below 2018/19.  Looking ahead to 2020/21, prices are forecast to weaken further and with costs creeping up, the margin from production is almost eroded.  This means the majority of the business surplus is coming from direct payments, which obviously is not sustainable as these are reduced over the coming years.

Defra and the Welsh Government have launched a consultation on proposals to introduce a new method to determine the age of sheep at the time of slaughter.  Sheep classed as being over 12 months old must have their carcases split and their spinal cord removed; a measure introduced as part of the response to BSE.  Currently this is assessed by ‘mouthing’; lambs which have their permanent incisors through are classed as being over a year old and need to be split.  Under the proposals abattoirs would have the option to introduce a system based on a date.  Any lambs sent for slaughter up to June 30th in the year after their birth would be treated as being under 12 months old.

In the summer of 2018 the EU agreed that the age could be assessed by mouthing, the acual age of the lamb or ‘as estimated by a method approved by the competent authority’.  Defra had originally said it would use 30th June date as from 2019, but then changed its mind, worried about the effect this would have on our trading relationship with the EU in the even of a No-Deal Brexit.  The full consultation can be found at https://www.gov.uk/government/consultations/ageing-sheep-at-slaughter-introducing-a-new-method?utm_source=88616d9e-1539-4a80-84a0-f4e2f643dbae&utm_medium=email&utm_campaign=govuk-notifications&utm_content=immediate   responses need to be submitted by 31st October 2019.