Category: Dairy & Livestock

HDB Dairy is undertaking some analysis of how the domestic dairy industry could replace imports.  At present, the UK has the second largest trade deficit in dairy products in the world (behind China).  In volume terms, the amount exported is not that far behind imports – 1.1m tonnes of exports against 1.2m tonnes of imports in 2015 (note, however, that these export tonnages include liquid milk being sent to the Republic of Ireland for processing).  However, the value of the imported products tends to be much higher – the trade gap in value terms is around £1bn.  Much of the product has traditionally come from the EU.  With Brexit on the horizon, could some of this market be captured by domestic production?  The AHDB provide some statistics on key dairy products being imported (see table).  It does caution that the UK may not have the processing capacity devoted to some of these products, and also that the profitability of some of these markets may not be high enough to make them attractive.

Source: HMRC

DEFRA has launched a consultation on proposals to change the TB control measures in England.  The proposals include the introduction of six-monthly surveillance testing of higher risk herds in the High Risk Area.  This received, in general, a positive response to the ‘call for views’ in August 2016.  Currently, the TB testing landscape across the High Risk Area is complex, with herds receiving multiple types of ad hoc testing.  The proposals aim to rationalise this regime, by moving to six monthly routine surveillance testing, with the opportunity of less frequent testing of lower risk herds.  DEFRA estimates that 80% of herds in the High Risk Area will actually face fewer TB tests than they do at present.  The other key proposals include:

• Increased use of private vets
• Changes to TB compensation system to encourage risk reducing behaviour on-farm.

The full consultation can be found at: https://consult.defra.gov.uk/bovine-tb/simplifying-testing-and-other-control-measures/ Responses need to be submitted by 29^th September 2017.

Morrison’s announced at the Great Yorkshire Show that it will be using 100% British meat for its own-label brand ‘Market Deals’.  This will mean the retailer will stop selling fresh imported lamb from New Zealand and Australia.  The move follows the Co-op’s pledge, back in May, to switch to selling 100% British fresh meat all year round.  Whilst both are very welcome, the move by Morrisons is possibly more important, due tothe scale of the retailer.

Producers have been told to be cautious about ramping up production following comments by Arla CEO Peder Tuborgh that there will be a butter and cream shortage at Christmas.  Fats have been the main driving force behind the increase in commodity prices and rising farmgate prices.  AHDB figures show that butter and cream prices have more than doubled since this time last year.  Butter values have risen by £800 per tonne in a month to average £5,100 per tonne in June, whilst bulk cream values have increased by more than £400 to average £2,370 per tonne.

The value of butter is now accounting for more than 65% of AMPE, normally it contributes about 45-50% with the remainder being made up by powders; SMP and WMP.  With powder prices being constrained by intervention stocks, it is the butter market that is applying upward pressure on farmgate prices. UK butterfat is currently below last year levels, cumulative levels show it at 4.02% in May, compared to 4.07% in 2016, but ahead of the 5 year average at 4%.

However, it seems pretty unbelievable that, when dairy farmers are still recovering from the last couple of years, during which they were told that there was too much milk about and producers were being compensated for reducing production, we are now being told that we face a shortage.  Processors need to be working with producers and sending out better market signals to farmers as this boom and bust cycle is obviously not sustainable. 

The European Commission has authorised the use of processed proteins derived from insects to be used in farmed fish food.  The European Compound Feed Manufacturers’ Federation has described the decision as a ‘promising alternative source of protein for animal feed’.

Member States have given the go ahead to sell 100 tonnes of SMP out of EU intervention.  This is the first time since December 2016 that any bids have been accepted when just 40 tonnes were sold.  Belgium and Poland both lodged bids for a total quantity of 1,340 tonnes, with just 100 tonnes being accepted.  Prices ranged from €138/100kg to €185/100kg; this compares to the current market price of €200/100kg, although it must be remembered the intervention powder is about two years old.  To put this sale into context, it is only a very small amount, there is about 354,000 tonnes in EU public intervention stores.

Following the consultation on the Wales TB Eradication Programme which closed in January, the Welsh Government has published the Wales TB Eradication Programme Delivery Plan.  From 1^st October 2017, there will be a regionalised approach to TB eradication in Wales with the introduction of Low, Intermediate and High TB areas.  This will enable measures to be more tailored to the different areas.  For chronic herd breakdowns there will be bespoke action plans drawn up.  In addition, where badgers are viewed to be contributing to the persistence of disease in chronic herd breakdowns, they will be trapped and tested.  If found positive they will be humanely killed.  Other key changes from 1^st October include:

• All cattle moved into the Low TB Area will require a Post-Movement Test (PoMT), this includes cattle moving from the High Risk and Edge Areas in England.
• Pre-Movement (PrMT) will not be required for cattle moving within or from the Low TB Area.
• In persistent and recurrent herd break downs, the ‘clearing’ test (the test that lifts TB restrictions) will no longer be allowed to be used as a Pre-Movement Test, a further PrMT will be required after 60 days.
• All Inconclusive Reactors (IRs) in chronic herd breakdowns will be slaughtered.
• In cases of persistent herd breakdowns, where cattle are moved under licence within a CPH, compensation will be reduced by 50% if the animals are subsequently slaughtered as a result of TB.  Keepers will be given time to restructure their holdings.
• The current cap of £15,000 per animal will be reduced to £5,000
• Phasing out of Exempt Finishing Units by 1^st January 2018

TB levels were at their highest in Wales in 2008-09 and the number of new incidents has fallen by 41% since then, but recently the number of cattle being slaughtered has risen.  However, this has been attributed to the increased use of the more sensitive interferon-gamma test and a more severe interpretation of the skin test.  Later in the year an eradication target and interim milestones for the regions and Wales as a whole are expected to be announced.

In contrast to what many were expecting, the average index at the latest GDT event fell by 0.8% to finish at $3,434.  This is the first decline in the index since the beginning of March.  WMP, which made up nearly half of the product sold, dropped by 3.3% to average $3,022 per tonne.  Cheddar also declined by 3.8%, whilst SMP, making up nearly a quarter of the products sold increased by 1.4%.