Category: Dairy & Livestock

The problems in the pig sector remain critical.  The SPP fell by 4.66p per kg in the week ending 16th October to average 146.35p per kg; over 11p less than at the same time last year and at a time when costs are soaring.

Brexit and Covid have compounded staff shortages, particularly of skilled butchers which continues to impact throughput in processing plants.  Labour issues have seen some processing plants cutting back by 25% per week since August.  The result being pigs remaining on farm, taking up room, and eating feed, (the cost of which is at record highs).  The NPA is estimating between 120,000 to 150,000 pigs are in the backlog on farm.  Some healthy pigs have regrettably already been culled as farms simply run out of space to house them.

The Government appears to have finally recognised the industry has hit a crisis point and in a move welcomed by the sector, has announced a support package to include:

• Private Storage Aid – A scheme to allow processors to store slaughtered pigs for 3-6 months so they can be processed at a later date.
• Temporary Visa system – Until December 31st up to 800 pork butchers will be eligible for visas from the existing allocation in the Seasonal Workers Pilot Scheme, allowing them to travel and work in the UK for a period of 6 months. However, the Government has said this is not a long term solution and the sector needs to offer better training, career options and increase wages to attract labour from the ‘large domestic pool’.
• Levy Holiday – AHDB and QMS have already announced they will be suspending levy payments for November 2021, saving the sector just under £1m.

Other measures will also include:

• Working with the AHDB to support those processors who have been blocked by China, to find alternative export markets
• Engage with retailers and the food service sector to increase the variety of cuts consumed domestically.

Being recognised by the Government that the sector is in a crisis and then being offered a support package is very welcomed by the industry, but the situation on farms remains very critical requiring the measures to be implemented quickly if they are to alleviate the situation that most pig farmers are currently in.

The Welsh Goverment has launched a consultation on changes on how to identify, register and report livestock movements together with the proposed implementation of Bovine Electronic Identification (EID).  The consultation covers:

• Whole movement reporting (departure and destination) and journey information
• Mandatory same day reporting for Central Point Recording Centres
• Voluntary use of an online herd or flock register facility for all species
• Show and event movements
• Pre-movement reporting
• Improving pig identification

Responses to the consultation need to be submitted by 2nd January 2022.  The full consultation can be found at https://gov.wales/changes-livestock-identification-registration-and-movement 

The results of the provisional June 2021 Survey, recently published by Defra, show the breeding herds and flock in UK have all declined in number over the past year underlining the uncertainties facing the beef, sheep and pig sectors.   The table below summarises the figures.

The total number of cattle and calves has continued to fall and is at its lowest level since the basis of data collection changed in 2009.  Both the dairy and beef breeding herds continue their historic decline, although the decline in the dairy herd is fairly marginal.  The finished beef price has been at a record high this year, but this is still not enough to offset the underlying factors in the sector.  With support payments declining and strong cull values some may have decided it is time to exit the industry.  For dairy, although the breeding herd has declined marginally, for cattle aged between 1 and 2 years and those less than 1 year the Survey shows a 2% and 5.1% year-on-year increase in numbers.  This suggests more replacements coming through and a possible rise in herd numbers in the future.  The increasing use of sexed-semen is likely playing a part in this.

Despite exceptional finished lamb prices, the UK breeding flock has also recorded a year-on-year drop, with all categories showing a fall in numbers.  The sheep sector is very similar to the beef in that it has been operating on very tight margins for many years now with a lot of businesses relying on support payments.  The high prices being received for all categories of sheep could see some ‘cash-in’.

Although the pig breeding herd has experienced a decline, total pig numbers have increased by 4.4%.  This could imply production per pig has increased, or it could be as a result of producers having to keep pigs on farm longer than normal due to a reduction in the processing facilities experienced this year.  The economic climate for pig producers is currently very challenging and we could see a further contraction of the breeding herd unless circumstances improve.  The full Survey results can be found at https://www.gov.uk/government/statistics/farming-statistics-provisional-crop-areas-yields-and-livestock-populations-at-1-june-2021-united-kingdom?utm_medium=email&utm_campaign=govuk-notifications&utm_source=a934b7a0-6a83-481c-8e02-1a5cce6a15b2&utm_content=daily

Defra has released further insight into the the new Annual Health and Welfare Review.  The Review, which is due to be launched in spring 2022, will be the first part of the new Animal Health and Welfare Pathway.  The Review will consist of a fully-funded annual visit by the farmer’s own vet for the lifetime of the Pathway.  The vet will carry out diagnostic testing and provide farmers with tailored advice and management to improve the health and welfare of their animals.  The Review will also include signposting to other financial support to improve the health and welfare of the herd or flock.  This could include capital grants to improve the sustainability and reduce the environmental impact of the business or increase animal welfare.

The vet will also collect data; this will be used to increase the health and welfare of the farmer’s own herd/flock, but it will also be shared with Defra so it can get a better understanding of the health and welfare of the national and regional herds/flock.  This information will then be used to inform and develop future policy to ensure it is targeted in the right areas.

The Review will initially only be available to commercial cattle, pig and sheep farmers in England who are currently eligible for the BPS.  Eventually it will be open to all livestock farmers above a minimum threshold – 50 pigs, 20 sheep or 10 cows.  The application process is currently being tested, but should be simple, either online or via a telephone call.

The prospect of lamb sales to the US has seemingly moved closer.  Boris Johnson announced the lifting of the restriction, imposed in 1996 as a response to BSE, after meeting with the US President Joe Biden.  The ban on UK beef which was implemented at the same time, was removed last September.  The precise details of the agreement, including when sales can actually re-start are unclear.  The AHDB estimates sales of lamb and mutton to the US could be worth £37m in the first five years.  Hopes of a wider UK/US trade deal being concluded swiftly seemed to have receded.

Prices

The GDT average index has risen sharply over the month.  After posting consecutive declines since April, there was a small uplift (0.3%) at the auction held at the end of August, but this was followed by a 4% increase at the first event in September and another 1% rise at the latest event on 21st September.  This takes the average index over the $4,000 mark to $4,011.  The index is often viewed as the bellwether for the global dairy commodity market and currently there is a general upturn in the market, although still some way off levels seen in the spring.  A ‘fly in the ointment’ could be a slow down in import demand from China.  According to analysis of the market by Rabobank, supply is outpacing demand in China and the second half of 2021 could see import demand lessening, weighing on global dairy commodity prices.  But reports of a shift in demand to other parts of Asia and the Middle East could compensate for this (see below).

Domestic farmgate prices remain strong.  The UK average farmgate milk price for August is 31.24ppl, some 2.5% higher than the previous month and 11% more than for the same month last year (Key Farm Facts includes this data monthly).

After announcing a price cut of between 0.87 and 0.9ppl from 1st September, due to increased operating costs, Arla has announced a 0.32ppl rise as from 1st October; somewhat of a welcome surprise.  After last month’s reduction many were hoping for a stand-on to prices at best.  Whilst inflationary processing costs resulted in last month’s cut, October’s increase is a result of a reduction in European milk production in July and, according to the processor, the prices for all European dairy commodities, especially cheese, have increased significantly due to high demand and lower availability throughout August.  Futhermore, Arla cites a shift in global demand from China to Asia and the Middle East supporting positive development in the global milk powder prices.  Arla’s standard manufacturing price will be 32.62ppl for conventional milk and 40.98ppl for organic.  Barbers, Belton Farm, Meadow Foods and Saputo have all announced a stand-on to their price until at least November.

Production

Defra’s latest statistics show UK milk production for August at 1,198m litres.  This is 3.9% lower than July and 0.2% lower than for the same month last year, although still marginally above the five year average (1,186m litres).  Whilst it hasn’t been the sunniest summer, rainfall has been limited and has affected grass growth and hence production.  This is even more pronounced, if we remove Northern Ireland (NI) production.  GB deliveries are 1% below year earlier levels and 12m litres below the AHDB’s forecast for August deliveries.  NI continues to show good growth; a 4% year-on-year increase for August according to the AHDB.  The increase is attributable, in part, to beef farmers converting to dairy.  So far in 2021, NI deliveries are up 4% on the year compared to GB which has only seen a 0.4% increase.

The AHDB expects production to run below year-earlier levels until the New Year due to market conditions.  Although the milk price is good (see above), feed prices remain high meaning the milk to feed price ration will not encourage more production.  Rising labour and energy costs are also squeezing margins.

Prices

Beef and sheep prices have eased a little, but remain very strong.  The GB all prime deadweight average price stands about 40p per kg above last year (which itself was the highest for 5 years).  The cow price has seen a slight decline since mid-August.  But typically more cows are culled at this time of year, so the price usually sees a decline, even so, once again prices are about 40p per kg above 2020 levels.  The liveweight and deadweight lamb price, has also dropped over recent weeks but remains high in historic terms.  For the week ending 11th September the GB deadweight NSL SQQ fell by 2.2p per kg to average 526.9p per kg but this is 62.6p per kg above the same week last year and £1.13 above the 5-year average.

Production

Both cattle and lamb supplies have been tight and production remains low.  In August a total of 73,200 tonnes of beef and veal was produced in the UK; 2% lower than in the same month in 2020.  In total, 159,700 prime cattle were slaughtered during August; 3% below the same month last year.  For the period January to August beef production was down by 4% at 593,000 tonnes compared with 2020.  The prime cattle slaughter totalled 1.32 million head a decline of 4% and the cow kill was 5% less at 402,300 head.

The UK monthly sheep meat production has also been below last year and the 5-year average for every month so far this year, with July and August experiencing particularly sharp year-on-year declines.  In August, production totalled 22,800 tonnes, 16% less than in 2020 (which was similar to the 5-year average).  The lamb kill was 18% down at 1,010,700 head, described by the AHDB as ‘exceptionally low for the time of year’ and below its forecast.  In the year-to-date (January to August) the lamb kill totals 7,255,200 head, almost 900,000 less than for the same period in 2020.  This is equivalent to around one month’s national kill during the months March to June, with the kill numbers typically picking up July to December.  Figures show the ewe slaughterings are down even more, by 222,100 head at 741,400 equating to approximately 6 weeks national kill.  All this equates to the sheep meat production to August being 11% lower on the year at 166,600 tonnes.

The Government has launched a Call for Evidence to seek views on a new food labelling system.  The ‘Labelling for Animal Welfare Call for Evidence’ is open for 12 weeks, closing on 6th December 2021 and will sit alongside the wider review of food labelling for the Food Strategy White Paper.  Evidence is requested on the impacts of different forms of labelling and how labelling for animal welfare may align with wider labelling reforms, including nutrition and eco-labelling.  Defra is particularly interested in the potential impacts on businesses and also on the effectiveness of labelling at influencing farmer, business and consumer behaviour.  The Call for Evidence only relates to England, Wales and Northern Ireland.  Animal welfare and food labelling are devolved matters; responses will be discussed with Scotland.  More information can be found at https://www.gov.uk/government/consultations/labelling-for-animal-welfare-call-for-evidence

Natural England has authorised seven new badger cull areas to start in 2021.  These are located in Shropshire (two areas), Hampshire, Berkshire, Staffordshire, Worcestershire and Oxfordshire.  In addition, licence holders in 33 existing badger control areas have been authorised to resume their operations for another year.  The badger cull has been in operation now since 2013 as part of the Government’s measures to eradicate Bovine TB.  However, the Government has already announced it will be phased out over the next five-years and no new licences will be issued after 2022 (see our article https://abcbooks.co.uk/bovine-tb-7/) 

British pig producers have received a boost after Mexico opens its doors to British pork imports for the first time.  According to the AHDB, there is strong demand from this market for high quality pork; the levy board is estimating it to be worth £50m over the first five years of trade.  The result follows four years of negotiations and inspections.  The Mexican National Department for Health, Safety and Agricultural and Food Quality inspected a number of premises during a visit in February 2020.  This led to four processing facilities and four associated cold stores being approved in England and Wales for export.  Furthermore, the UK and Mexico have committed to begin negotiating a new and ‘ambitious’ free trade agreement this year.  These negotiations are also expected to help with our accession to the Comprehensive and Progressive Agreement for Trans-Pacific Partnership (CPTPP).