Category: Dairy & Livestock

Levy Bodies Joint Activity

The meat levy bodies of England, Scotland and Wales have announced a £2 million programme of joint activity.  The Agriculture and Horticulture Development Board (AHDB), Hybu Cig Cymru (HCC) and Quality Meat Scotland (QMS) have agreed to collaborate to deliver on five priority areas;

  • International shows and export events
  • Market Access
  • Brexit preparation
  • Meat and health, animal health and environment
  • Research

The AHDB will ring fence £2 million to support the programme.  The announcement comes after a year of discussions between the levy boards, and is an interim arrangement whilst a long term solution is found regarding the ‘repatriation’ of levies collected at the place of slaughter.  Both Wales and Scotland, for many years now, have argued that they do not receive their fair share of the levies, as animals which have been reared in Wales and Scotland are often slaughtered in England and as the levy is collected at the point of slaughter, this remains in England.

Meat Markets

Cattle

Prime cattle prices saw a rise in November as processors geared up for the Christmas procurement period.  There was a drop at the beginning of December, after which prices remained steady for the rest of the month.  January, however, has seen deadweight prices fall quite sharply week-on-week; even so they are still above the previous year’s.  For the week ending 20th January the average deadweight all steer price stood at 358.8p per kg, some 2.3p per kg lower on the week but still 8p per kg better than a year earlier.  Estimated slaughterings are up by 4.3% on the week.  Supply is said to currently be ahead of demand putting pressure on prices.  Prime beef supplies in 2018 are forecast to be higher than 2017, which unless demand also rises we could see prices ease further.

In contrast to prime cattle, prices for cull cows have seen a week-on-week increase.  The all-cow price for the week ending 20th January is 240p per kg, some 23.2p per kg more than the same week in 2017.  This could just be a ‘blip’, but demand for manufacturing beef remains strong both domestically and on the continent and should therefore help to support the price.

Sheep

The deadweight lamb price has started the year well, with the average SQQ for the week ending 20th January standing at 413p per kg, some 2.2p per kg up on the week and 34.1p per kg higher than for the same week last year.  In 2017, prices fell throughout January, where as this year the lamb price started the year higher and has steadily increased throughout the month.  Slaughterings are also estimated to be ahead of last year, suggesting demand for sheep meat is currently strong.

Revised Slaughter Figures

According to the latest DEFRA figures, year-on-year UK beef and veal production was down by 5% in December, to 68,000 tonnes.  This brings the total beef and veal production for 2017 to 901,600 tonnes, a decrease of 1% compared to year earlier levels.  However the reduction was expected to be more significant, but in DEFRA’s latest statistical release it has revised the production upwards for each of the months from August to November, a total increase of 8%.  And, with an 18% drop in production between November and December, and a 5% year-on-year fall, it is possible the December figures could also see a revision upwards.

A similar revision has also been made to the sheep meat figures.  If we look at the number of lambs slaughtered, this sees the numbers between August and November increasing by 10% in the latest release.  Meaning the carry over of lambs into 2018, although still significant, it is not quite as much as first thought.

Pig Meat

2017 proved to be an exceptional year for pig producers.  After a number of years of poor prices the SPP reached a historic high of 164.75p per kg in July, with record margins margins also being achieved in quarter 3.  But price rises were due in the main, to a fall in supply, both domestically and across the EU and not due to an increase in demand.  Consequently as supplies have increased in the second half of the year, prices have also fallen.  In addition, AHDB forecasts, domestic production to continue to rise in 2018 and we may also see a recovery in the EU.  If this is the case, similar to beef, an increase in demand will be required to support prices during the coming year.

For the week ending 20th January, the EU-spec SPP halted its 21 weeks of declining pig prices, by climbing (marginally) by 0.03p per kg.  But with ample supplies it seems unlikely that this ‘stabilisation’ will remain for any length of time.

Milk Prices

Arla UK has announced it will be cutting its milk price by 1.73p per litre as from February 1st.  Other purchasers had already announced price cuts, see below, but many others are now likely to follow now that Arla has made its move.  Arla’s price cut means it is now bottom of the AHDB milk price league table.

Other price cuts include:

  • First Milk – 1p per litre cut as from 1st February
  • Muller’s Co-op Group – 0.52p per litre cut as from 1st February
  • Dairy Crest Davidstow – 0.75p per litre cut as from 1st March

In contrast Tesco’s cost tracker price has actually seen a 0.07p per litre increase as from February 1st.

 

Revised Milk Production Figures

DEFRA has revised its milk production figures upwards for each month it has previously reported on in 2017 (January to October).  This means the cumulative production for the calendar year to October is now 12,315 million litres, an increase of 332 million litres (+2.7%) compared with the previously published data.  Production for the current milk year, April to November, is now reported to be 9,860 million litres(2.8%) higher than previously reported.

AHDB Dairy has voiced concerns on a number of occasions over the figures, but state, despite the adjustments being significant, that the 2017 figures are now inline with its expectations.  The levy board does however believe the May 2016 to December 2016 figures are about 20 million litres lower than expected, and therefore cautions using them in making year-on-year comparisons.

The revisions have apparently been made following ‘re-analysis of submitted data’, but it is a worry and begs the question whether there is a lack of detail/care being applied in gathering and analysing the data, or indeed whether the processes have not been updated to take into account the changing structures within the industry (perhaps due to funding cuts).  Especially when we hear other statistics are seeing large revisions as well (see meat market article).  The problem being that farmers and processors are making decisions based on these figures.

GDT Up

The GDT average index has increased at both auctions held in January.  This is the first significant increase since back in September (there was a 0.4% rise in December).  At the beginning of January, the index was up by 2.2% compared to the previous auction and at the event held on 19th January it saw a further increase by 4.9%.  All products saw a rise, in particular Butter (8.8%), SMP (6.5%) and WMP (5.1%).  Drought conditions in New Zealand has seen Fonterra reduce its production estimates for the country by 4%.  Consequently Fonterra has reduced the volumes being put forward to auction.  The purchaser collects around 85% of New Zealand’s milk.

Lactalis Salmonella Scare

Lactalis is at the centre of an international salmonella scandal, involving powdered baby milk.  It is believed that the outbreak can be traced back to one of its factories in the town of Craon in north west France.  At least 35 babies in France and 1 in Spain have so far been affected (but are recovering) although with the product being exported to numerous countries, more cases are expected to emerge.  It is reported that 12 million boxes of powdered baby milk from 83 countries has been withdrawn.  But there has been anger over reports that the French dairy giant did not act as soon as it could and even tried to ‘hide’ the outbreak.

Goat Farmers Served Notice

Both Arla and Abergavenny Fine Foods have given notice to their goat milk farmers to end their contracts.  Arla has given 12 month’s notice to all 9 of its suppliers, saying it will no longer be involved in goats milk in the UK once all producers have left.  Meanwhile, Abergavenny Fine Foods has given just 6 weeks notice to 4 of its 15 suppliers, to end their contracts as it continues to battle with an oversupply due to a fire which destroyed processing facilities back in 2015.  The problems seem to be a lack of communication, as demand has fallen whilst at the same time supplies have increased significantly.  Finding an alternative purchaser for those affected is looking very difficult.

Avian Flu Reappears

DEFRA has announced that the whole of England has been designated an Avian Flu Prevention Zone as the virus has reappeared in wild birds over the last few weeks.  This means that poultry keepers must follow enhanced bio-security measures.  However, there is not yet any requirement for free-range producers to house their birds.  The full range of measures that should be followed can be found at – https://www.gov.uk/government/news/bird-flu-prevention-zone-extended-to-cover-whole-of-england.  The H5N6 strain of the virus which has been circulating across Europe in recent months had been found in dead wild birds in Dorset.  With confirmation of further cases in Warwickshire, the measures have now been extended across the whole country.

 

Dairy Markets

Rising milk production in the EU and globally is putting downward pressure on the dairy markets.  Reports from AHDB dairy show that production from the five key exporting regions (EU28, Argentina, Australia, New Zealand and the US) in October were 4.1% higher year on year.  This was mainly due to an increase in production by the EU and NZ.  Estimated daily deliveries from the EU 28 were 5.2% more than for the same period in 2018, although it must be remembered this time last year production was falling due to the EU milk reduction scheme.

The GDT average price index did show a small increase of 0.4% at the auction held at the beginning of December, but this was the first rise since September.  It will be interesting to see the results of the second event in December (this was taking place as professional Update was going to press).  The downward pressure on the markets has led to some farmgate reductions being announced.  Following Muller’s announcement earlier in the month, as from January;

  • Meadow Foods will make a 1.25ppl reduction
  • Glanbia Cheese suppliers will receive a 1.5ppl cut
  • Sainsbury’s contracted suppliers will receive a 0.11ppl reduction, based on its cost tracker
  • Dairy Crest has said it will be holding its milk price until February.

Animal Welfare

The Government is seeking views on the draft Animal Welfare (Sentencing and Recognition of Sentience) Bill.  The Bill which was laid in Parliament on 12th December will increase the maximum penalty for animal cruelty offences from 6 months to 5 years imprisonment and will ensure that animals are defined in UK law as sentient beings.  The Bill underlines the Government’s commitment to not only maintaining animal welfare standards but also improving them as the UK prepares to leave the EU.  The full consultation can be found at https://www.gov.uk/government/consultations/draft-animal-welfare-sentencing-and-recognition-of-sentience-bill-2017. Responses need to be submitted by 31st January 2018.