Category: Dairy & Livestock

A fifth case of avian influenza has been found in the UK.  The H5N8 strain of the disease has been confirmed at a commercial pheasant breeding operation near Preston.  This adds to the cases seen in two turkey farms and two backyard poultry flocks.  Protection and surveillance zones have been put in place around the Lancashire unit.  Meanwhile, the housing order requiring all poultry to be bought indoors remains in place until at least the 28^th February.  In Northern Ireland this has already been extended to 16^th March.

Production and Prices

Milk production in December was just under 5% less than for the same month in 2015.  But at 1,150 million litres it was similar to production back in December 2014 (1,156m litres).  However, since the turn of the year, daily delivery information from AHDB Dairy shows production has fallen again.  For the first week of January, deliveries were running at 5.6% less than year-earlier levels.  For the week ending 14^th January it was 4.8% below 2016 and 2.5% lower than 2015 levels.  Cumulative production now stands at 6.3% below the previous year at 10,490 million litres.

As documented previously, the fall in production both domestically and globally has resulted in milk price rises.  The average UK farmgate price for December was 26.21ppl; a 2.7% increase on the month and 9.7% (2.33ppl) higher compared with the same month in 2015.  There has been several further significant price increases announced for January and February (some are included in last months article):

• ArlaFoods is increasing its January price by 1.68ppl
• As from 1^st February Muller UK has announced a further increase of 1.25ppl plus a retail supplement of 0.82ppl
• Yew Tree Dairy is increasing its February price by 1.5ppl
• Other price announcements include; a 1.5ppl and 1.65ppl increase in January for deliveries to Paynes and Wick Farms respectively, with Muller-Tesco announcing a 0.14ppl rise in February

Intervention

The EU Commission has held three tenders for the sale of SMP currently being stored in EU intervention but so far only 40 tonnes has been sold.  This was from the first tender held in December but at the latest two tenders the Commission has not accepted any bids.  The latest event saw bids for nearly 7,500 tonnes, but the highest bid was €1,900 per tonne, whereas the average market price recorded by the Milk Market Observatory for 15^th January was €210 more than this.  Buyers are reluctant to buy stock above the market price and are waiting for clearer market signals.  With the spring flush just around the corner, buyers may wait to see whether it looks like it will be a good or bad one before they commit too much.

Free Range Milk

Free Range Milk has been hitting the headlines with Somerset farmer Neil Darwent being featured on Jamie Oliver and Jimmy Doherty’s TV programme.  In addition, Somerset farmer Nick Hiscox has set up the Free Range Milk Marketing Board and is preparing to launch the ‘Enjoy Milk’ brand in full in April, although direct sales are expected to start from February.  But there are mixed messages, as milk from the Free Range Milk Marketing Board is from cows that are kept out at grass ‘as much as is possible and practical’ whereas Neil Darwent’s dairy uses milk from cows that have been out at grass for at least 180 days.  The lack of a single coherent standard and message could well hinder the development of this market.  It remains to be seen if this is just a fad.

A further outbreak of Avian Flu was confirmed on 16^th January in a flock of turkeys at a farm in East Lyndsey, Lincolnshire.  It is the same, H5N8, strain that has been identified in ‘backyard’ flocks in Carmarthenshire, Wales and Settle, North Yorkshire earlier in January and a turkey farm in Lincolnshire in mid-December.  A number of wild birds across England, Wales and Scotland have also been identified with the disease.  There is currently a legal requirement in place to house kept birds or to otherwise separate them from wild birds and follow strict biosecurity measures.  This requirement remains in place until at least 28^th February 2017.

The first period of the Milk Production Reduction Scheme finished on 31^st December.  Those who made a successful application to this first tranche of the scheme must send in a claim for payment by 14^th February.  Further guidance and the two page claim form (MPRS2) can be found on the DEFRA website at https://www.gov.uk/guidance/milk-production-reduction-scheme-how-to-apply .

Proof of actual deliveries must also be sent with the claim.  Proof can be a copy of the milk cheque or purchaser statement for each of the relevant months; you can send photocopies.  The completed form and proof must be sent to; Milk Production Reduction Scheme, Rural Payments Agency, Room 151, Lancaster House, Hampshire Court, Newcastle upon Tyne, NE4 7YH by 14^th February 2017

Claims for payment for the second period (1^st November 2016 to 31^st January 2017) must be received by the RPA at the above address after 31^st January but by 17^th March 2017.  As the first two periods were oversubscribed tranches 3 and 4 never opened for applications.

The application window for applying for an NVZ grassland derogation has been extended until 20^th March 2017 (previously 30^th December 2016).  A derogation can only be applied for by telephoning the Environment Agency on 03708 506 506.

Those within NVZs are normally subject to a limit of 170kg nitrogen per hectare per year from livestock manure averaged across the area of the farm.  However a derogation can be granted to allow up to 250kg nitrogen per hectare per year from grazing livestock, if at least 80% of the agricultural area of your holding is down to grass and the nitrogen comes from grazing livestock manure (i.e not pigs, poultry or veal calves.  When applying farmers will need information on the area of grassland on the holding and the amount of manure nitrogen produced on the holding by various categories of livestock.  For more information on what is required please go to: https://www.gov.uk/guidance/grassland-derogations-for-livestock-manure-in-nitrate-vulnerable-zones

DEFRA are still in negotiations with the Commission over the renewal of the UK’s derogation.   In the meantime DEFRA is continuing to go ahead with inviting applications for 2017 on the same provisions as in previous years, but note it may have to withdraw derogations if the Commission does not grant arenewal or if the conditions are changed.

Further to our article on 9th December DEFRA has confirmed an outbreak of Avian Flu at a turkey farm near Louth in Lincolnshire.  The H5N8 strain is the same one that has been affecting poultry in Europe.  The outbreak was confirmed on Friday 16th December.   In the region of 5,000 turkeys have been affected.  A 3km Protection Zone and 10km Surveillance Zone has been put in place around the farm.  The Prevention Zone, which means all poultry and captive birds should be housed, if possible, remains in place at least until 6th January and may now be extended.  All keepers should observe strict biosecurity measures and report any suspected diseases to APHA tel. 03000 200 301.  Further advice is also available on the DEFRA helpline on 03495 33 55 77.  Public Health England has confirmed that the risk to human health is very low; there has never been a recorded case of H5N8 in humans.

After four consecutive price rises, the last Global Dairy Trade (GDT) Event of 2016 has seen the index of prices fall by 0.5%.  There was no change to the SMP index price compared with the auction held earlier in December.  The WMP index has fallen marginally by 0.8%.  It remains to be seen how much affect the sale of SMP out of EU intervention stores has on prices going forward.

The Government’s strategy to combat bovine TB is ahead of schedule.  DEFRA is set to apply for Officially TB-Free (OTF) status for over half of the country next year, this is two years ahead of the published timetable.  The OTF area will cover the north and east of England which is classified as the low-risk area.  Obtaining OTF for this part of the country will be a significant step in the Government’s 25-year plan to see the whole of the UK classified as OTF by 2038.  It will also be the first time anywhere in England has achieved this status and will provide a boost to export opportunities.

As part of the overall announcement, statistics have been provided on the 2016 badger cull.  Across the 10 licenced areas 10,886 badgers were removed this year.

DEFRA has also announced it has opened a consultation seeking views on proposals to introduce a supplementary licence for farmers to continue badger disease control measures after the first four years of culling has finished.  The full consultation can be found at https://www.gov.uk/government/consultations/bovine-tb-supplementary-badger-disease-control.  The deadline for views is 10^th February 2017. The Chief Veterinary Officer has said that it is likely the disease risk from badgers will increase in the cull areas as the population recovers.  He has therefore said that consideration should be given to maintaining the badger population within these areas either at the same or below that achieved at the end of the four year intensive cull period.  DEFRA also said it plans to resume the Badger Edge Vaccination Scheme in 2018 when it expects the vaccine to be available again.  This scheme, which is currently on hold due to a global shortage of the vaccine, offers funding for private badger vaccination in the edge area counties.

Other measures which have been been announced following responses to consultations and as part of the 25-year strategy include:

• A wider use of the blood test alongside the skin test in high-risk areas.  This is a more sensitive test and should help prevent leaving infected animals within the herd
• To bring the measures to control the risk of TB within pigs, sheep, goats, deer and camelids more in line with cattle controls and the introduction of new statutory compensation arrangements for these species
• To update the online tool, ibTB, every two weeks rather than once a month.  The tool allows keepers to track if there have been outbreaks near their holding

AHDB Beef and Lamb has released its latest benchmarking figures for English beef and sheep enterprises.   The figures in the 2016 Stocktake Report relate to the year ending 31^st March 2016.  The table belowshows the net margins for each enterprise for the last two years and the difference between the average producer and a top third producer where available.

In the main, the cattle margins are better than last year and improved compared to the last three years; only beef finishing up to 16 months bucks the trend.  The top third of sheep enterprises continue to see positive returns, but the average producer for both beef and sheep enterprises continue to struggle to make a positive net margin return.  It should be noted that the results do not include income from the Basic Payment Scheme, any Agri-environment payments or diversification income.  Many of these types of farms will be reliant on such income to produce an overall farm profit. 

The figures below are only for the top third and average producers, there is a significant further gap to the bottom third producers.  The level of fixed costs between the top third of producers and the average show a marked difference, highlighting the importance of looking at total costs rather than just the gross margin.  In addition, there is a difference in the physical performance, particularly within the suckler herds.  For example, the Non-SDA top third of producers had shorter calving periods, more calves born alive and a lower percentage of empty cows or heifers.  The report aims to offer benchmarking figures and physical information for producers to compare their enterprises against.  This year, for the first time, there is space to put producer’s own figures in.

For the second year, international comparisons have also been included in the report.  These were compared on the basis of US Dollars and therefore some exchange rate impacts are felt.  For suckler herds, once again only the US had returns greater than costs.  The UK (upland farm) and Germany were again the only countries to have returns lower than their cash costs (i.e. those costs not including imputed rent, unpaid labour, depreciation and finance).  For finishing units, the USA and China had returns higher than costs whilst for sheep breeding enterprises, New Zealand and China were profitable.

ENTERPRISE NET MARGINS 2014/15 AND 2015/16 – Source: AHDB
	2014/15		2015/16
	Average	Top Third	Average	Top Third
Lowland Suckler Herds (£ per cow to bull)	-218.45	-42.88	-155.76	26.53
SDA Suckler Herds (£ per cow to bull)	-124.79	23.13	2.82	134.36
Combined Breeding/ Finisher (£ per cow to bull)	-323.05	12.97	-203.07	n/a
Combined Breeding/Stores (£ per cow to bull)	-268.26	n/a	-348.29	n/a
Beef Finishing up to 16 months (£ per head)	-207.76	24.53	-117.35	-19.60
Beef Finishing 16 months & over (£ per head)	-208.91	41.36	-67.29	52.86
Store Rearers (£ per head)	-127.50	-17.91	-87.35	41.97
Lowland Breeding Flocks (£ per ewe to ram)	-7.59	14.53	-6.34	17.36
SDA Breeding Flocks(£ per ewe to ram)	-1.95	23.59	-3.55	17.61
Store Lamb Finishing (£ per head)	0.43	9.77	0.15	6.28

The full report can be downloaded from http://beefandlamb.ahdb.org.uk/returns/stocktake/

The latest GDT auction on the 6^th December saw the index of prices rise by 3.5% to $3,622 per tonne.  This is the fourth consecutive rise in values.  Part of the increase in prices is down to fears over availability, with volumes being sold through the auction around a quarter down on the same time last year.