As businesses across the UK attempt to plan for the effects of the forthcoming withdrawal from the European Union, trade bodies within every sector of the economy are seeking to influence government and minimise the risks to their members.

The Agri Supply sector represented locally by the Northern Ireland Grain Trade Association, are seeking a Brexit outcome which recognises the strategic importance of UK Agriculture and its ability to produce high quality food in a sustainable way through the efficient use of available resources.

The provinces high dependence on imported feed materials for the intensive livestock sector mean that it is vitally important to maintain existing trading patterns, ensuring favourable access to grains, feed and fertiliser on the global marketplace – preferably free of quotas or tariffs. Currently 90% of feed ingredients are imported – roughly half from within the EU and half from third countries such as North and South America. Agribusinesses are calling for government to work constructively with EU partners to develop a bilateral approach to agricultural trade which facilitates historic trading patterns - appreciating that the vast majority of food produced in Northern Ireland is for consumption beyond these shores.

Practical and workable solutions could be agreed through a process of mutual recognition of standards and quality criteria. These high standards of assurance and safety, to which we currently operate, are key to market access, both new and existing, and must be clearly visible throughout the food chain.However, they must also apply to all imports of food into the UK – particularly from the low cost regions where production is less well regulated.

Local businesses are adamant that any solution must remove the threat of disruption to trade, through physical delays and administrative burden associated with a hard border. The daily movement of thousands of tonnes of meat, milk and grain throughout Ireland are essential to the efficient operation of many agri-food businesses. In addition, the transatlantic shipments of feed materials, with vessels often carrying over 50,000 tonnes, generally involve discharge in more than one port – Belfast, Dublin or Cork.

Industry leaders are calling for government to promote a growth agenda based on a competitive and efficient Agri-food sector delivering growth, jobs and productivity. This has to be based on profitable and efficient farm businesses supported by a program to drive competitiveness and sustainability. This should also include protection against the extremes of price volatility at farm level.

There is potential for such a program to reduce the UK’s dependence on imported food through a focus on local supply, produced to the highest standards, in a well-regulated and welfare friendly environment and to invigorate farming and the rural economy.

Traders have been surprised by the activity of fund buyers in driving commodity prices upwards in recent weeks in spite of plentiful supplies of the main feed materials.

Money has been flowing into commodities as equities in the US hit all-time highs causing speculators to look around for something “cheap” to buy.  Thus hedge fund buyers have been active across all commodities, taking unusually long positions on soya, reducing their short positions on wheat and going long corn.

Soya trucks queuing up at the silo’s in Brazil
Soya trucks queuing up at the silo’s in Brazil

The weather outlook for most of the world’s main crop producing regions is fairly benign and there are no major concerns on the supply side for most commodities. This should lead to a bearish outlook on pricing eventually but the flow of money trumps the fundamentals over the short term.  Soya meal is a case in point with the funds long by 74,000 contracts which is exceptional in terms of recent history. The prospects for the soya crop in South America are very good with harvesting conditions in Brazil much better than last year and with almost 40% of the crop already safely in store the latest forecasts predict a massive 108 million tonne crop – up 2 million tonnes from last month.    The Argentinian harvest is still a few weeks away but although it will not challenge the record 61 million tonnes seen in 2014/15 analysts are predicting a harvest in the region of 55 million tonnes. 

The market for maize and wheat in the United States has been buoyed by speculation over the Trump government’s policies regarding bioethanol support. It is expected that the government will change from a blenders' credit to a producers' credit, meaning imported ethanol could no longer qualify. This could increase demand for US maize to be used in ethanol production and fuels concerns about supply which will keep a firm feel to the markets for old crop grains.  Inevitably the legislative process will be slow, possibly taking  as long as 4 years to enact, but it does add another layer of uncertainty.

The soya harvest is well under way in Brazil​ as evidenced by these combines​
The soya harvest is well under way in Brazil​ as evidenced by these combines​

In Europe wheat demand is also firm, particularly for the old crop due to lack of selling by the Russians and a strong demand for milling wheat from Egypt. DEFRA have reduced their estimate for the UK wheat crop by 84,000 tonnes.  Supply concerns driven by increased feed wheat demand predominately by the poultry sector combined with increased demand from the flour milling and energy channels have pushed the old crop futures to a premium of £10 per tonne over the new crop.

As always currency plays a major part with renewed pressures for a Scottish referendum enough to cause a weakening of sterling and a lift grain prices.  As we get closer to pushing the big red button for Article 50 further currency volatility is to be expected.

The impact of the currency devaluation in the immediate aftermath of last summers’ Brexit vote is still to be fully reflected in feed prices at farm level. The coming weeks will see the unravelling of winter feed contracts – many of which predated the 23rd June  - and this will inevitably lead to a significant uplift in farm pricing.

Northern Irelands Farmers will have been pleased to receive the lion’s share of their single farm payment in recent days. The weakness of sterling following the Brexit vote has added a very welcome £40 million to this year’s payout. A further benefit will be recovered from the increased competitiveness of our food exports in those all-important export markets.

This has been very positive for our grain producers, collecting an enhanced single farm payment and also enjoying a £20 to £25/tonne uplift in grain prices purely driven by exchange rates.

The weakness of sterling following the Brexit vote has added a very welcome £40 million to this year’s payout.
The weakness of sterling following the Brexit vote has added a very welcome £40 million to this year’s payout.

For our livestock sector however there is a sting in the tail - with well over 2 million tonnes of feed materials to be imported from Europe, South America and the USA - we will suffer from the rapidly falling exchange rate against euro and dollar. The 15% reduction in the value of sterling will add £75 million to the provinces annual feed bill when the full effect has filtered through.

Our local European issues are only part of the story of course – in the wider world, markets are moving in response to the normal trade issues of supply and demand, weather patterns and money movements. The concerns about the La Nina weather pattern causing dryness in Argentina is creating some doubts on the supply side and funds looking for somewhere to invest their $millions have moved back into agri commodities. Funds reportedly moved from a position of 50 million tonnes short in grains to 25 million tonne short over a 3 week period. The buying spree spilled over into the soya markets and in spite of strong supply signals the markets responded with soya meal in Chicago moving from under $295 per tonne to $328 in a few days. Most of this gain has been given up again and the markets settled back in recent days as the funds became sellers – offloading substantial tonnages of corn and soya. Volatility is a big feature and markets are sensitive to money movements but fundamentally not much has changed with little activity in terms of physical trade. Generally prices have come off the bottom reached in mid-October with all commodities trading a little stronger and buyers are struggling to find where the value is.  Sterling buyers have the added concern about currency and where the current slide will end.

It is inevitable that currency driven inflation will affect most farm inputs and indeed the wider economy. This cost pressure makes it critical that product prices quickly reflect the increased value of our exported milk and meat. After a prolonged period of food deflation it is important that food retailers recognise the pressures in their supply chain and deliver more realistic farm prices. Current prices are not at a sustainable level and as farmer indebtedness to the banks has just crossed the 1 £billion level and with trade credit also running at record levels there are many businesses at breaking point.  

 

 

A couple of weeks can make a big difference to global commodity markets and the predictions of a record soya crop in South America reported in this column last month have been shot down in flames. The run of record large soybean crops in this region has now come to a screeching halt as weather has played havoc with the harvest and with the movement of the crop to the ports.

The Brazilian soybean crop had problems from the beginning of the growing season, so it was no surprise that the early estimates have been trimmed as the harvest progressed. The crop is now ending on a poor note due to dryness in North Eastern Brazil and wetness in far southern Brazil.

The flooded soya bean crop in Argentina
The flooded soya bean crop in Argentina

The big surprise has been the terrible end to the growing season in Argentina. Up until a few weeks ago Argentinean farmers had been expecting a record soybean harvest. The weather during the entire 2015/16 growing season was nearly ideal but as the crop was approaching maturity the rain started to fall and continued falling for several weeks. As a result, widespread areas in eastern and northern Argentina experienced extensive flooding with as much as 60% of the farmland under water. This region of Argentina is very flat with almost no slope to the land, so flood waters recede very slowly and the concern is that some soybean fields will be a complete loss due to beans sprouting and moulds developing in the crop. Even if the field is not flooded continuous wet weather can have a devastating impact on the crop resulting in shrunken, lightweight beans. The crop is now forecast to be down around 8% on the 2105 harvest with the hardest hit areas down by up to 30%.

The harvest in Argentina has basically been paralyzed for three weeks due to the wet weather. In a recent estimate, the Buenos Aires Grain Exchange estimates the soybean harvest at 16% complete compared to 46% harvested at the same point last year. This marks the slowest soybean harvest in Argentina in at least a decade. 

This has played havoc with shipping programs as vessels queue in the River Plate awaiting the arrival of the crop at the ports as lorries struggle through a flooded and damaged road system.

The impact of these delays has been to drive up prices in the consuming countries with soya meal on the local spot market up by £40 to £50 per tonne in the last three weeks or so. Hopefully this is a reaction to concerns about supplies in the short term and there will be some correction as weather improves and shipments catch up with demand. However with global production forecasts now trimmed by 5M tonnes the expected reduction in stocks is bound to bring some firmness to a market which has been in a steady decline for the last year or so.

The decision of the Assembly Environmental Minister to ban the cultivation of genetically modified crops in the Province doesn’t have any immediate impact on local farmers - but it does deny our growers access to technologies which are accepted as standard in the main food producing countries of the world and it is a further indication of a “sentiment over science” approach which could lead to major issues for livestock production in Europe..

Europe's livestock industry depends on imports of feed materials from North and South America – Much of this material is derived from genetically modified maize and soya.
Europe's livestock industry depends on imports of feed materials from North and South America – Much of this material is derived from genetically modified maize and soya.

With 90% of the feed materials used in Northern Ireland arriving by ship the provinces livestock sector is totally reliant on the global grain market. 

Over 2 million tonnes of feed materials enter the province each year from all corners of the globe and much of this material is derived from genetically modified crops grown in other countries. All of this material has undergone a rigorous risk assessment by the European Food Standards Authority (EFSA) and has been approved for use in food and feed production within the EU

The EU Commission is currently debating a proposal which will allow each region within the EU to decide whether to permit the use of G M materials for food and feed in their country under “compelling grounds of public interest”. The reason cannot be scientific as the EFSA have already deemed them to be safe.

EU feed and food business operators act in a global commodity market, where GM technology is a given and this proposal could jeopardise the future of EU livestock farming. With 80% of feed produced containing some GM material all Member States are strongly reliant on GM imports for the viability of their livestock industry. The EU cannot replace the 32 million tonnes of imported soybean products which are derived from GM crops.  Maize and maize by-products from the starch and ethanol industries would also be affected.The feed industry already offers non-GM feed supply chains for customers who are willing to pay the premium for segregation and identity preservation; therefore, there should be no need for any interference by policy-makers to prohibit GM raw materials, as market solutions already exist.

The distortion of trade which would result from some regions regulating against the use of GM would drive up prices and cause chaos throughout the EU agrifood sector. It would end the free trade throughout Europe and result in food shortages and imports of livestock products from third countries (where they would almost certainly have been fed on GM materials). Farming organisations and trade bodies across the EU are vigorously opposing the proposals – concerned about the logistics and labelling issues and the potential for massive distortion of trade. 

Since Implementation will be a devolved issue there is potential for disruption of trade even within the British Isles with England, Scotland, Northern Ireland and Southern Ireland all making their own decisions.

 

With the 1st of February signalling the start of slurry spreading most farmers will still have a chance to collect and analyse some soil samples before the growing season. The information provided by a soil analysis can save hundreds of pounds in fertiliser costs and can lead to significant increases in crop production. For livestock farmers the need to maximise use of the resources available on the farm and to closely manage input costs has never been greater. The potential for production from grass is not being exploited on many farms and basic good farming practice  - such as applying lime on a regular basis - is often neglected.

Spreading Fertiliser
Spreading Fertiliser

The benefits of correcting soil acidity, in terms of better utilisation of nutrients applied and in improved yield are well recognised but over three quarters of the soils tested still indicate a deficiency of lime. A knowledge of the phosphate and potash requirement of each field on the farm is essential to allow efficient use of the farm manures and will also ensure that the right fertilisers can be applied to deliver exactly the nutrients that the growing crop requires. This saves on the fertiliser bill but also reduces the risk of environmental damage through the loss of surplus nutrient to the atmosphere or to our waterways. The work of the industry’s Green House Gas partnership and the land management strategy project highlights the potential for efficient farming and precision in the use of inputs to improve farm profitability. Measurement is fundamental to good management and the soil analysis report is one of the key elements.

FERTILISER MARKET FIRMS

Following a period of flat fertiliser prices the market is waking up to the fact that there actually isn’t a great deal of product in the pipeline. The depressed demand of last season caused many nitrogen producers to ease back on production rather than build up massive stocks of material which the market was reluctant to buy.

Alarm bells sounded when the Indian government invited tenders for supply of 1.2 million tonnes of urea – usually such a tender would be well oversubscribed as leading manufacturers competed for the business – but when only 800,000 tonnes were offered it signalled a dramatic change in the supply/demand equation.

Globally the effect of reduced production in China, where the government have taken measures to  curtail the output of urea from coal fired production processes due to concerns about damage to the environment, will be significant – as will the political unrest in Turkey where ammonium nitrate has been removed from the market due to security concerns.

Local importing businesses have shipped less material in the late summer and autumn of 2016 due to dull demand and fears about the impact of poor grain prices on the fertiliser market. In recent weeks the market has reflected the growing supply concerns and demand has been driven by buyers looking to secure supplies ahead of higher replacement costs. Merchants are reporting significant activity as farmers move to cover at least some of their spring requirements.

Attention to detail and sound advice are among the key ingredients of a successful dairy business today according to producer Seamus Lappin who farms near Armagh in Northern Ireland. 

Contrary to many of the current trends, he also believes that small, efficient businesses can succeed and thrive in the current climate. Seamus runs a family dairy farm and has been working on the farm for some thirty years, starting as a teenager working alongside his father. He has a herd of around 65 Holstein dairy cows with another 40 or so followers. All his milk goes to Linwood, a local liquid milk processor based in Armagh.

Paul Sloan's membership of the Feed Advisers Register (FAR) enables him to provide a comprehensive advice service for the entire enterprise.
Paul Sloan's membership of the Feed Advisers Register (FAR) enables him to provide a comprehensive advice service for the entire enterprise.

“The size of the herd has hardly changed over the past thirty years,” he says, “But what has changed is the yields that we are achieving. Fifteen years ago we were getting around 5500 litres per cow per annum, while our current yield is 10,100 litres per cow per annum. We have been able to remain competitive by increasing our yields, and I believe that small, well-run businesses definitely have a role in the future.

“For me the biggest challenge – like every producer in the country – is the volatility of markets. The lack of stability and uncertainty over prices mean you can’t plan and it’s very difficult to make longer term investments.”

Important to the development of the business over the last 10 years or so has been the input from Feed Adviser, Paul Sloan who not only supplies much of the feed used on the farm, but is a useful source of technical support and a sounding board for ideas. Paul has been around the feed industry in the province for a number of years. After studying at university he spent some time beef farming in Canada and has since held various positions in the local feed trade before setting up his own business partnership in 2005.

He is also a member and keen supporter of the Feed Adviser Register (FAR), which was established in 2013 by the Agriculture Industries Confederation (AIC), NIGTA's affiliated organisation in GB. The Register provides a platform for professionals who have a proven record of competence in the field and delivers continual on-line training for those involved with giving livestock feed advice, as well as a new level of assurance for livestock producers. 

Paul says that he doesn’t bring any easy answers to Seamus in terms of improving the business - it’s very much a partnership and it’s about a lot more than nutrition.

He says: “I like to take a holistic approach to the business, looking at overall cow management and cow comfort, all of which come together to achieve greater efficiency, sustainability and animal welfare, as well as increased productivity. The balance of the rations is obviously important, but I like to think that I bring a total package to Seamus and the other farmers that I advise.”

Seamus Lappin pictured with his dairy herd where the emphasis is on production and efficiency rather than herd size.
Seamus Lappin pictured with his dairy herd where the emphasis is on production and efficiency rather than herd size.

Together Seamus and Paul have worked on a number of improvements including housing to improve cow comfort and feed space; better laneways for cows walking out to grass; dry cow nutrition; winter rations; and calf vaccination. This has produced dividends in terms of the health of the animals. 

Paul says: “When you put this together with reduced feed inputs and increased productivity you have a business that is sustainable in every sense of the word.”

Seamus agrees with Paul that it is the all-round approach that has led to the increase in production.

“It’s been mainly led by diet, better cow management, vaccination and overall improvements in the day-to-day running of the herd”, he says, “However, if I had to pick out one thing, it would be the changes we have made to dry cow nutrition. This has made a big difference to how the cows calve and reach their peak with very few issues. Anything which improves the health of the animals is good for cow welfare and productivity too.”

Paul recommended introducing more straw to the dry cow diet using the Keenan Klassik feeder which allows the straw to be chopped and presented consistently.

Both Seamus and Paul believe that measurement is a key component of management and improving performance on the farm. As well as the annual yield figures of 10,100 litres, the herd is currently producing 32.6 litres per cow at 3.8 per cent butterfat and 3.2% protein with cows in milk for an average 200 days. 

Each cow is consuming 3100 kg of concentrates per year. However, grass is a key component of the system put in place by Seamus and Paul. Weather allowing, the cows are turned out around 17th March and they are currently taking 18 litres off grass and feeding to yield in the milking parlour at 0.45 kg per litre above 18 litres.

There is a paddock system in use on the farm and the forage quality is exceptional. Seamus has been gradually replacing his swards to ensure that this remains the case. Silage quality is also good with figures of around 25 per cent dry matter.

For Seamus measurement and benchmarking of his performance are important. As well as an annual assessment of his performance by the Department of Agriculture, Seamus has also benefitted from the monthly discussion groups run by the College of Agriculture Food and Rural Enterprise (CAFRE) from its Greenmount Campus. These are attended by around 20 local dairy farmers.

As part of the group, figures are collected monthly for comparison including milk production, feed rates, and milk from forage

“It gives me an idea of where I am compared to the rest of group,” says Seamus, “It stimulates interest and maybe even a bit of competition, and it helps the members to continually improve what we do. I find it really useful to have that kind of benchmark and to be able to compare what I’m achieving with other members of the group.” 

Going forward Seamus is not necessarily looking for further improvements in yield volumes, but he would like to consolidate what they have done to date and improve solids and animal health traits.

Seamus is also a supporter of the Feed Adviser Register and believes that it gives livestock producers a degree of confidence in the quality of the advice they receive that did not exist before.

More information about the Feed Adviser Register can be found at www.feedadviserregister.org.uk or by contacting This email address is being protected from spambots. You need JavaScript enabled to view it.

 

Feed materials are sharing in the general torpor of the global commodity markets as plentiful supply meets limited demand from consumers.

The bumper crops of the last couple of years are weighing on the market for cereal grains – prices are on the floor and while it’s too soon to make any forecast on the 2016 harvest a substantial stock carry over is inevitable. With spot prices so low, the London futures November wheat price looks attractive and new crop grain is set at a considerable premium to the spot market – this may tempt sellers to hold their grain. At this stage with strong plantings in the ground and no serious weather events anywhere in the world it’s hard to see that grain will be scarce in the foreseeable future and as buyers are reluctant to cover forward, it is very much a hand to mouth market.                                

The weakening of sterling driven by the uncertainty around the outcome of the Brexit vote is preventing UK buyers reaping the full benefit of these cheap grains.

Currency is also a major factor in the maize market with the big exporters such as Russia and Ukraine selling in a weak currency and marketing very competitively against the other origins. The removal of export taxes on corn by the new regime in Argentina is giving an advantage to growers in this region and they are currently the cheapest sellers on the world market. For local feed compounders maize continues to compete very successfully against wheat in ration formulations and is likely to be the first choice cereal for many diets for the foreseeable future.

On the protein side the soya harvest is underway in South America with Brazil about 2/3rd through its expected 100 million ton crop while Argentina is just getting underway with a 60 million ton harvest expected and a record line-up of vessels awaiting its arrival at the ports. These big crops will continue to pressurise the global markets and the US will be keen to recover some of the export tonnage lost to the South Americans. The gradual slide in soya prices which started with the big US harvest last year has taken nearly $100/ton off meal prices over the winter months and offers the best hope for any further feed price reductions for local farmers.

Other commodities are reflecting global demand as market opportunities arise. Soya Hulls have enjoyed a surge in price as drought in South Africa has created a substantial demand for high fibre feeds in that region. With Argentina the only source of this material they have made good use of a new customer prepared to pay considerably more than the Europeans. In contrast the Palm Kernel market has weakened as the New Zealand drought has eased and the dairy industry there has suffered heavily from the collapse in global milk prices.

One commodity which has maintained a relatively strong price is fertiliser with the reductions so far failing to reflect the major fall in energy costs. Local blenders and distributors have shared farmers’ frustrations as the major manufacturing companies have enjoyed a firm global demand for their product and the protection of the EU tariffs on imported material. The local merchant trade have the difficult and thankless job of distributing and financing the supply of this essential input to local farms.

 

The global commodity market is no place for the faint hearted – as dramatic swings in the world financial indexes throw everything into a spin.  The economic miracle that was China seems to have been derailed and the fall in demand from this region is being felt across a range of commodities. Crude oil tumbled from 51$ to 40$/barrel last week (losing 1/4 of its value) before recovering the losses and moving higher within a few days.

NIGTA is supporting the campaign for a realistic intervention price for dairy products
NIGTA is supporting the campaign for a realistic intervention price for dairy products

On the grain and feed material front, record yields and an uncertain demand are giving a very weak feel to the markets. The world is harvesting another big grain crop – with projections of a 17 million tonne wheat crop in the UK on top of a 3 million carry over. Ukraine has another big crop of maize to sell but the continuing unrest in this region (overshadowed in the news by immigration issues) makes it a high risk origin. The French maize crop however has suffered heavily from heat and drought through the midsummer and could lose up to 30% of its forecast yield. The combination of growers more inclined to put their crops into store than sell at prices below cost of production and purchasers afraid to buy in the expectation of reduced demand from the livestock sector is creating a distinct lack of confidence with little business getting done.

On the protein side the global soya crop looks good with a good harvest in Argentina but farmers again reluctant to sell. Elections in this region are due in October and with the possibility of a new government cutting export taxes growers will hold on to their crops in hope of better returns. A strong US dollar and significant global demand for soya will mean that protein will be the more expensive element in rations this winter.

BIG ISSUES

 Locally feed materials are trading at the levels of 6 – 8 years ago and this is reflected in current feed prices with compounds around £50/tonne back on the peak in 2013. The big issues for the supply trade in Northern Ireland this winter is the level of demand which can be expected from a livestock sector which is clearly not profitable and the level of debt carried by the trade. Farmer debt to feed suppliers is currently running at around £150M with just under half of this figure owed by dairy farmers. 

 A week’s credit to the dairy sector is worth around £5M so any increase in the debtor days will create an increase in the working capital needed to fund the 50 or so feed businesses in N Ireland. Just like their farmer customers these businesses are in danger of running out of cash this winter. 

Trade projections would indicate that feed costs at around 8.5p/litre this winter could account for 50% – 60% of the milk cheque. Careful budgeting and cash flow projections to predict the peak requirements for credit and an open and honest communication between farmer and feed supplier will be vital to avoid the risk of business failures this winter.

 

The challenge of maintaining a healthy rural environment while operating a profitable farm business is one of the big issues for the local agri-food sector. The industry’s growth plan must be delivered while at the same time achieving reductions in our emissions and improving water quality.

The recent news from Holland highlights the impact of environmental regulation on food and farming. The Dutch dairy industry is embarked on a program of measures including a reduction of their national dairy herd by 175,000 cows in an effort to bring its phosphate surplus into compliance with EU law.

Similar pressures exist in Northern Ireland and farmers cannot afford to ignore the environmental impact of intensive agriculture. The excellent work of the Greenhouse Gas Action Plan and the recently launched Land Management Strategy point the way forward. Through a program of precision farming and efficient use of inputs businesses can grow and develop without increasing their carbon intensity. 

The local feed trade has responded to the issue of phosphate balances by firstly commissioning extensive trials over a number of years at AFBI Hillsborough which sought to determine the minimum level of phosphate supplementation required by the dairy cow. Over the last 10 years or so phosphate in dairy diets has been reduced by around 25% on the basis of this industry research. Phosphate in pig and poultry diets has been reduced by around 30% as specialist enzymes which improve the utilisation of dietary phosphate have been widely employed to reduce the level of supplementation required.

The applications of phosphate fertiliser to land has also shown dramatic reductions with use of fertiliser now only 25% % of the levels of 20 years ago. Better understanding of the value of farm manures and improved storage capacity has brought improvements to farm profitability as well as lowering the phosphate level in our waterways. There is considerable scope to further improve our phosphate balances through driving greater output from grass and mining the reserves of phosphate in the soil through grazed or conserved forage.  Attention to areas such as soil Ph and optimising nitrogen and potash applications can increase productivity hence removing phosphate from the soil. Soil analysis is the key to delivering the precise requirements of the crop in the ground and will deliver optimum yields while ensuring that money is not wasted on unnecessary nutrients.

The local supply trade strongly promotes the efficient use of all farm inputs as the key to a profitable production system which minimises the emissions from surplus nutrients. The Feed Advisors Register which now comprises 120 field advisors in Northern Ireland is based on training the suppliers of feed and fertiliser on effective use of these materials in a sustainable and cost effective way.

FINANCIAL VIABILITY

The fundamental issue of sustainability in agriculture for many farmers centres on financial viability and whether the business can be held together for the next generation. The current profitability crisis has seen a major increase in farm borrowing (and trade debt) which will take some years to correct. The uncertainty caused by the UK withdrawal from the EU has damaged confidence in the future of the industry and the government response hasn’t brought any reassurance.  Whitehall is showing no appetite to continue the current system of farm support beyond 2020 and it remains to be seen what will replace the annual injection of £240 million of cash into the rural economy. Whatever the future holds there is no doubt that businesses with a high level of technical efficiency, making best use of their own resources and controlling costs will have the best chance of survival. This is also the approach which will deliver the environmental sustainability which will be the key to future growth in the agri-food sector.

World protein prices are being driven up rapidly as the financial fund buyers have surged back into the commodity markets. Funds moved from near record short to near record long positions in 4 to 5 weeks following the recent United States Department of Agriculture (USDA) report.

Soya is leading the charge as the USDA reduced its forecast for Argentina’s soyabean crop by 2.5m tonnes to 56.5m tonnes, contributing to a drop in global production. Meanwhile China, the world’s biggest soyabean consumer, is set to import a record 87m tonnes of soyabeans in the coming year, up 4m annually, largely to feed its growing livestock and poultry sector. 

Contracts for July soybeans rose by the maximum daily limit of 65 cents, or 6.3 per cent in Chicago trading on the back of the new USDA estimates of grain supply and demand for the coming season. These reports are closely followed by the trade and have a big influence on the market sentiment. The price for nearby soyabean meal futures was also strong – hitting the highest level since September 2014 while other commodities were pulled along in its wake.  

This is the first report since dry weather in Brazil and flooding in Argentina damaged the soyabean and corn crops under cultivation in South America and restored volatility to grain markets. Predictions are that customers will turn to the US to source beans and revitalize the export trade which had been hurt by the strong dollar in recent months. Weather concerns are also keeping an edge to the market in this region however amid fears of a La Nina weather event which would increase the possibility of hot and dry weather during the critical flowering stage of the current US crop and potentially impact yields in South Amrecia next spring.

 The outlook for grain remains bearish as bumper crops of maize and wheat are predicted as spring growing conditions are favorable in most of the key exporting regions. In spite of the likelihood of record global grain stocks the Chicago futures posted higher prices for both wheat and maize.

The implications for global protein prices are alarming as the other principle proteins such as rapemeal are being forced higher as buyers look for alternatives. In reality there is no substitute for soya in many diets and it highlights the vulnerability of our local livestock sector. Pig and poultry producers are dependent on these imports from North and South America to maintain productivity and are at the mercy of one of the world’s most volatile supply chains.

 

Farm commissioner Phil Hogan has declared his commitment to reducing the red tape which is slowly enveloping agriculture in the EU. This will be warmly welcomed by every farmer and every business in the agrifood sector as we face a steady stream of regulation from Brussels. Much of the Brussels output is based on genuine concerns around food safety, the environment and issues which can have positive outcomes for farmers and consumers.

EU Agriculture commissioner Phil Hogan met with local agrifood leaders on a visit to Belfast. Owen Brennan, Devenish Nutrition, Commissioner Hogan, Alan Gibson, Moy Park, Robin Irvine, NIGTA.
EU Agriculture commissioner Phil Hogan met with local agrifood leaders on a visit to Belfast. Owen Brennan, Devenish Nutrition, Commissioner Hogan, Alan Gibson, Moy Park, Robin Irvine, NIGTA.

An example of a proposal which has no such redeeming features is the regulation which would permit regions within the EU to ban the use of Genetically Modified food and feed materials. This proposal threatens the supply of soya and other essential proteins into the EU and would be disastrous for the livestock sector. It seems to be meeting opposition on all fronts, however, as the European Parliament's plenary session has rejected the Commission's proposal. This follows earlier defeats for the proposals at the EU Agriculture committee and at the Environment committee.  A call for a moratorium on new GM authorisations was also rejected while the parliament voted in favour of an amendment calling on the Commission to submit a new proposal. 

Charging for Regulation - Progress is being made on the proposal on official controls which aims to shift all the cost of regulation in the agrifood sector on to the businesses involved. This would add substantial cost into the food chain as every inspection made and sample analysed would be charged to the business. The Council of the European Union has reached a compromise position on the key issues of charging and competency of controls staff and it appears that there will be no requirement to extend mandatory charges to the feed sector. UK negotiators claim to have successfully   delivered greater flexibility in key areas and fought off increasing prescription, supporting their aims of smarter, more efficient controls 

Medicated Feed Proposals - These proposals threaten to bring an end to the practice of administering medicines to livestock through feed. The EU Parliament has decided that the Medicated Feed file overlaps with another piece of legislation, the Veterinary Medicinal Product regulations, and therefore they will be treated in tandem. The timescale of both the VMP file and the medicated feed file has subsequently slipped back in committee, and will not be voted until mid February.  The feed trade have briefed MEP’s on the various proposals and amendments in the hope that a workable solution can be achieved. 

Dairy Intervention - One very positive measure which would earn many friends for Mr Hogan in this part of the world would be the introduction of an effective intervention scheme for dairy products. The commissioner seems determined to resist this one as local milk producers continue to face a bleak winter with milk prices  well below the cost of production.

 

As a new harvest gets under way growers have been issued with guidance on the use of the passport system for the sale of grain under the Northern Ireland Farm Quality Assured Cereals Scheme (NIFQACS).

A valid passport must accompany each delivery of cereal to the end user – be it farmer, merchant or feed miller. Coloured stickers applied to the passport are used to indicate the year of harvest and blue stickers have been issued to scheme members to identify the 2015 crop.

Purchasers of grain must ensure that the appropriate stickers are applied to the passport presented with each consignment and they are also required to record an individual identification number for the trailer used for delivery as well as the vehicle registration. Feed producers or merchants operating under the Universal Feed Assurance Scheme (UFAS) will be required to retain this information for inspection at their annual audit.

The assured cereals scheme is an important element in the network of schemes which help ensure the safety and integrity of the entire food chain. It is a code of practice which covers the crop -through growing, harvest and storage and is designed to manage the principle risks to the quality of the grain.

Particular emphasis is placed on the control of diseases in the crop which result in the production of mycotoxins. These toxins are harmful to animals and have the potential to cause contamination incidents in the human food chain. A copy of the HGCA guide to minimise the risk of Fusarium Mycotoxins has been issued to all scheme members. This details management practices and techniques for the control of the fungal diseases which are the precursors of mycotoxins.

Safe and secure storage, effective pest controls including a plan for the elimination of birds and rodents are all part of the strategy to produce grain fit to enter the food chain.

The scheme is administered by Northern Ireland Food Chain Certification and further details are available from NIFCC, Lissue House, 31 Ballinderry Road, Lisburn, BT28 2SL - Tel. 028 9263 3017