The implications of the UK withdrawal from the EU are the subject of much speculation and the Agri-Supply trade, like most sectors of our economy are working to understand and plan for the likely outcomes.
The three major challenges we will face post Brexit are about
A.- Maintaining trade with our nearest neighbour, Ireland.
B. - Future agricultural policy and support payments which will reduce farm incomes.
C.- Future trade agreements on agriculture that drive down the price of food in the UK.
The issue of the Irish border and the ability to continue the trade across this border depends on the establishment of practical arrangements to facilitate certification of standards consistent with EU regulation and to deal with collection of taxes on goods where duty differentials exist.
Today, we trade in feed and in animals and animal products seamlessly in both directions across the border, businesses always chasing the highest prices that exist in either market, driving competition on the island. Tomorrow, even under a free trade agreement we will face restrictions. Our work with DEFRA in London has been useful in understanding impacts on our business and it is clear that in both the UK and EU, restrictions on where we source cereals and cereal by-products will apply on goods trading across the border. Businesses selling either way across the border will have to comply with “Rules of Origin” in terms of the ingredients which they can put into rations, inevitably increasing the cost on cross border trade. Free trade is not as free as the name might suggest, however we have thrown the challenge to DEFRA to ensure this does not happen.
Duty differentials across the border offer opportunities for profit to the unscrupulous and smuggling could well emerge as a major issue. With the potential for the UK to charge lower duty rates on imports of agricultural products in the future, (South American beef trades at 50% of UK prices), it is easy to see how an open border will drive much more than just fuel smuggling in the years to come. Europe will not be able to accept a soft border if cheap smuggled product is driving down local farm gate prices in the South as well as the North. The only way to remove the incentive to smuggle is to standardise the tariffs so that imports into the UK and EU from third countries have the same “Gate Fee” regardless of the port of entry. The two ways to deliver this we believe are a Customs union or with more difficulty, the New Customs Partnership.
Assuming a solution results in no duty differentials - then things get a lot easier. With no incentive for the smugglers, we could expect lighter touch customs policing and are left with disease and contamination regulations, (often referred to as the Sanitary and Phyto sanitary controls or SPS) to be managed. Checks on up to 8% of cross-border movements have been suggested by some. However the Good Friday Agreement resulted in all island policies and collaboration on disease management, with the closure of our ports to GB imports during Foot and mouth being but one example of this. There appears be a consensus around the principle of managing disease on an all island basis between the UK and EU and if so, another hurdle to cross border trade disappears.
Whilst the challenges to trade are significant, it is possible with goodwill on both sides of the negotiation table to avoid a hard border on the island. A free trade agreement, with no duty differentials, a common approach to disease and contamination management on the island and what we could be left with is the need to effectively file our goods movements (HMRC equivalent to delivery notes), electronically and ideally on a monthly return. Failure to deliver on either of these two areas will frustrate trade, add bureaucracy, cost and delays and ultimately with smuggling damage our reputation internationally. We wait to see if common sense will apply.
- Category: Feed Forum
While the province is still firmly clasped in the grip of winter most farmers will be hoping for some spring like weather very soon. The early start to the winter and the difficulty of making silage in the latter part of last summer have combined to put pressure on feed stocks and farmers are looking anxiously for signs of an early spring.
An early turn-out and a good growing season to restore the depleted forage reserves would be very welcome – but cannot be guaranteed. A number of factors need to be in place to make the best of the great potential for grass growth through the spring and early summer. A soil analysis report detailing the nutrient status of each field is a good first step. Hopefully the acidity of the soils will have been corrected by a suitable application of lime and conditions will be right to ensure a good response to nutrients applied. Slurry should be applied as soon as conditions allow and this should be factored in to the calculations to determine the nutrients required from chemical fertiliser.
Applying the right levels of chemical fertiliser required to meet the crop requirement will ensure that crop yields are optimised and that money is not wasted on nutrients which are not required. The other benefit of this type of precision farming is that emissions to air and waterways are also reduced. This will be a major consideration for farming in the future as government have indicated that environmental protection will be a key element of any farm support package when the UK withdraws from the European Economic Community.
There is now considerable interest in fertilisers which have lower environmental impact - particularly in terms of emissions of ammonia to the atmosphere. Products are now available which have been proven to be much more efficient in terms of nitrogen utilisation. Specially modified forms of urea have been developed which virtually eliminate emissions which are wasteful to farmers and damaging to the atmosphere. These enhanced products are commanding a premium over ordinary urea but the improved efficiency of nitrogen delivery more than outweighs the cost.
Fertiliser prices are fairy stable at the minute with supply and demand reasonably balanced at both at a global and a European level. Markets for most products are not showing much movement although demand for urea and Di-ammonium Phosphate (DAP) has firmed the trade on these commodities.
Locally merchants are reporting a slow start to 2018 following significant movements to farm in Autumn of last year. There have been signs of demand building up through February with a lot of business still to be done in March.
- Category: Feed Forum
As farmers struggle to salvage the last of their silage crops from waterlogged fields it is obvious that they face a difficult winter. For many, winter started several weeks ago with stock housed in September and scarce feed stocks are already disappearing rapidly.
Concerns about both quantity and quality of silage stocks will drive an increased requirement for forage replacer blends to stretch out the home grown feed and also for high quality rations to compensate for poor quality silage.
With record crops of most feed grains throughout the world the global market is awash with grain at relatively low prices but despite this the twin perils of currency and logistics could mean that Northern Ireland’s feed importers will have to compete to secure some of the key materials needed to support the industry through the coming winter.
One of the main challenges will be sourcing the supplies of digestible fibre required for ruminant feeds and particularly for the forage replacement rations. Recent years have seen a rapid growth in the trade in Soya Hulls from Argentina into Ireland – virtually replacing the 300,000 tonnes of citrus pulp which were the basis of ruminant rations some years ago. However new emerging markets for Hulls have meant that the available supplies have been spread more thinly and prices have been driven upwards by the increased demand from New Zealand, Morocco and South Africa. Feed businesses have moved to secure alternatives such as sugar beet pulp from Russia where a bumper crop has produced a large exportable surplus. But the Russians are also enjoying a record wheat harvest – and wheat trumps sugar beet in the queue for rail transport. The wheat will move first and local importers will have to wait for their October/November sugar beet tonnages – having to fill in with more expensive supplies from France and England in the short term.
As the winter progresses local traders will be hoping that the Argentinians will move to recover some of their market for Soya Hulls to Ireland and will become more competitive as the other fibres move up in price in response to the increased demand .
Grain prices continue to be led by wheat with maize, coming in at £5 - £6 cheaper in spite of the EU import levy, proving popular with feed producers and likely to be a major ingredient in rations this winter. Soya meal, given current exchange rates, is also competitively priced in terms of recent history with the result that the cereal/soya rations used in the intensive sector could be relatively stable while ruminant rations based on by-products such as hulls, sugar beet and the corn products could see more upward price pressure in the months ahead.
The volumes of all commodities on the move around the world have put some life into the demand for ocean freight and ship owners are enjoying a significant uplift in rates following a few years in the doldrums. With 90% of our feed materials arriving through the ports this will be another element keeping feed prices firm through the coming winter.
- Category: Feed Forum
High standards of safety and manufacturing integrity are a feature of Feed businesses in Northern Ireland and the success of the industry assurance schemes in delivering these standards has been formally acknowledged by the Department of Agriculture, Environment and Rural Affairs (DAERA) with the adoption of the concept of “Earned Recognition”.
The Department is implementing revisions to the Feed Enforcement Guidance, published by the Food Standards Agency which brings Northern Ireland guidance into line with the Code of Practice operating in England and Wales. This will include a modified risk assessment scheme with a greater weighting toward voluntary membership of approved quality assurance schemes.
“This is welcome news and means feed businesses in Northern Ireland can enjoy the benefits of earned recognition,” said Keith Agnew, President of the Northern Ireland Grain Trade Association. “Feed business operators are legally responsible for compliance with feed safety legislation and DAERA have officially recognised that the trade takes these responsibilities very seriously and often exceed the legal requirements”.
John Kelley, Managing Director of AIC Services which operates the AIC assurance schemes explained that the move follows a thorough assessment of the key industry schemes - the Universal Feed Assurance Scheme (UFAS) , the Feed Materials Assurance Scheme (FEMAS) and the Trade Assurance Scheme for Combinable Crops (TASCC). “The regulators have ruled that businesses which participate and comply with these schemes are demonstrating best practice in feed production and can be viewed as lower risk” said John. “As well as reducing the burden on compliant businesses this approach allows regulators to redirect resources to areas of higher risk – including work to improve standards in businesses which do not have such a good history of compliance.”
DAERA have also confirmed their ongoing commitment to working with the Food Fortress network in Northern Ireland and have already modified their feed sampling programs to reflect the information shared though this program. The Food Fortress program is unique to Ireland having been developed originally by the Northern Ireland Grain Trade Association in partnership with the Institute of Global Food Security at Queens University. Over 80 companies involved in the import and manufacture of animal feeds contribute to a program of sampling and testing to protect the Feed and Food Chain from contamination. Test results are shared with the regulators and are factored in to the official risk assessments. This is a significant advance in terms of feed safety according to Food Fortress director, Robin Irvine. “ The industry working closely with government agencies can ensure a much more effective response to the challenges of managing risk within the food chain. “
- Category: Feed Forum
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.
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.
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.
- Category: Feed Forum
Following many months of subdued markets with no major supply issues and only the vagaries of currency bringing any volatility to prices the new year has started with a distinctly different tone. Weather has reasserted itself as a major driver as protein markets have seen a significant bounce in response to a prolonged drought in Argentina affecting the planting season for soyabean. The lack of rain over recent months has reduced the acreage in the ground and has curbed yield expectations. Some analysists are predicting a crop of less than 50 million tonnes – well down on last year’s crop which came in at 57 million tonnes. This is significant on a global scale since Argentina accounts for 45% of the world trade in soyameal.
Weather is also having a major impact in North America with the complete freeze-up of US logistics following the record snowfall and ice bound waterways. Nearby soya supplies have become tight and this has resulted in firmer protein markets in recent weeks.
The Speculative Funds who bet on the Agricultural markets have gone into this period with the second largest short position they have ever had (largest was spring 2016) and decided to unwind some of these short bets in recent days which has pushed the market up further. This has meant that since the turn of the year soya has moved up around £20 per tonne ex store Ireland despite a stronger Sterling over the same period.
Grain markets are performing strangely with barley the most expensive cereal ahead of wheat and maize. There has been a tight EU barley supply picture due to the knock-on effects of larger Chinese barley imports, coupled with a recent 1 million tonne purchase by Saudi Arabia. The EU is now the main origin for importers since the Russian and Ukrainian supply has been depleted driving up our local barley prices. We are seeing plentiful supplies of wheat throughout mainland Europe with exports discouraged by the strength of the euro.
The maize market continues to represent exceptional value with high stocks overhanging the market and keeping prices down below the EU import tariff threshold. Analysts do not expect to see last year’s crop numbers repeated however as the dry weather effect in South America will reduce yields significantly in Argentina and Brazil. The US is also forecasting a reduction in corn acreage planted and the overall effect is that 2018 is likely to see a reduction in year end maize stocks.
Supply issues in the micro-ingredients which are added to animal feeds are also conspiring to push up ration prices. Following a fire in a BASF plant in Germany which is responsible for 45% of world production of vitamin A and E supplement prices have risen by 100 – 200 % adding £5.00 to £10.00 per tonne to finished feed prices from the start of 2018.
- Category: Feed Forum
Sustainable intensification of farming and food production can be achieved - but only through commitment from all partners and the application of new research based technologies. This was the message from Patrick Casement when he addressed a recent meeting of the NI Grain Trade Association. Patrick is a farmer and environmentalist and is Chairman of NI Environment Link and a member of the National Trust's Rural Enterprise Panel. He said that farmers need to get recognition for what has already been achieved in areas such as carbon sequestration in hedges and trees. He predicted that agricultural support in the future will recognise and reward the contribution farmers make to the environment and management of the countryside.
The challenges are highlighted in the “State of Nature” report which highlights a wildlife decline in the UK with agriculture as the main contributor. Habitat quality and quantity have been affected; water quality has suffered from phosphate and nitrate enrichment while air quality has been impacted by ammonia emissions from agriculture – mainly generated by ruminant livestock. The net result has been abandonment of much of agriculture in the uplands and further intensification in the lowland areas. The success of agriculture in the future will depend on the ability of the industry to reconcile food production with care for the environment.
A new approach is necessary – but it must be evidenced based and supported by measures such as remote monitoring of habitats in order to assess change rapidly. A sustainable land management strategy must be achieved with the carrot rather than the stick if we expect farmers to respond. Government bodies setting rules and penalising farmers will result in a “them and us” scenario whereas knowledge transfer along with financial encouragement can create a team effort which delivers the desired results for everyone.
Achieving a balance of grazing in the uplands and intensification in an environmentally friendly manner in the lowland could have huge market potential. Sustainable intensification based on evidence and scientific research has the potential to provide a win-win result for the lowland areas while farmers in the uplands can continue to graze their livestock in addition to being rewarded for the care of the environment and wildlife.
Patrick added “This might sound like a pipe dream but is achievable if the industry accepts the challenge and the responsibility of reconciling food production with care of the environment – modern agricultural systems are unsustainable if we do not act”
He warned “As farmers we must remember that we rely on the rural environment, not just for food production, but for clean water, clean air, carbon sequestration, pollination and recreation.”
Patrick concluded by complimenting the NI Grain Trade Association on their most recent training module for farm advisers which focuses specifically on reducing the environmental impact of intensive farming.
- Category: Feed Forum
With the new harvest imminent in many of the main crop producing countries in the world growers and traders will be paying close attention to the weather forecast.
For many commodities a healthy carry-over and the expectation of a good harvest points to plentiful stocks and nothing to push up prices. Maize is a case in point with big stocks carried over from last season in the United States and now in the midst of a weather market. Concerns about hot dry weather threatening the new crop recently caused a rally as fund buyers moved to cover a large portion of the short they had built up. Almost as soon as their short position was covered the weather forecast turned causing future prices to decline just as quickly. In South America this year Brazil have harvested over 30 million tonnes from their first crop in January/February and will soon start harvesting their second crop of the year. This will bring their total production to around 100 million tonnes which will be a record for Brazil. Last year after a terrible second crop the Brazilians were a net importer whereas this year they will be exporting roughly 35mmt.
With prices at low levels and supply looking strong any market volatility will most likely come from a weather event pre harvest or currency fluctuations. The all-important fund buyers don’t see much opportunity in this sort of market and have historically short positions on most feed commodities. This has left prices bumping along at a low level – just a couple of euro above the trigger point for the EU maize import levy. This means that maize prices are virtually at rock bottom since any further reduction will be offset by the levy and will be of no benefit to EU buyers.
The outlook for wheat is somewhat more bullish with US plantings at a 30 year low and the European crop threatened by drought. Markets firmed by 10 euro per tonne on weather concerns last week but gave up most of this gain fairly quickly on the forecast of rain. The effect will be to make maize more competitive against wheat and this is likely to be reflected in ration formulations in the coming months.
World protein supplies are also boosted by big soybean crops in South America with increased Brazilian exports a feature of the market. A big crop is also expected in the US and the hot, dry weather isn’t causing any major concern as the crop is still 2 to 3 months from harvest. Again fund activity is low with record short positions the order of the day.
The impact of these big crops is obviously bearing down on the market and Dollar prices are relatively low. However Sterling buyers are not likely to see any benefit as the weakness of the Pound has pretty much cancelled out the price reductions in the commodities. £1 sterling would have bought over $1.50 before the Brexit vote 12 months is worth less than $1.30 today. While this has been very valuable in improving the competitiveness of our exports it also has a big impact on our buying power.
- Category: Feed Forum
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.
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.
- Category: Feed Forum
2018 will be a year of many challenges for the provinces Agri-food sector – and not least in the area of farm supplies according to Keith Agnew president of the Northern Ireland Grain Trade Association – the organisation which represents local feed and fertiliser distributers.
“The incoming year should see new trade arrangements and the shape of future agricultural policy for the United Kingdom evolving, as it looks to a future outside the European Union” says Keith.
“Our food businesses are very dependent on exports and their ability to compete in the world market for milk and meat products is critical to the local economy. But trade is a two-way flow and we must not forget that our livestock producers depend on imports of well over 2 million tonnes of feed materials. We need access to the global market for grains and proteins on favourable terms to ensure a competitive cost base for local farmers. In mainland UK the situation is significantly different with a substantial arable sector producing a high level of self- sufficiency in grains. This is an area where Northern Ireland is vulnerable and we continue to stress the importance of these inward trade flows in our meetings with DEFRA and other government departments”.
“An area of immediate concern, as we embark on the New Year, is the supply of the key vitamins essential to animal health and performance. A fire in a major manufacturing plant for Vitamins A, D and E has caused a global shortage of these nutrients. The loss of production from the BASF facility in Germany will take several months to restore and the company have declared Force Majeure on their customer contracts. Suppliers of premixes and supplements to feed businesses are working with their customers to minimize the risk of welfare issues in the most vulnerable species.
The work of the Association in protecting the food chain from contamination continues to provide an unparalleled level of assurance and the Food Fortress program has been acclaimed as world leading. We look forward to further development of the Food Fortress brand and to working with our food chain partners to add value and competitive advantage to milk and meat products from Northern Ireland.
One of the key events planned for the coming year will be the launch of an environmental training program for feed advisors and sales specialists. The environmental impact of intensive livestock farming needs to be fully understood and carefully managed to ensure the sustainability of food production. As suppliers of farm inputs, the Associations members have an important part to play in helping farmers tackle issues such as phosphate balances and ammonia emissions. This training program is designed to equip field staff with the knowledge and practical skills to deliver key messages, relating to the use of feed and fertiliser, within sustainable livestock production systems.
The New Year starts, however, with our businesses focussed on the day to day challenges of meeting the high demand for feed ,as most livestock sectors enjoy a period of improved profitability and growth. The priority for the trade in 2018 will continue to be the production of cost effective nutritional packages for all species to support an efficient and competitive livestock sector in Northern Ireland” says Dr Agnew.
- Category: Feed Forum
The falling value of sterling is adding millions of pounds to the UK’s import bill every day. The good news for livestock farmers dependent on the global grain markets for feed supplies is that the weakness in our currency is partly offset by the fall in some key commodity prices.
Wheat prices which had stayed firm on the strength of concerns about weather in the US and a strong demand for quality grain have weakened in recent weeks. The market has been undermined by news of the Russian crop which has enjoyed favourable growing conditions – resulting in a 20% increase in yield - and is now expected to produce a massive 80 million tonnes. Domestic consumption will account for half of this tonnage but the other half will have to be offered on the world market. Realistically the country hasn’t the capacity or infra structure to physically handle exports on this scale but it is likely that around 30 million tonnes will make its way to export customers.
The Russian effect will raise the worlds traded wheat tonnage to the second highest on record – second only to last year – and has seriously depressed prices. Wheat which was trading at a 20 euro per tonne premium to maize at the end of July is now almost the same price. Both grains have lost significant value – but while wheat is unsupported the low maize price has triggered an EU import levy of 10 euro/tonne which prevents any further reductions to European consumers.
The US maize crop is progressing well with no weather issues and the weakness of the dollar against the euro making it competitive on price.
The Brazilian maize crop is now safely in store and following an aggressive campaign has been largely sold and having little effect on current trade at this stage. The monthly shipments from Brazil are running at around 5 to 6 million tonnes per month and account for 50% of the world maize trade. Other origins have suffered in competition with Brazil and have not been able to persuade their farmers to sell maize at the prices on offer.
The soya crop in the US is also enjoying favourable conditions with good yield forecasts and nothing to push up prices. Again the large South American crop is safely gathered and aggressive selling has resulted in increased tonnages for shipment over the winter months.
One material which is not in plentiful supply is Soya Hulls - a fibrous by-product of the soya crush and a popular feed ingredient in ruminant rations in Ireland and parts of the EU. Argentina is the only source of this material and as new markets have emerged in New Zealand, Saudi Arabia and North Africa the available supplies have been spread thinner so availability may be tighter this winter. This has been aggravated by the introduction of a new tax on the use of Argentinian biodiesel in the Unites States which has reduced the demand for soya oil from the crushers and reduced the production of hulls.
The soya hulls effect together with continued firmness in the market for maize by- products which are widely used as a protein source in ruminant rations mean that these feeds will see some upward price pressure in the coming weeks.
- Category: Feed Forum
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.
- Category: Feed Forum
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.
- Category: Feed Forum
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