Welcome to our collection of items of news and interest from the last quarter.
Overall RPI has continued its very slow decline falling just 0.2% to 0.8% in the last quarter – this versus 2.3% this time last year. Apart from dairy, all the other commodities dipped in the last quarter with some recovering more than others: beef and cereals ending higher (0.9% and 0.6% respectively), pork falling 0.2% with fish returning to its June 2015 figure. Dairy reflected its turbulent sector conditions both rising and falling during the quarter but ending down almost 1%.
With Autumn passing rapidly Summer is but a distant memory, but this doesn’t prevent us reflecting on the success, or otherwise, of the traditional BBQ season – how many times did we get ours out this year? The oft cited BBQ phenomenon of how the hot weather brings out the tongs, an increase in beef demand and thus an uplift in cattle prices, has been properly evaluated by AHDB (Agriculture and Horticulture Development Board). Taking data from over 20 years they looked at the correlation between those months with the highest temperatures and cattle price movements and found no sign of prices tracking the temperature – if anything, the reverse. Why? Well, essentially, increased burger sales come at the expense of a fall in other cuts – such a stewing or roasting joints – no real surprise then really. (AHDB
If beef is to develop a more sustainable and profitable future there needs to be far more integration in its supply chain – so said farmers at the recent Farmers Weekly and McDonald’s Beef Farmer of the Year awards. All agreed that the beef supply chain would benefit from the integrated practices found within the pig and poultry sectors and that more should be done to make this happen. Elsewhere in the world, the US for example, cattle are killed at 18 months (much younger than the UK) which saves both time and money. In addition, the beef production there is far more integrated with dedicated breeding and finishing lots meaning a shorter life for the animals and a reduced carbon footprint – all seems to make sense we think. (Farmers Weekly)
Finally, Canada has finally reopened its doors to UK beef lifting a 19 year old ban dating back to the 1996 BSE crisis. A welcome glimmer of good news for UK farmers.
Whilst holding firm, demand for cows is at its lowest for the year but a similar picture was seen last year. With the euro weakening slightly against the pound there could be increased competition on both domestic and foreign markets in the coming months. (AHDB)
Dairy farmers have had their fair share of turmoil over the last year or two and, rightly, have provoked strong support and sympathy from both within the sector and the public alike. However, it can be argued that many of the issues they face are symptomatic of the industry and longer term solutions should be sought to protect them from similar challenges hitting them once again in the future. With this in mind, two initiatives have come to light in recent weeks.
Firstly, it has been suggested that UK dairy farmers could look to their US cousins for inspiration on how to beat inflation including, for example, using the futures market to lock in returns/feed prices or maybe using insurance schemes to guarantee the margin between milk price and feed. Not without its challenges but food for thought. (Farmers Weekly).
Secondly, the Agrihive initiative has been instigated which aims to find “actionable solutions to the current challenges facing dairy farmers through multi sector events”. Launched at the Agrihive UK Summit, the initiative brings together a diverse range of business leaders to discuss and consider a “fictional ‘typical’ British family farm” – the Kidworth Dairy – and explore a range of issues to do with succession, profitability and management. (AHDB)
The search for long term, sustainable solutions that can be owned and delivered by wholly-owned farming groups themselves has to be the way forward we think – watch this space.
It could be mid 2016 before there’s any significant recovery in worldwide mIlk prices – overall due to falling milk production (China and New Zealand) and little or no growth in the EU and US. No respite for the UK landscape anticipated any time soon. (international Supermarket News)
Whilst UK pig meat production in September showed a 1% year on year increase (to 70,200 tonnes) this was the slowest growth rate recorded since 2014. For comparison, growth up to September was 5%. A similar 1% increase was posted in the same month for UK clean pig slaughterings (to 826,000 head) with England and Wales recording 0.5% increases, Scotland flat and Northern Ireland achieving the highest levels with 3%. (The Pig Site)
Meanwhile, pork imports decreased by 7% during September (to 28,700 tonnes) compared to the same month the previous year – in this case, the lowest level posted for the month for more than a decade. For this month we received 6% less pork from Denmark (The UK’s largest pork importer) and 9% less from Germany all prompting AHDB pork to comment “This suggests that UK pig meat supplies are meeting more of domestic demand”. Good news surely. (AHDB)
As reported in the last quarter, pork has featured heavily on the menu in the Great British Food Fortnight in Beijing – even in the pudding! At the “Great British Carnivores Club” dinner guests were served a dessert of golden syrup candy bacon on the ice cream – a recipe for poor health if ever there was one given the poor press bacon has received in the last week or two!
Relatively stable supply should be reflected in the pricing as we head into 2016. Strong growth from Spain may, however, counteract this but any impact should lessen by the second quarter.
Regular readers will know that sustainability is a core pillar of our thinking so we were pleased to come across the “Good Catch – The Sustainable Seafood Award ” category in the 2016 National Fish and Chip Awards, organised by Seafish. Three UK businesses have been shortlisted having been assessed on a wide range of measures including responsible sourcing, education and influencing of customers and staff knowledge. Long having been a key element of the UK’s staple diet its good to see that fish and chips too are beginning to play their part in the health of the planet, if not the consumer! (Seafish)
On the same theme, at an aptly named conference “How can green solutions be good for business?” was organised by the Norwegian Embassy in London, Innovation Norway, Norwegian-British Chamber of Commerce and the Norwegian Seafood Council, which was aimed to encourage green entrepreneurship and sustainable growth. (fishnewseu) It’s good to see that over and above national fishing quotas and agreements, steps are being taken at industry and supply chain level to address the long term needs of a sustainable and thriving fishing sector.
Nothing to suggest fish prices will deviate from normal market conditions. For reference, fish RPI for the same period last year rose and fell before peaking in March but we’ll have to wait until the year end report to draw any annual conclusions.
Defra has reported that the 2015 harvest has delivered an 18 year high for barley, reaching almost 7.3 million tonnes (the largest since 1997) whilst the total oilseed rape combined fell by more than 5%. Year on year, the average yields of winter and spring barley were up 4.4% and 2.4% respectively with wheat yields (at a five year high of 8.8 tonnes/hectare) contracting by 2.6% following a reduction in growing area. (Farmers Weekly)
The UK oat milling industry has made a promising start to 2015/16 with an estimated 125 kilotonnes used during Jul-Sep 2015 – a year on year increase of 6%. With a strong correlation between the first quarter results and the total year’s usage the outlook for the season bodes well. (AHDB)
After a strong harvest prices look fragile in the coming months.
Despite a 7.8% drop in growing area there is no shortage in potatoes and this is putting pressure on prices. Additional pressure on the common spud could come from the increasingly popular sweet potato with, for the first time, a British grown variety going on sale in supermarkets in this month. Hailed as a breakthrough for British farming this could be a welcome string to the potato farmers bow. (Guardian)
More good news comes from McDonalds who have pledged to spend £79M on British potatoes – this will equate to 100% of the fast food giant’s potato spend (up from 87% last year). (Farmers Weekly)
As sure as is eggs is eggs – that’s when we know something for certain – but how can we be sure? Well, the British Egg Industry Council (BEIC) relaunching its Lion Eggs Code of Practice and is also to looking to incorporate a new trademark logo for products containing eggs such as quiche for example. In addition, they are lobbying for eggs to be stamped with their country of origin – all aimed at ensuring retailers make the most of this definitive sign of confidence and customers get to know as much as possible about their goods and be as sure as eggs is eggs. (BakeryInfo)
Whichever side of the fence you sit on, vegetarian, vegan or otherwise, most would probably agree that animal slaughter should be undertaken in as a humane way as possible. With this in mind, the British Veterinary Association (BVA) is apprehensive over the lack of stunning parameters within Defra’s latest slaughter (Welfare of Animals at the Time of Killing – WATOK) regulations – specifically with regard to the killing of poultry ‘in accordance with religious rites’. The fears are centred around the use of electric waterbaths and that potentially, the birds could be simply immobilised, and thus conscious at the time of slaughter, rather than stunned.
Let’s hope the more rigorous parameters successfully developed by the European Food Safety Authority (EFSA) will ultimately find their way into the UK regulations. (Meat Info)
The NFU across the UK has welcomed news from Tesco that they will be providing greater transparency and not selling lamb in mixed origin packs from February next year. More informed choice to the consumer definitely a good thing – moreover, a productive relationship between retailer and producers always welcome. That said, hopefully the retail sector in Scotland will similarly listen to the plea from National Farmers’ Union Scotland (NFUS) for more support in promoting British Lamb and a larger share of the spoils. (MeatInfo)
A quick round up from our friends atReynolds: leafy salad crops are progressing to plan whilst hard salad growers are not predicting any major winter issues; large carrots will be hard to find this autumn and winter; large onion availability lower than last season; apple and pear crops expected to better the average harvest than last 3 years; oranges and easy peelers in short supply; winter stone fruit season looking favourable.
In Other News …
At a time when the traditional bacon sarnie has come in for ‘bad for your health’ battering (isn’t everything we like most!) it’s good to know that scientists in America have allegedly developed a chocolate so healthy it ‘could be taken as medicine’. With only 35% fat, this wonder “medicinal” chocolate keeps all the good bits from cacao (the key ingredient of chocolate) such as the antioxidants and minerals but uses an alternative ‘de-bittering’ agent to the traditional sweeteners of fats and sugars.
So, maybe in the future, in return for cacao’s health benefits such as protecting the nervous system, reducing stroke risk and lowering blood pressure the we might yet have our favourite of chocolate bar a day to keep the doctor away!
It’s all a question of balance. A recent report by the All Party Parliamentary Group on Antibiotics has challenged the validity of using antibiotics in animals and posed the question “should antibacterial compounds be restricted to human use?”. It goes to on to criticise the use of antibiotics, particularly within growth promotion, but also the widespread use to tackle infection in only a few animals and the preventative use before infection is even detected. On this, and other matters, many reasonable arguments are presented.
On the other side, the National Office of Animal Health (NOAH), the group representing the UK animal medicines industry argues that within the report there is insufficient recognition of the steps already taken to address and minimise the issues highlighted and that antibiotics play a key role for vets and farmers in their battle to treat infectious diseases and preserve animal health and welfare. (The Pig Site) So where does the answer lie – probably somewhere in the middle.
Elsewhere, a report by Defra shows, with the exception of grazing and livestock, average business incomes for farms across all sectors fell during 2014. Low commodity prices were the main culprit driven by farm output, currency fluctuations, global supply and others but where are the root causes for these challenges and who is responsible for tackling them? The NFU’s deputy president, Minette Batters, calls on the government to build a policy framework to encourage farmers to be more efficient, optimise the use of technology and take a longer term view on investment. She also looks to others in the supply chain to recognise the farmers’ plight and introduce measures and initiatives to mitigate the pressures they are facing. (Eastern Daily Press)
All the drivers within the current economic landscape are pushing prices downwards as we hover over deflation. With oil prices lower than we’ve experienced in recent history, along with low interest rates, food surpluses and unstable political zones there is a hesitancy and lack of confidence in higher trading volumes. In addition, further pressures on the markets are being created from volatility within the European zone, growth softening in Asia, together with accelerating efficiencies in the developed world. The resulting decline in commodity prices and corporate margins are providing greater opportunities for small to medium sized hospitality operators who we see changing the traditional face of our industry – as our recent experience on our London Food Tour proved. No more the complicated dishes and formal service – fun and versatility rules the set up, delivery and a refreshing way forward!