Welcome to our collection of items of news and interest from the last quarter and review of the previous year.
Overall annual RPI edged up further during the last quarter of 2016 reaching 2.5% which you can see from the graph has show a steady incline since April of that year. The biggest mover of the commodities was dairy whose annual RPI settled at -1.5% in December 16, a little over 3% higher than in September 16. Not a smooth run though with a spike in November mirrored by fish and beef and, to a lesser extent, cereals. Notably, fish ventured above the 0% line in both October and November, the only commodity to do so during 2016.
Contrary to the air of promise felt with the first hints of Spring, inflation is beginning to bite with prices tightening and suppliers looking to renegotiate sooner rather than later. A sensitive time ahead as Brexit kicks off and Trump settles in.
To coin a well known song, the first cut is the deepest but according to the 2016 AHDB Beef & Lamb retail survey the first cut is getting easier – a tested measure of the tenderness of English beef. Not only are our steaks becoming more tender, they are becoming more ‘reliably’ tender with the likelihood of us cutting in to a tough steak falling too.
This is the result of welcome advances and improvements made by both farmers and processors – all good news for the lovers of the staple diet of ‘steak and chips’!
Prices relatively stable for the moment but the outlook for the rest of the year is more unsettled with upward pressure likely to seize the day.
Despite our excellent milk producing credentials the UK will, following Brexit, be the EU’s largest dairy customer. Largely driven by our love of cheese (around half the total), the UK imported c£2.5bn worth of dairy imports from the EU-27 in 2015 making the UK’s net dairy deficit second only to China in the world rankings. This makes us a key and valuable customer for many dairy exporting nations and one of the first names on the guest list to the post Brexit trading table. On the flip side, AHDB dairy are looking to redress the balance and give the UK’s dairy export a much needed boost. This, ultimately, to drive farm gate prices from targeted promotion (both home and abroad) and begin to counter the investment made by our competitors over the years that have increased their presence and market share. Whatever side of the table you sit, a healthy, sustainable and profitable UK dairy industry would seem to be the key.
There’s no let up it would seem for the dairy sector with continued volatility the order of the day. Brexit is unlikely to help and the impact of any resulting CAP reforms will also need to be addressed – a long year ahead.
Our Chinese friends cannot seem to get enough pork and following a restructure of the Chines pig industry, the UK (along with the rest of the EU) has been able to capitalise on this increased demand with export volumes in 2016 showing 31% year on year growth versus 2015 levels. Not so here in the UK it would seem. Well, whilst pig meat sales (such as bacon and sausages) are still rising, the sale of pork is proving less popular and losing ground to other meats such beef and poultry. During the last quarter of 2016, spend on pork (fresh/frozen) was down over 7% year on year with sales volume down 5% and average prices falling 2% for the same period. All the above against a backdrop of increased pig production during 2016 – the highest since 2000 (Defra). What does this mean? Simplistically, if we are producing more but selling less domestically we will need to rely on our Chinese friends’ continued appetite for UK pork!
Whilst retail prices have been relatively stable in recent months, volumes have dipped versus the same period last year. Traditional spring demand may boost the market but outlook still unsettled.
A key message from the AHDB Agronomists’ Conference in December 2016 was the importance of ‘integration’ in the future success of UK crop production. It sounds obvious – the sharing of best practise and harnessing the impact of combined funds and resources is not a new concept – but it is a welcome observation and a valuable foundation for moving the UK arable industry forward in what will surely continue to be a challenging environment. The conference theme of ‘Inspire, Innovate, Integrate’ was equally motivating and appeared to pinpoint exactly what was expected from the 300 strong audience (agronomists, growers and other members of the arable industry) when they head back to their day jobs following the conference. Key themes included the integration of research, pest control, disease management and systems, all of which important in their own right but perhaps the common threads of teamwork, collaboration and learning from global experiences strike the most resonant chord.
It’s early days but, in the absence in any really unfavourable recent events, prospects look reasonable and prices are likely to remain at their relatively lower level in the medium term. Like all other commodities though, the impact of Brexit is still an unknown.
Long have we supported both the plight of fishermen and the need for sustainable fishing but now there appears to be light at the end of this particular tunnel and a view that these two aspirations need not be mutually exclusive. A study by the Thomson Reuters Foundation suggests, in a nutshell, that allowing fish stocks to return to their optimal levels would, in the longer term, grow global profits by tens of billions of dollars. How? Overfishing and overexploitation costs the global fishing industry billions a year (travelling further and longer to find smaller supplies) and by ‘giving the ocean’s a break’ these challenges could be reversed. Is there a catch (no pun intended!)? Naturally, all good things come at a price and in this case, to get the oceans back to their optimal healthy level would take 5 years if we stopped fishing all together (clearly a non starter) but 30 years if we were to cut back by 5% each year. This wonderfully attractive idea almost seems to good to be true but at the same time, has more than a ring of sense to it. The question is, can we all pull together as a planet to make it happen? We hope so …
The prospect of Brexit together with currency swings is already impacting some supply (and prices too) but like everything else at present, there is no certainty as how 2017 will pan out.
Potatoes … Technology is not always a welcome component to the food production process and nor, in this case, is the technology in question a universally welcomed gadget but the drone, it would appear, could play a key role in predicting potato yields. An accurate picture of crop growth and development is invaluable to the potato farmer (and subsequently processors and packers) in their planning and forecasting but this can be costly and time consuming. To this end researchers at Fera Science, have been looking into whether specialist image-processing software can take images taken by drones to automatically count crops. A good idea and one of many where the drone might be beneficial to the farming community.
Eggs … We are all pretty familiar these days with meat substitutes for the vegetarians amongst us but an egg alternative for vegans is maybe something to shout about. The arrival of the UK’s first algae-based egg alternative has been introduced by health shop Holland & Barrett, is made from algal flour (derived from water dwelling algae) and can be used to make scrambled eggs, omelettes and even cakes. All good news apart from the cost … the algae based equivalent of a dozen standard eggs will set you back around 4 times what you might normally pay in a supermarket. For vegans this might just be a price worth paying!
Chicken … The cost of doing the right thing can often be cited as prohibitive and so it’s nice to come across a project that demonstrates that it is possible to provide, in this case, a cage free life for chickens without impacting profitability. FAI Farms in Brazil in partnership with Korin Agricultural company have established that the commercial success of rearing laying poultry need not be at the expense of high welfare standards. Great news we say.
Greengrocery … Sometimes adversity gives us just the nudge we need to make a change and the recent shortage of salad and vegetables is prompting some to give grow-your-own a go and others to maybe try more seasonal fare. Of course, home grown produce will not find its way on to the Sunday dinner table ay time soon but let’s hope some still see the many long term benefits of a such a behavioural change!
In other news …
Fed up of seeing bills arrive through the letterbox? How about a bottle of wine instead? In a wonderfully innovative move, Garçon Wines is set to launch the UK’s first wine-by-post club where the standard 750ml of wine will be delivered in a specially designed longer, flatter style bottle to allow it to fit through the letterbox and created in a glass-like plastic to avoid breakages.
So, for a time, Brexit was knocked off its top news spot by the antics of the Trump administration but has now returned with a fresh impetus as the imminent triggering of Article 50 gets ever closer. What links these news hoggers (other than that they both surprised the so-called pundits to upset the opinion polls) is that they both pose the same fundamental question: how will their respective policies and bureaucracy impact UK trade? And for all the talk of special deals and special relationships banded about in all camps, the fundamental point remains: trade is based on there being an economic proposition that someone is willing to pay for. This whether it’s with the EU on our doorstep or our cousins across the Atlantic.
Our sense is that until we understand the final picture from either side of the big pond we should focus on those things that we can influence now. That is, how can we make our proposition more attractive and how we can deliver that proposition in the most economic and sustainable way. Of course, this isn’t rocket science but many of the key messages directed at UK agriculture are centred around getting these two elements right: whether working smarter; collaborating up and down the supply chain or using innovation or technology. These essential foundations are the key to building strong and productive relationships with our trading partners both home and abroad.
So let’s not get bogged down with the media and government circus – let’s get cracking on making a difference … together!