Market Report: June 2016

Welcome to our collection of items of news and interest from the last quarter and review of the previous year.


Overall, annual RPI has risen again by 0.4% for the second consecutive quarter to 1.6% (this versus 0.9% for March 2015). Excepting beef (down 2.1% to -2.4%), all other tracked commodities have risen – in stark contrast to the last quarter when all fell. The biggest climber was pork (up 3.2%) with, in descending order, fish, cereals and diary posting increases of 2.5%, 1.5% and 1% respectively. That said, all are still sitting below the 0% mark. Looking at both the last quarter and the last 12 months no clear patterns are emerging but we’ll be sure to see an impact following the EU vote – one way or another – next time round.


One man’s meat as they say … in this case, a weakening pound against the euro (a bad thing surely?) is helping British exports of beef and sheepmeat to the continent. With the value of sterling falling more than 13% since November last year (down to €1.238 from €1.429) – in part due to the forthcoming EU referendum – beef exports have been reaping the benefits with increased demand from Holland, Germany and Italy (beef and veal exports at the highest for many years). Many of the beef cuts exported, such as cheek and non-prime cuts, are highly price sensitive on the continent meaning a slight drop in price can generate a significant spike in demand. This too, a natural fall out from the exchange rate fall. (Farmers Weekly/AHDB)

On the retail side, based on combined national statistics from the UK, France, Germany, Italy and Spain, beef inflation has been shown to have been relatively static across all EU beef consuming member states for the last 2 years (2014 and 2015) following increases in both 2012 and 2013. In essence, the classic factors of supply and demand have driven these results: lower demand and fiercer competition kept prices stable in the last 2 years with a shortage of supply (especially 2012) putting upward pressure of prices during the 2 years prior.

Against this backdrop, beef prices have hit a five year low according to the National Beef Association (NBA) and whilst retail price have edged a 1-2% increase the income to the producer may have fallen claims the NBA. A sceptical Chis Mallon (chief executive of the NBA) rightly points out that if, as suggested, there is apathetic consumer demand for beef (a reason for lower revenue passed on to producers) then surely this would be reflected in the retail price? He argues that a pegging back of retail price would stimulate sales to the benefit of all – sensible we think. (Meatinfo) Naturally, margins need to be achieved at all stages of the supply chain but, sustainability is the key word here and if everyone is to have a fair share for the long term then, as we have said many time, all the players in the chain need to work together for the benefit of all.


With prices currently low and demand likely to remain subdued for 2016 and 2017 there is little prospect for any major uplift in prices.


When will it end for the dairy sector? Yet more misery is just around the corner with further milk price cuts predicted in May and June during a spell where the lowest average milk prices are being experienced for seven years. And, according to the National Farmers Union (NFU), this is not just about the need for famers to better manage their operations and margins – even the most efficient dairy farmers will not be able to accommodate these ‘below breakeven’ levels. Once more, a consistent theme emerges with the need for collaboration up and down the supply chain: processors, co-operatives and farmers alike need to work to manage and mitigate risk together if sustainable solutions are to be found that will enable market downturns to be ridden out. (NFU)

Meanwhile, MPS from all sides have been discussing the plight of the dairy sector in a two hour long debate at Westminster Hall. Whilst well meant rhetoric was aired – “grave uncertainty”, “unsustainable”, “desperate”, “Voluntary Dairy Code of Practice is largely ineffectual”, “more needs to be done” – we’ll have to wait and see whether understanding words convert to definitive action. (NFU)


Average farmgate prices have fallen sharply in the last quarter and there’s little to suggest any significant upward pressure in the forthcoming months.



A rise in the UK breeding herd recorded in December (2015) is underpinning a prediction that the UK’s pig production is heading for a seventh straight year-on-year rise during 2016 and, initially, will outstrip demand in the coming months. However, any immediate imbalance is likely to be offset by a forecast reduction in imports coupled with a corresponding increase in exports, which is expected to take up the slack. Heavier weights will contribute further to the levels of production keeping the level of growth this year, similar to 2015 ahead of a slow down in 2017. (The Pig Site/AHDB)

A useful insight into data analysis and interpretation is provided by latest figures from Kantar Worldpanel. Whilst volume sales of fresh/frozen pork for the 4 weeks to the 28 February 2016 rose by 3% year-on-year, spend value fell by 5% for the same period: meaning less return for the farmer but more pig per pound for the consumer. Taking a slightly wider perspective though, volume sales for the 3 months to the end of February fell by 2% compared to the same period the previous year – still with us? Well, this suggests that whilst it is good news then that pork volume sales are showing positive signs, these need to be supported by better margins if the declining market of the last 12 months needs to be reversed. Ahh – the beauty of numbers! (The Pig Site)


With production outstripping demand in the coming months any pressure on prices will kept to a minimum.  Beyond that we will need to wait and see.


Regulations, more often than not set out with good intent, can end up causing as much confusion as their designed direction. In this instance, Fishermen with vessels under 10m are facing seemingly contradictory legislation with regard to catch composition, the catch nets utilised and landing obligations. In part, this is due to the rules never originally being intended for vessels of this size, but, legally, they are applicable to all vessels meaning that honest fishermen can, unwittingly, fall foul of an overly zealous officer keen on sticking to the letter of the law. Without going into the details concerned (which would take some time) it seems this scenario reflects many of the issues currently contested within the EURO debate. Firstly, the underlying premis of the EU’s existence and purpose is rightly founded upon good intent behind which most of us could agree. However, things can begin to unravel when the implementation of its work is wholly centred around the letter of the law rather than the ‘spirit’ … food for thought.

On the topic of ‘Brexit’, Environment Secretary Elizabeth Truss is predicting a loss of £100m to UK fishermen if the no vote wins in June. This is based upon the UK’s ‘easy access’ to the EU market and the fact it exports twice as much to Europe as it does to the rest of the world. As we know, there are views on both sides as to the impact on trade deals and relationships should the UK stay in or leave the EU – this is another opportunity to ‘analyse the data’ (see Pork above) and take a view. (fishnewseu)

Latest figures from Seafish are showing, as expected, that lower fuel prices have aided the UK fishing fleet’s economic performance with most fleets remaining profitable during 2014 and a similar picture expected for 2015. Naturally, fuel is only one component of the profit challenge but still good news we say. (Seafish)


With the cost of crude oil creeping back up over the last quarter prices are expected to reflect this.



Not since November 2011 have we seen such a level of combined UK wheat and barley exports (515Kt). Helped by ‘positive’ currency movements (see Beef), the UK exported 2.85Mt (million tonnes) from July 2015 to February 2016 – this represents around 40% of the UK’s wheat and barley surplus (6.8Mt) leaving still 60% to either export before the year end or carry into next season.

GM is back in the news with the go-ahead for scientists to grow a field trial of genetically modified (GM) Camelina oilseed plants. The trial will test whether “GM Camelina sativa plants can make significant quantities of omega-3 long-chain polyunsaturated fatty acids and astaxanthin under field conditions” – bonus points to all those who understand this. In essence though, there are the usual arguments here – the production of an ‘engineered’ crop designed to provide disease averse, additional health benefitted food supplies – versus the risks, known or otherwise, of playing with Mother Nature. Again, time to take a view.

Good news for oilseed rape (less so for affected hay fever sufferers) as its area is set to rise after four seasons of decline say leading plant breeder Monsanto. Go oilseed rape!


Having lost money on the 2015 cereals crop, farmers in the UK are planting less for the 2016 harvest hoping to push pricing back up whilst reducing costs. That’s largely substantiated in the US and Asia where the it’s also noted a decrease in GMO cereals planted! Welcome succour for health gurus and the smaller enterprises.


Potatoes …

Potato late blight (Phytophthora infestans if you are interested) is a well know and severe threat to the production of potatoes and tomatoes worldwide and scientists from The Genome Analysis Centre (TGAC) and The Sainsbury Laboratory (TSL) have made a significant breakthrough in identifying blight resistance to allow rapid crop improvement. Without venturing into technical speak they have developed a faster and more efficient system for identifying and cloning the resistance (R) genes that provide the basis of protecting the crops – great news. Just a thought though – is this genetic modification, selective breeding or just good old fashioned common sense?

Eggs …

Like pork, eggs are facing the ‘margin challenge’ with an optimistic outlook on consumption tempered by falls in retail prices – chiefly driven by fierce competition between supermarkets and discounters (Lion Eggs).

With questions over salmonella and cholesterol have being largely answered recently, an unwelcome outbreak of highly pathogenic avian influenza has been reported in an Italian commercial laying flock – one of a number of such outbreaks in Europe over the last 2 years. A timely reminder of the continued need for the very highest levels of vigilance within the food supply chain. (Farming UK)

Chicken … 

The identification of those ‘genetic markers’ that are associated with both specific poultry diseases and their resistance is already a reality and the use of this information to drive ‘selective breeding’ and thus reduce the threat of these diseases, is almost within reach. All good news for resilient and sustainable supply but how long before the line between this and GM become ever more blurred? More decision making. (Poultry Site)

That said, selective breeding should allay one of the two biggest fears cited by egg and poultrymeat producers in a recent NFU Spring 2016 poultry industry survey. Broiler producers put disease at the top of their list whilst layer producers opted for oversupply. (Farmers Weekly)

Contrary to the wider farming establishment opinion (and that cited in our Fish section), the majority of Poultry farmers are calling for an exit from the EU in the forthcoming referendum according to a new poll from Farmers Weekly. The fact that there is less support for their market together with more red tape seems to underpin their argument – different perspectives, different views … (Farmers Weekly)

Lamb …

Unlike other commodities within this quarter’s report, sheepmeat exports were significantly impeded by the strength of Sterling against the Euro during 2015. This together with low consumer purchasing power and cheaper imports contributed to UK lamb exports to fall by nearly a quarter during the last year. Interestingly, the Eurozone accounts for 95% of all sheepmeat exports (impact on Brexit similar to Fish?) and sales to major markets here fell in line with falls in shopper demand across the channel akin to those in the UK. For the same period, imports of sheepmeat rose slightly, albeit only 0.3% and whilst many imports from many countries fell it was a 6% increase from our biggest importer (New Zealand – up to 68,800 tonnes, almost 75% of all sheepmeat imports) that had the biggest impact. (Farming UK)


With Shakespeare reaching his 400th birthday (well, not really, more of an anniversary) it would seem an opportune time to explore the ‘appetite for diet’ back in the 16th century – high it would appear.

Not unlike today, books were aplenty offering advice and good counsel (sometimes contradictory) on the benefits, or otherwise, of various foodstuffs. Largely, excess was recognised as not such a good thing, meat eating was seen as more healthy than a vegetarian diet (interestingly) with fish seen as inferior to meat and, whilst they may not have had the science available we have today, they did recognise (but maybe misdiagnosed) the effect various foods had on our digestion, our moods and our ability to support different lifestyles. Shakespeare himself provided many references to the food and drink of the day offering varying attributes within different plays. Beef, for example, providing soldiers “iron and steel, they will eat like wolves and fight like devils” in Henry V, but suggesting it as the bearer of stupidity in Twelfth Night and Troilus and Cressida.

What is clear is that the desire to understand what’s good for us and what isn’t – isn’t new. What isn’t clear is why after 400 years we are still not universally agreed!


In or Out? It definitely feels like a “shake it all about” moment! And it’s certainly initiated much debate (not always healthy) that has polarised views amongst a now weary voting populace. So well hidden are they within the ‘economically truthful’ arguments (and counter arguments) you need great resolve if you are to delve into the detail and discover the real issues and substantiated facts.

With less than three weeks out to our seminal vote, having scoured, listened and studied many of the pro’s and con’s from both sides we are more than sceptical of the so-called presented facts and get a hunch that each party is pitching in their own self-interest. This is natural to a degree but all too often opposing factions have defaulted to their primary conviction, or a logically sustained collation of their favoured data, and allowed ‘views’ to be presented as ‘facts’ … misleading at best, scandalous at its worst.

This decision scenario strikes us as similar to the consideration many clients make with Partners In Purchasing and, like the referendum, they are fundamentally asking themselves “do we want to change our current situation?” Likewise, this consideration is usually precipitated by a view that things could be better (or the grass could be greener) and the journey to a sound conclusion can require challenging questions of long-standing beliefs and principles, which can be painful. Sound familiar?

For Britain, we joined the then EEC (European Economic Community) back in 1972 with the firm belief we would be ‘better off’ – predominantly around trade and security – and the public were first asked for their endorsement in a referendum in 1975 with the issues centering around food, money and jobs. With 67% of the vote we elected to ‘change our situation’. Since then, depending upon your point of view, the grass turned out not to be as green as we thought and, over the years a deep mistrust has developed that our European partners are benefitting more from their membership to the European club than we are – not only in respect of them profiting from our successes and ethics of hard work and fair play but also more sinisterly at the expense of our benevolence and victories.

In addition, we are torn between our fundamental desire to maintain independence and our vision of expansion, not only from the European territory but also our ambition to continue to be a significant player in the Global marketplace. We want better, we deserve better, but will we be dragged back by the Europeans or will our conviction that outside of the EU we are more likely to be the leaders in Europe to shape and enable us to compete as alongside as equals to Asia and America?

Past and future Olympics provide us with analogous examples of mini, unelected, bureaucratic bodies promising visions of growth and development without any certainty there is a sustainable political, social and economic infrastructure – not to mention the significant financial commitment required – in place to support it. For Athens, huge overspends have crippled Greece to a degree that has impacted us all in the EU. For Rio, the population could find themselves under an unstable and punitive commercial regime as a result of their mismanagement of the ‘opportunity’ that is the Olympic games. At this point in time, London stands out as an exception – is this a sign for the UK as they pore over their European future?

Many recognise that the idealism behind the concept of a safe Europe and a cosy trading partner is very beguiling. However, for some we seem to have ended up with a painful erosion of personal and economic control and far reaching compromises where we fear the prospect we may never be able to reclaim back these economic or cultural boundaries without more catastrophic schisms of war or voluntary apartheid.

As we say, there are many arguments on both sides which are, unsurprisingly, rooted to their beliefs. The Brexit clan wish to regain what they see as their personal and national sovereignty. They accept this will entail perhaps some short or even medium term pain. The ‘In crowd’ wish to avoid short term change and succumbing to what may transpire as long term anaesthetised pain and the erosion of power on a larger scale (as observed in Greek Olypmian disaster above). Conversely the ‘Remainers’ see strength in joining together with a combined conviction of their hope and vision, influencing and negotiating back any lost ground by volume of trading and sheer presence. The Brexiteers see strength in managing the detail of the numbers; the Remains see value in the sheer size of management and manipulation of numbers.

Partners In Purchasing seek to gain win-wins from our management of the commercial environment. We drive value both from detail and magnitude and these intrinsically work with each other and are mutually dependent! Whether we stay or whether we go from Europe take heart that trading is the core characteristic of our British and Partners In Purchasing psyche and therefore, we need fear no diminishment in the performance of our economy. If we are to compare the mini bureaucracy of international games as an analogy: “Seize The Day!” The London Olympics were magnificent! Looking forward to your comments!!