FARMING BRIEFING

Nick Read

New government’s agenda for energy
The new Minister of State at the Department of Environment Food and Rural Affairs (Defra) is Caroline Spelman. The coalition government has flagged up a commitment to environmental policies which highlights the contribution farming can make to energy production, and which may oblige energy suppliers to source an increasing proportion from renewable sources. Mrs Spelman has experience of the farming industry as NFU sugar beet commodity secretary from 1981-4 before becoming Deputy Director of the International Confederation of European Beet Growers. The government’s agenda coincides with the latest EU biofuel update which suggests that both supply and demand will continue to grow. EU biodiesel production is expected to increase by 5% from 2009 at 8.3m tonnes and bioethanol production rose 30% over the last year to 3.7m tonnes. Germany and France remain the biggest producers accounting for 52% of EU biodiesel output and 66% of bioethanol. The EU Renewable Energy Directive (RED) sets ambitious targets for all member states so that the EU can achieve 20% of its energy share from renewable sources by 2020, and a 10% share specifically within the transport sector. RED has to be implemented by December 2010 and the UK target is to produce 15% of its energy from renewable by 2010, a seven-fold increase over 2008 levels. However, a report produced for the European Commission which looks at the “indirect emissions” that arise when converting land in order to produce biofuels suggest some biofuels are four times more polluting than the equivalent fossil fuels they replace. The problem arises because the land can no longer be used to produce food as it is growing a biofuel crop, and the food must therefore be grown elsewhere, often in developing countries, at a high ecological (and carbon emission) cost.  The launch of the Feed-in-Tariffs (FiTs), which pay for electricity being produced by renewable sources, and which came into effect on 1st April, has boosted interest in small-scale renewable energy projects. Payments are guaranteed for a maximum of 25 years, and vary depending on the size and type of system. This has led to strong interest in small wind turbines and photovoltaic (solar) panels. However many analysts feel that the FiT for anaerobic digestion is too low to attract potential investors.

European workforce reduction
The number of people working in agriculture across Europe has fallen by 25% between 2000 and 2009, 3.7m people left the farming sector in that period and 11.2m were employed full time in the 27 EU member countries. In the UK the number of people employed in farming fell by 13.2% over the same period.

Farm borrowing rises
Bank lending to farm businesses rose 5% compared to last year, registering £11.5bn in the first quarter of 2010. The livestock sector showed the greatest increase in borrowing. Although the total income from farming decreased in 2009 the underlying asset strength of the industry, and growing future prospects make agriculture a good prospect for bank lending.

Pig sector in profit
Growing demand for British meat, stronger prices and the value of sterling against the euro, have raised the profitability of the UK pig industry with UK prices being nearly 25p/kg above other EU countries. Defra indicates that the national pig herd rose by 1% during 2009, with total pig numbers at 4.6m head during the year.

Future of the CAP
A major consultation is underway on the future of the Common Agricultural Policy which is due for further reform in 2013. EU farm leaders want to retain a strong CAP with direct payments to help producers deal with market volatility and poor market conditions. However the UK position is less favourable and would like more of the money to go towards environmental or rural development issues which are much broader than just farming. The CAP is the only “common” policy across Europe and, at €53bn, amounts to 40% of European expenditure. However it is only 1% of the total public expenditure of all EU member governments and represents 0.4% of EU GDP.

Bovine TB - Pressure rises on English politicians
The High Court recently threw out a legal challenge to the badger cull taking place in Wales (see previous briefings). The Badger Trust had applied for a judicial review of the Welsh Assembly Government’s decision but the court ruled that the planned cull was lawful. As a result, farmers groups in England are putting increasing pressure on politicians to consider a cull within England as well, with support from the British Veterinary Association.

Red Tractor ten years on
The red tractor logo, adopted to promote home-grown produce, was launched ten years ago by Prime Minister Tony Blair. A “red tractor week” has been planned for 14th – 20th June to commemorate its tenth anniversary and the organisers hope this will increase awareness of home grown produce. TV personality Janet Street-Porter has been chosen to lead the celebrations.

____posted May 24th 2010____