Welcome to our collection of items of news and interest from the last quarter.
RPI Summary
Overall RPI has moved minimally during the last quarter – just 0.1% up to 1% since March. Beef and cereals have also moved less than 1% (beef +0.4% and cereals -0.2%) for the same period. The bigger movers were pork – down 2.8% – and fish, the only big increase with 4.2% uplift. With the economy hovering around deflation, interest rate rises are forecast to be just around the corner but we’ll have to wait to see the impact of these increases as and when they happen.
Beef
Cattle prices showed some resilience in tough farm markets during July breaking the 350p/kg barrier for the first time since late March. This, after a particularly low level start to the year but moved swiftly above the 5 year average in just a matter of weeks. (Farmers Weekly)
However, since this show of strength, prices have relaxed somewhat and a key factor in this recent inconsistency in farmgate pricing can be attributed to volume fluctuations, according to Quality Meat Scotland (QMS). This volatility reflects a fickle consumer demand where a small increase in the number of animals reaching the abattoir inexorably leads to a proportional slip in price. (Meat Info)
The strength of sterling too has played its part during the last quarter, attracting imports from overseas into the UK market when the exchange rate is suitably favourable with the expected knock on effect on supply and price. (AHDB)
Looking forward, it will be the balance of these competing factors that determines the fortunes of producers, retailers and the UK public alike.
Assessment
A somewhat subdued demand during the summer has dampened prices and, with supply steady, this picture is unlikely to change dramatically if the public do not return from the holiday season with a renewed appetite for beef.
Dairy
The dairy marketplace, as foreseen, is a bleak one for the UK producer with some unable to find any margin at all between their costs of production and the price they receive – predominantly from the major supermarket chains. With little or no further opportunities for farmers to reduce their cost base they are at the mercy of the supermarkets’ continuous drive to compete with each other on lower prices – regardless of the impact further down the supply chain.
The current crisis prompted an urgent summit by farming unions across the UK from which an action plan has been developed. Items include labels for British products and long term contracts for farmers – let’s see how this develops over the coming months. (BBC)
There are some glimmers of compassion within this, what appears to be, heartless landscape with two initiatives which would seem to be good news for the dairy farming fraternity. Firstly, the Farmers Weekly has created a Milk Map that shows customers where they can get milk from farmers who are getting a fair price – a win-win solution giving both the public and farmers an alternative. Good idea we say! (Farmers Weekly)
Secondly, Morrisons has created a “Milk for Farmers” brand that offers the opportunity for the public to pay an inflated price for the same milk with the additional cost being passed back to the farmer. On the face of it this seems both benign and benevolent.
However, on closer inspection, with any milk sales not from this range attracting the same impossible terms for farmers, it would seem the guilt and responsibility has been simply handed over to the consumer – you pays your money and takes your view ….
Assessment
In the longer term, the prospects for the dairy sector may well be fine as we progress through 2016 but meantime we have a tough time ahead for the UK marketplace as we try and unravel the current turmoil and head for calmer times.
Pork
What did we do before “pulled pork”? It seems to have crept into both our consciousness and diet at an astonishing speed – no restaurant or café menu, or home BBQ seems complete without it making an appearance somewhere. One would be hard pushed not to draw a correlation, at least in part, between this anecdotal observation and the success of Phase 1 of AHDB’s (Agriculture and Horticulture Development Board) pulled pork campaign, which has driven an additional £7.8 million worth of total fresh pork sales. During the six week campaign (27 April to 7 June 2015) 206,000 more households bought pork shoulder (without reducing meat spend elsewhere) than the same period the year before – an impressive result! (The Pig Site)
Elsewhere, the impossible seems to have happened – pigs have flown – to China! This according to the UK Government who, following the opening up of pork trade with China in 2012—have announced that £30 million worth of pork is now shipped there each year. Up from £149 million in 2010, exports of UK pork around the world are now worth £214 million, with China by far the biggest player and with a growing appetite for British produce. (UK Government)
Assessment
Aside from pulled pork (shoulder), like beef, the summer months have been disappointing for pork sales and pricing over the coming months depend largely upon how the UK demand responds.
Fish
Restrictions on the fishing of sea bass come into effect from September 2015 – not, for a change, driven by EU territorial quotas, but as part of a longer term strategy to build more sustainable stocks for the future. By preventing fishermen and anglers from catching juvenile bass under 42cm in size, this will hopefully give female bass the chance to grow to an age where they can spawn and thus create a new generation of fish to catch.
As much as we love our fish – conservation and sustainability are a crucial part of the equation so definitely a good collaboration between the UK Government, EU Commission and member states.
What with pigs flying (see Pork section) it appears fish are swimming faster (according to the University of Glasgow) – to avoid capture! Maybe not so surprising really – the fitter the fish the more likely they are to outstrip the trawler’s net or tire and fall back into them. Does it matter? Well, possibly, if any proven physiological or behavioural differences in the ‘winning’ fish can be exploited – watch this space. (Fish Update)
Assessment
Despite the more volatile movements over the last 6 months there are no major factors looming to suggest any significant changes either way in the forthcoming months – other than the usual seasonal impacts.
Cereals
Let the combines roll! There’s been good harvest progress with 90% of the UK winter barley area, 80% of the UK winter oilseed rape area and 10% of the UK winter wheat area all harvested by mid August with good yields being reported across England for all three crops. For winter barley and oilseed rape the national yield estimates remain above the 10 year average with early wheat yields also good.
In an interesting development, the Scottish government has moved to ban GM crops and, thus, protect Scotland’s “clean, green status”. The ramifications of this decision will certainly venture south – we will need to follow this one closely.
Comment
“In the challenge to take more land to prepare, maintain and improve natural habitats for the preservation and development of diverse species whilst also producing more food; the agricultural community needs to embrace GM techniques with a high attention to safety, quality and sustainability in order to produce more food from less land under cultivation”.
Al Brooks: Chairman of Oxford Farming Conference 2016 and Chairman of the OFC Arable Conference at the Cereals Event 2015
Assessment
A firmer picture will emerge once the harvests, here and abroad, are completed but for now, prices unlikely to move dramatically either way.
Other Markets
Potatoes …
According to AHDB, GB potato plantings fell by 6.6% in 2015 to its lowest area on record. With less than ideal growing conditions “yields are unlikely to reach levels seen in 2014”. The AHDB report goes on to say that in the 12 months to May 2015, UK imports fell by 11% to 1.7m tonnes, seed potatoes down 36%, fresh potatoes by 29% and finally, processed potatoes by 6.5%. Clearly not chips with everything!
Eggs …
The cost of cleaning up the avian influenza outbreak could top the £1 million mark. The bill for the cleansing and disinfection of an affected operation is shared between Government and farmer, with the responsibility for the primary cleansing borne by the Government and the secondary picked up by the farmer. Not insignificant for either party with costs estimated to be as much £10 per bird for egg producers. (FarmingUK)
Chicken …
The theme of drug use throughout the food supply chain is a common one – whether to boost production, curtail disease or both. Not always a bad thing, but the introduction of any additives into the production line will always have implications. Thus, it’s refreshing to see a study running a ‘drug-free’ poultry production alongside, in this case, ‘antibiotic growth’ promoted production and comparing the outcomes (Poultry Science journal). The results were not conclusive – but that’s not the point – whilst not always achievable it’s important we keep looking for the more natural solutions
Lamb …
At the end of July many sheep farmers were selling sheep at a loss (sound familiar?) with finished lamb prices at their lowest since 2009 and showing few signs of recovery. With UK production expected to be up on last year, prices will continue to be under pressure if consumers are not wooed by the joys of lamb and demand driven up as a result.
Greengrocery …
Apples are in for a bumper crop with dessert apples expected to break records for the 2014/15 season – notably the Bramley will make a welcome return to form.
Elsewhere however, wholesales carrot prices have risen sharply due an early shortage driven by cold weather during May and June.
In Other News
Two new technological developments on the drinking front have emerged this month. The first is described as a “beerbot” – three robots that work together to enable you to get a nice cold beer without getting out of your favourite comfy chair. Developed by researchers at the Massachusetts Institute of Technology the robots take your order, without any attitude, and then disappear to pick up your drink before bringing it back to you – happy days!
Many miles away in Japan, in another development, cameras have been in installed in public stations that can detect if an individual is drunk – this to prevent accidents and incidents involving intoxicated passengers. Presumably, if we were able to combine the two inventions the ‘beerbot’ would stop serving you once it knew you had had enough!
Comment
An extinct bumblebee has been spotted in Kent – in itself, not so significant but consistent sightings of short haired bumblebees in RSPB’s Dungeness nature reserve in Kent demonstrate the welcome success of a reintroduction scheme. As we have become increasingly aware over recent years, bees are an essential part of the food chain with estimated one third of food produced being pollination dependent.
So what makes this story special? Well, it highlights the two sides of the sustainability story. Firstly, it illustrates our ability, through continuous changes in farming and production methods together with environmental mismanagement, to carelessly wipe out such an important element in the food chain. Secondly, and as important, it also highlights our ability to do something about it.
At Partners In Purchasing we go the extra mile to educate and to highlight the impact of our purchasing and supply chain decisions. Wherever possible we mitigate the negative and fully exploit the positive. The really important fact here is that we can all make a big difference and we are positively here to help you make it!
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