Agricultural Quarterly Update 2023

This agricultural update highlights the changes within farming over the past 6 months. Prices (for both crops and inputs), policies and global affairs are discussed to fully capture what is happening within agriculture. James Valentine, Agri-Business Consultant.

To view the full update, click the button below.

Summary

Environmental Schemes

• The Mid-tier Countryside Stewardship application deadline is the 18th August 2023 for agreements, with a go live for January 2023.
• Countryside Stewardship capital grants remain open for applications. Funding is available for the likes of fencing, hedge layering and other yard works such as concrete.
• Defra released the Sustainable Farming Incentives 2023 standards this month. The 3-year scheme, paid quarterly allows farmers the flexibility to adjust areas each year as well as providing better access for tenant farmers who do not have long term security of tenure. View the all the SFI 2023 options here.

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Basic Payment Scheme

• 99% of farmers received their remaining 50% BPS payment in December 2022 from the RPA. The remaining unpaid farmers are due to pending inspections and unresolved queries.
• The Basic Payment Scheme rates from 2024 onwards are still to be confirmed due to a potential change of government.

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New Agricultural Policy

• The BPS lump sum exit scheme has now closed for applications. Farmers have until the 31st May 2024 to provide evidence that they have transferred out their agricultural land.
• The third round of the Defra Future Farming Resilience Fund service is now available, providing businesses, environmental, planning and development advice to farmers across England and is funded by Defra. Brown&Co continue to be a provider of the service up to 2025, register your interest here.

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Change in Market Prices 

• Pork prices have consistently risen and are currently high at around 220 pence per kilo.
• Defra farmgate milk prices have fallen.
• Lamb prices have increased significantly.
• Beef prices have increased to record levels.
• Cereal & Oilseed prices have decreased significantly.
• Fertiliser prices have fallen further, which has been influenced by political affairs, mining activity and gas prices.
• Crude Oil prices have fallen, and the gap between oil prices and red diesel have closed back to typical levels.

Commodity Price Comparison between May 2022 and 2023

Produce	Measurement	May 2022	May 2023	Difference	% Change
Lamb	P/KG/DW	626.0	691.2	65.2	9.4%
Beef	P/KG/DW	439.2	492.7	53.5	10.9%
Pork	P/KG/DW	171.8	219.8	48.0	21.8%
Milk	P/L	40.74	39.43	-1.3	-3.3%
Wheat (Feed)	£/TONNE	319.4	176.1	-143.3	-81.3%
Barley (Feed)	£/TONNE	302.6	162.3	-140.3	-86.4%
Oilseed Rape	£/TONNE	806.9	336.9	-470.0	-139.5
£/Euro Exchange	EUR to GBP	1.1783	1.1476	-0.031	-2.7%

Note: Due to the dynamic period we are currently in, commodity prices may move daily.

Climate & Carbon

The COP28 climate summit is set to be held by the United Arab Emirates (UAE) between 30th November and 12th December 2023.

This will be the first time the Global Stocktake (GST) will provide an assessment of progress since adopting the Paris agreement. The results of the assessment will determine what further action is necessary to maintain the target limit of 1.5 degrees global warming by 2050.

Initial figures published by the Department for Energy Security and Net Zero show a 1.1% fall in total energy demand; mainly being attributed to the cost-of-living crisis driving people to be more resourceful with energy, however more notably, gas demand fell by 7.6% whereas electricity demand increased by 11%. Given that gas is the most commonly used domestic heat source, it indicates that many households were not being heated to usual temperatures this winter and the increase in electricity demand could indicate more businesses and households are moving towards renewable energy.

Renewable energy production matched its record high (from 2020) in the winter of 2022, making up 41.4% of total electricity generation. This percentage share of electricity from renewable sources has plenty of room for improvement, further demonstrating the opportunities landowners have to capture an opportunity in this market.

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Supply Chain

The Black Sea Grain Initiative (BSGI) was renewed in May and continues to operate.

Over £32 million tonnes and foodstuffs have been exported since the beginning of the initiative, still well below pre-war levels. For the past 8-years, global grain stocks have remained around the 850 million tonne region, with minor fluctuations that have mainly been governed by extreme weather events, however pre-capita, the increase in global population has diluted this level of stock per head. In 7 of the 8 years, production has managed to outweigh the upward trend of utilisation (consumption) which has mainly been fuelled by technological and efficiency improvements that are allowing farmers to grow more on the same area to keep up with demand.

Consumer Behaviour

The cost-of-living crisis is causing a big impact in society currently and driving changes in shopping behaviour.

There has been a noticeable increase for demand of cheap cuts of meat, such as stewing beef and minces, which outside of the annual trend for barbeque season (with burger and sausages being classified as minces) providing a lower cost alternative ingredient to regular and premium cuts. Despite this, levels of domestic food waste have increased to back to pre-pandemic levels, where lockdown saw a 43% decline in waste levels. 

Survey data shows most UK consumers consider welfare, health, and the environment when making food choices, which is a positive for high welfare UK producers, however how robust this opinion is when budgets are tightened is to be determined.

 

For more information, contact our Agri-Business Consultant James Valentine on 0116 289 4719. Or, alternatively contact your local office: https://www.brown-co.com/offices