Remember the importance of registering your right to buy and bear in mind the need for accuracy. If you make a mistake, don’t worry – it can be corrected, but don’t neglect a registration that has been challenged by the landlord. Tenants have been caught out and lost the opportunity of a lifetime to become an owner. Forms and advice always on hand from STFA. JULY 2008 Chairman’s Introduction stfa news One of the challenges in farming is that every year is different, not only the vagaries of the weather and the idiosyncrasies of livestock production, but also the volatility of the market place. A year ago we could not have foreseen the sudden jump in cereal prices or the disruptions caused by the F and M fiasco in Surrey which led to the collapse of the sheepmeat and pigmeat markets in the autumn. This year we have been caught unaware by the unprecedented rise in fuel and fertiliser costs. Red diesel is up to 67p/litre and fertiliser continues its relentless upward spiral heading toward £500 or even higher by next spring. Rising costs are the subject of our guest article by Julian Bell of SAC where he gives us some tips on risk management. The theme of fertiliser cost is echoed by Stewart Jamieson writing about the benefits of clover in the sward and grassland management. New TFA National Chairman Greg Bliss, an arable and sheep farmer in Cambridgeshire gives us his vision of the future. Vice STFA chair Brian Shaw of Lockerbie writes on his latest travels to Australia and Hamish Lean’s regular feature covers fixed equipment. Rent reviews have been the topic of the month and the STFA phone has been hot with queries from tenants who have just had a rent review notice land on their desks. The main message is; don’t panic but start to make preparations for arguing your case and try to make contact with other tenants in the same position. Tenants who have already been through the process will testify the importance of sharing information and, where possible acting in concert with other tenants on the same estate. Enclosed with this newsletter is a survey for the Rental Databank so, if you have not done so before or if you have just had a change of rent, please take the time to fill it in and return to TFA on the freepost address. Usual prize draw later in the summer. Registration of Interest Visit the Scottish Tenant Farmers Website: www.tfascotland.org.uk Visit the Scottish Tenant Farmers Website: www.tfascotland.org.uk 13 Useful Information List of STFA approved professional agents: Solicitors John Allan, Maclean & Stewart 51/53 High Street, Dunblane, Perthshire FK15 0EG Tel: 01786 823217 Allan Collie, Ledingham Chalmers 52-54 Rose Street, Aberdeen AB10 1HA Tel: 01224 408408 John Dale and Alan Marshall 18 Wallace Street, Galston, Ayrshire KA4 8BP Tel: 01563 820216 Jim Drysdale, Anderson Strathern 1 Rutland Court, Edinburgh EH3 8EY Tel: 0131 270 7700 Hamish Lean, Blackadders 128 Castle Street, Forfar, Angus DD8 3HS Tel: 01307 461234 Andrew Murchison 5 Ardross Street, Inverness IV3 5NQ Tel: 01463 709992 David Sturrock, Turnbull, Simson & Sturrock 25 High Street, Jedburgh, Roxburghshire TD8 6AE Tel: 01835 862391 Jamie Whittle, R & R Urquhart 2 Ardross Street, Inverness IV3 5NN Tel: 01463 714477 Land Agents/Chartered Surveyors Andrew Macfarlane, Hayes McCubbin and Macfarlane Lochgreens Farm, Dyce, Aberdeenshire AB21 7AS Tel: 01224 724466 Colin Stewart, Hayes McCubbin and Macfarlane Royal Bank Building, Market Square, Alyth, Perthshire PH11 8AA Tel: 01828 632786 Eddie Henderson, Hendersons Surveyors East Netherton, Milnathort, Kinross KY13 0SB Tel: 01577 862566 David Butler, Beckfoot Annan, Dumfries-shire DG12 5SN Tel: 01461 201200 Colin Beattie and Robin Steele, C & D Property Services 17/19 High Street, Longtown, Cumbria CA6 5UA Tel: 01228 792299 John McDiarmid Mains of Murthly, Aberfeldy, Perthshire PH15 2BA Tel: 01887 820427 David Leggat, United Auctions Perth Agricultural Centre, East Huntingtower, Perth PH1 3JJ Tel: 01738626183 Kenny Mackenzie, Dingwall & Highland Marts Humberston, Bailechaul Road, Dingwall IV15 9TP Tel: 01349 863252 James Fisken King’s Croft Main Street Symington Biggar Lanarkshire ML12 6LJ Tel: 01899 308736 Ian Duncan Millar Tirinie, Aberfeldy, Perthshire PH15 2ND Tel: 01887 830394 Stewart Jamieson, Cara Consultants Kirklands, Thornhill, Dumfries-shire DG3 5AD Tel: 01848 331231 James Dick Flat 10 Netherby Apartments, I Netherby Road, Cults, Aberdeenshire AB15 9HL Tel: 01224 867730 Watson Bell Lower Inchallan, Pluscarden, Elgin, Morayshire IV30 8TZ Tel: 01343 890412 Chartered Accountants & Taxation Advisers James Hair, James Hair & Co 59 Bonnygate, Cupar Fife, KY15 4BY Tel: 01334 654030 Graeme Davidson, EQ Westby, 64 West High Street, Forfar, Angus DD8 1BJ Tel: 01307 474274 SCOTTISH TENANT FARMERS ASSOCIATION TENANT FARMERS ASSOCIATION www.tfascotland.org.uk www.tfa.org.uk email:[email protected]5 Brewery Court, Theale, Reading Culmaily Farm Golspie Sutherland KW10 6TA Berkshire, RG7 5AJ Tel/Fax: 01408 633275 Tel: 0118 930 6130 Chairman: Angus McCall Chief Executive: George Dunn Please note that there are changes to the website address of TFA and also to the email address of STFA Area Contacts NORTH HIGHLANDS EAST & CENTRAL Malcolm McCall 01408 621208 Andrew Riddell 01875 320303 George MacIver 01463 811564 Duncan McEwen 01786 870236 Andrew Stoddart 01620 823596 NAIRN & MORAYSHIRE & STRATHSPEY SOUTH & BORDERS George McConachie 01667 404271 Stewart Jamieson 01848 331231 Willie Hamilton 01479 851739 Brian Shaw 01576 202572 ABERDEENSHIRE WIGTOWNSHIRE Tom Johnston 01466 740208 James McIntyre 01776 860225 David Clark 01330 825544 Christopher Nicholson 01988 500423 BUTE & THE ISLANDS Duncan McAlister 01700 831257 Many photographs courtesy of Hutchinson Photography - www.farm-images.co.uk
Transcript
Remember the importance of registering your right to buy andbear in mind the need for accuracy. If you make a mistake,don’t worry – it can be corrected, but don’t neglect a
registration that has been challenged by the landlord. Tenantshave been caught out and lost the opportunity of a lifetime tobecome an owner. Forms and advice always on hand from STFA.
JULY 2008
Chairman’s Introduction
stfanews
One of the challenges in farming is that every year isdifferent, not only the vagaries of the weather and theidiosyncrasies of livestock production, but also the volatilityof the market place. A year ago we could not have foreseenthe sudden jump in cereal prices or the disruptions causedby the F and M fiasco in Surrey which led to the collapse ofthe sheepmeat and pigmeat markets in the autumn.
This year we have been caught unaware by theunprecedented rise in fuel and fertiliser costs. Red dieselis up to 67p/litre and fertiliser continues its relentlessupward spiral heading toward £500 or even higher by nextspring. Rising costs are the subject of our guest article byJulian Bell of SAC where he gives us some tips on riskmanagement. The theme of fertiliser cost is echoed byStewart Jamieson writing about the benefits of clover inthe sward and grassland management.
New TFA National Chairman Greg Bliss, an arable andsheep farmer in Cambridgeshire gives us his vision of thefuture. Vice STFA chair Brian Shaw of Lockerbie writes onhis latest travels to Australia and Hamish Lean’s regularfeature covers fixed equipment.
Rent reviews have been the topic of the month andthe STFA phone has been hot with queries fromtenants who have just had a rent review notice land ontheir desks. The main message is; don’t panic butstart to make preparations for arguing yourcase and try to make contact with
other tenants in the same position. Tenants who havealready been through the process will testify theimportance of sharing information and, where possibleacting in concert with other tenants on the same estate.Enclosed with this newsletter is a survey for theRental Databank so, if you have not done so before orif you have just had a change of rent, please take thetime to fill it in and return to TFA on the freepost address.
Usual prize draw later in the summer.
Registration of Interest
Visit the Scottish Tenant Farmers Website: www.tfascotland.org.ukVisit the Scottish Tenant Farmers Website: www.tfascotland.org.uk 13
I took over from Reg Haydon as the TFA National President in March this year. He was, and is passionate
about the TFA and believes that tenant farmers need to be properly represented and their views are not always
heard. I had the honour of making him the TFA’s first Honorary Life President in recognition of his services to
the Association. As there can only be one Honorary Life President at a time, it is likely Reg will be the only
ever recipient as it is unlikely that anyone in the future will have done as much to deserve the award.
We take comfort at TFA that the amount of land being soldby local authorities in recent years has declined compared tothe 80’s and early 90’s due to our widespread lobbying. Wehave actively encouraged councils to manage assets better,including careful, planned, strategic disposals of land fordevelopment from the county estates of areas of land toosmall, scattered or uneconomic to farm.
Bluetongue is of grave concern. At time of writing, muchof England and part of Wales is in either a protection orsurveillance zone. With Intervet having delivered the firstdoses of vaccine at the end of April, it’s hoped thatbluetongue will not have such a widespread impact as ithas on the Continent. TFA has been an active member ofthe JAB campaign, there is concern that bluetongue willfollow the pattern of Europe, where in the first year,incidence was low and animals tended to recover from it.However, in the second year, the incidence was much
higher and the disease causedabortions, still births, a drop inproductivity and deaths.
Finally we are expecting anannouncement from theGovernment on the Action Planfor NVZ’s before summer.Defra has started the processapplying to the EU for aderogation on the 170kgloading limit. Of main concernis there may be a requirementfor farmers to have increasedstorage capacity for slurry. It’sbeen estimated that dairyfarmers alone would have tospend upwards of £50,000per farm for new slurry
storage facilities. From a tenant’s point of view, forholdings let under the ‘86 Agricultural Holdings Act, it willbe the landlord’s responsibility to install fixed equipmentnecessary to meet statutory standards. Will landlordshave the financial capacity to cope with the degree ofinvestment required? In the case of County Councils it maycause them to reconsider their estates and potentiallyspeed up a programme of dispersal. TFA hopes commonsense will prevail.
Agriculture is not an easy industry to work in, at timesthings can look extremely negative but with the supportof industry bodies such as the STFA and TFA, farmersstand in much better stead to face the challenges whichlie ahead.
My first year as National Chairman is already provinga busy one. I am going to be at many of the shows, tomeet as many members as possible. Rent reviews, countycouncil tenancies and bluetongue are all at the forefrontof members’ minds. With increases in product pricesin the dairy and arable sectors, many farmers havefound this has triggered a rent review.
We have seen most rent review notices being served in thearable sector. Some farmers managed to sell their crops athigh prices in 2007 but many sold a significant amount of theircrop forward at prices well below the top of the market.Unfortunately in some cases this seems to be forgotten bylandlords who only see headline prices. Arable farmers, likethe rest, have been hit by increases in the cost of fuel, labourand fertiliser. Red diesel at record highs, is now at 60ppl, andlikely to continue to rise. Labour costs increase year on year,whilst fertiliser, if available, costs £330 to £350 per tonne.We can see that although thereis scope for some increase inrents in the arable sector, it’snowhere near the inflatedfigures that some landlords’agents have been quoting.
In the dairy sector there’svirtually no scope for rentincreases as the sector hascome through a period ofdepressed returns and needsto recover earlier losses. Costshave risen to eat up most of thebenefits of recent priceincreases. In the red and whitemeat sectors and upland farmsthere is no scope for anyincreases and in some casesthere are arguments for a decrease. It appears however thatlandlords with tenants in these sectors have generally avoidedserving rent review notices - the correct decision at this time.
TFA’s online rent databank has proved an invaluable tool atrent reviews as is the Farm Business Protector Insurance;we have had numerous comments from both tenants andland agents that having the insurance can help prevent a rentreview from going to arbitration.County Council Farms in England have come under pressure,as cash strapped local councils look at ways to cut spendingand raise capital through sale of farms. Over the past twentyyears there has been a 43% reduction in area rented out(down to 96,000 hectares) and a 58% reduction in thenumber of tenancies (down to 3,900).
As you will have read in the press, the publication of the TFFrecommendations to the Cabinet secretary met with a mixedreception from the journalists present. There was a generalair of disappointment that the TFF report did not come outwith some specific recommendations for a new entrant’sscheme but, to those who have been involved in theconsultation this came as no surprise. Any recommendationsto come from a forum with such a disparate membership andsuch opposing views are bound to be a compromise.
The recommendations to the Scottish Government and thefull report are available on the STFA and TFF websites –www.stfa.org.uk and www.tenantfarmingforum.org.uk.The report went into a detailed examination of why land isnot being let and came to three main conclusions, firstly;political insecurities, secondly; a dislike of the LDT minimumterm of 15 years and thirdly; the tax system which is seenas acting as a disincentive to let land.
STFA made its position quite clear in a letter to CabinetSecretary Richard Lochhead: “The existence of right to buy legislation has always beenresented by landlords and the perceived fear of its extension issaid to cause lack of confidence in letting land. The pre-emptiveright to buy which was introduced in the 2003 Act is athoroughly appropriate piece of legislation welcomed by STFA,who have never suggested it should apply to new tenancies.
It’s Showtime!It’s Showtime!Highland Show
Thursday 19th – Sunday 22nd June
Turriff ShowSunday 3rd – Monday 4th August
Black Isle ShowThursday 7th August
Grantown ShowThursday 14th August
STFA will be at the usual shows; our show season kicks offwith the Highland, so come and see us, there is alwayshospitality and plenty of craic and a chance to catch up withfellow tenants from other areas. STFA professional agentsusually drop by during the show so it is a chance to have aninformal chat about what’s going on. We can be found at thesame site: Stand 483 on 4th Avenue – on the way in fromthe West Gate.
There are a limited number of tickets available to thosewilling to take a turn in helping to man the stand. Anymembers interested should get in touch with the office.Tickets will be allocated on a first come first served basis.
New Entrant ConsultationIn recommendations on “Assisting New Entrants intoFarming” STFA has emphasised that; “right to buylegislation should not be extended to include tenanciescreated after the 2003 Act”. The extension of the existinglegislation is not on the STFA agenda. Perpetuating thisfear has been a distraction from the real business ofencouraging young people into farming and can only bedescribed as scare mongering.
One of the main reasons behind landlords’ unwillingnessto let land is the.. “wish to keep control of their land totake advantage of increasing land values, tax benefits andof any development opportunities that may arise.Furthermore, in harsh economic terms, land will bringlandlords a larger return if the farmhouse is let separately,the steadings developed and the land rented out on yearlyrents rather than letting the whole farm out under aregular tenancy agreement”.
The TFF recommendations have received a mutedwelcome from Richard Lochhead and clearly there is stillmuch work to be done to find ways to help young peopleget started and the bottom line is that there will be nonew entrants unless more landowners make land availableto let, and here the large estates will have to take the lead;try as they may to deflect the attention on to the owneroccupier sector.
Over the last year the TFF has been almost totallypreoccupied with the new entrant’s consultation but is nowturning its attention to some of the pressing issues that havebeen concerning STFA. Chief among these are the difficultiesthat tenants are experiencing when a 1991 tenancy passesfrom one generation to another.
Problems arising from anomalies such as the definition of anear relative and the two man rule have been welldocumented. STFA has raised these matters in the TFF andhas had broad agreement that the whole issue of succession
Tenant Farming Forumneeds to be re-examined. STFA intends to get rid of the two-man rule altogether and to have a close look at how thedefinition of near relative should be re-defined so that the pathof succession into tenancies is made easier and lesscomplicated with fewer grounds for unreasonable landlordobjection.
STFA has also had its attention drawn to some seriousmalpractices on the part of some landlords, and ones whoshould know better, and will be raising these both within theTFF and with politicians.
New TFA National Chairman Greg Bliss, an arable and sheep farmer from Cambridgeshire.
Visit the Scottish Tenant Farmers Website: www.tfascotland.org.ukVisit the Scottish Tenant Farmers Website: www.tfascotland.org.uk 54
which is not useful for modern requirements and it is oftenpossible to reach a compromise agreement that a modernbuilding will be erected with the tenant making a contributionto the cost, which contribution will be a tenant’s improvementfor compensation purposes.
Also, not decided by the Court in Buccleuch was the questionof to what standard the landlord had to replace an item offixed equipment which modern legislation requires to be at ahigher standard than the original (eg a slurry store). In myopinion it is strongly arguable that the landlord’s obligation isto provide a new slurry store to a modern standard.
Tenants should also be aware that the landlord’s renewingobligations are tied to the type of farming specified in the leaseand a tenant is unable to call upon a landlord to provide orreplace fixed equipment which is not required for the type offarming which is specified, albeit the tenant has been practisingfreedom of cropping and a different farming operation.
Where a post lease agreement has been entered into it is ofcourse possible for the tenant to nullify the agreementsubject to certain conditions. In summary, a tenant is entitledto serve a notice nullifying his post lease agreement followinga determination of a rent review application in the LandCourt. The post lease agreement will be nullified if the fixedequipment is in a reasonable state of repair or, if not in areasonable state of repair it is in no worse a state of repairthan it was when the post lease agreement was entered into.A reasonable state of repair is not as onerous as a thoroughstate of repair, which is the landlord’s obligation. At a timewhen many tenants have received rent notices, this should beborne in mind in any negotiating process.
In any dispute relating to the fixed equipment there is greatscope for argument about whether the fixed equipment hasfailed through fair wear and tear or as a result of a lack of repairby the tenant during the tenancy. Often both will have been acontributory factor. In these circumstances the Court is likely toapportion the cost of a replacement between the parties inaccordance with its view on the responsibility of the parties asto why an item of fixed equipment is in its present state and thisshould be borne in mind when negotiating a settlement.
There are many existing traditional tenancies which areregulated by leases entered into before 1st November 1948.These fall outwith the provisions of s5 of the 1991 Act theresult of which on the face of it is that the landlord cannot beforced to renew or replace an item of fixed equipment whichhas failed through fair wear and tear.
There is however a means by which the tenant in such a leasecan obtain the benefit of s5 and this is by making use of s4of the 1991 Act. Put shortly, a tenant in a pre 1st November1948 lease which is running on tacit relocation and whichcontains a provision inconsistent with the provisions of s5 canserve a notice on the landlord to agree terms consistent withs5 and in the absence of agreement can apply to the LandCourt for an order imposing conditions consistent with s5into the lease. Once this has been achieved the tenant is thenin a position to oblige the landlord to renew and replace.
In this edition’s article I want to have a look at issuessurrounding fixed equipment in respect of traditional
tenancies governed by the Agricultural Holdings (Scotland)Act 1991, in particular repairing and renewing obligations onthe part of Landlord and Tenant.
Fixed equipment is defined in s85 of the 1991 Act asincluding any building or structure affixed to land and anyworks on, in, over or under land and in particular includes allpermanent buildings, farmhouses and cottages necessary forthe proper conduct of the holding, all permanent fences,hedges, stone dykes, gate posts and gates, ditches, opendrains and tile drains, conduits and culverts , ponds, sluices,flood banks and main water courses, stells, fanks, folds,dippers, pens and bughts, farm access and service roads,bridges and fords, water and sewerage systems, electricalinstallations and shelter belts.
S5 of the 1991 Act incorporates by law into every leaseentered into after 1st November 1948 an undertaking on thepart of the Landlord to put the fixed equipment on the holdinginto a thorough state of repair and to provide such buildingsand other fixed equipment as will enable an occupierreasonably skilled in husbandry to maintain efficient productionas respects both the kind of produce specified in the lease, or(failing such specification) in use to be produced on the holdingand the quality and quantity thereof. The Landlord is alsoobliged to replace and renew fixed equipment which has beenrendered necessary by natural decay or by fair wear and tear.
The Tenant has a corresponding obligation imposed on himwhich is to maintain the fixed equipment in as good a state ofrepair (natural decay and fair wear and tear excepted) as itwas in immediately after it was put in repair by the Landlord.
The Landlord’s renewing and replacing obligations are veryonerous. However, s5(3) of the 1991 Act permitted theparties to the lease to agree, after the lease was signed, thatthe tenant would take responsibility for the landlord’srenewing and replacing obligations. Such an agreement is a“post lease” agreement. No new post lease agreements canbe entered into after the Agricultural Holdings (Scotland) Act2003 came into force on the 28th of November 2003 butexisting post lease agreements at that date remain in force.
Angus McCall in his commentary on the recent Land Court caseof Buccleuch v Telfer SLC 101/07 in the last edition of thenewsletter highlighted that in the Court’s view, the Landlord’sobligation to replace and renew did not arise where an item offixed equipment was no longer fit for purpose because ofchanging farming practices or new legislative requirements buthad not worn out through fair wear and tear. Accordingly, acattle court provided by the landlord in 1949 which is still ingood working order but useless or next to useless for modernfarming purposes is not something that the tenant can insistthat the landlord replace. Even worse, from the tenant’s pointof view, if our hypothetical cattle court does require to bereplaced, the landlord’s obligation is to replace “like with like”which may not be of any use to the tenant. Practicallyspeaking if the landlord does have a liability to renew it is notin his interest either to replace a building with something
Visit the Scottish Tenant Farmers Website: www.tfascotland.org.ukVisit the Scottish Tenant Farmers Website: www.tfascotland.org.uk 76
When we flew into Ayres Rock on the last Saturday inFebruary ‘08, Peter Severin, the 80 year old station ownerof Curtin Springs was there to meet us in a 50 year oldHolden. His son and business partner Ashley, a Nuffieldscholar had invited our party to visit their property CurtinSprings - 85km east heading for Alice Springs which lies afurther 360km to the East. We were a long way fromanywhere but on a highway to Ayres Rock and KingsCanyon which brings the tourists in.
In 1956 Peter, his wife Dawn and young son Ashley tookCurtin Springs on a grazing licence which was renewableevery 12 months. They couldn’t obtain a bank loan tofurther expand or improve their infrastructure as therewas no tenure in a grazing licence. After much canvassing,the Government in Canberra changed the grazing leases topastoral leases of 53 years and envisaged that 500square miles was not sufficient area to make a family livingsustainable. Subsequently the pastoral leases wereenlarged to approximately 1000 square miles and todayCurtain Springs is 1,608 square miles or 1,028,960acres - (don’t worry about the 28,960 acres says Ashley).
On arrival in ‘56, the Severins purchased 1,500 cattle andthe heavens opened up and an inch of rain fell - a blessingfor the new pastoralists. Unfortunately it didn’t rain thenfor 9 years. By the time the drought ended they had only400 head of stock left. It took several years and thecommencement of good seasons to restock to the present4,500 head. Feral camels are an increasing nuisance aslarge mobs graze valuable forage and break down fences.Several were shot during our visit - only the saddle meatwas brought home to the butchery for steaks.
Water is the major issue in running the cattle station.There is no natural water on Curtin Springs – no creeks, nowaterholes, no freshwater springs – all the water comesfrom bores. This means they use the “water trapping”method of mustering, where cattle come into the fencedwater areas and no-return gates close behind them. Fire isa huge threat as the spinifex grass is highly flammable. In2002/3 over 1,000,000 acres of Curtin Springs wasburnt out. Mount Conner dominates the skyline on thesouthern end of the station and is 32 km around the basemaking it three times the size of Ayres Rock.
Like farmers the world over, diversification plays an everincreasing part of the farm business. Ashley’s partnerLindie overseas the running of their roadhouse, which fromsmall beginnings, now occupies a big part of the balancesheet of the business. More than 30 buses pull off the
DOWN UNDERThe Life of Brian
STFA Vice Chairman and Nuffield scholarBrian Shaw made a trip to New Zealandfour years ago and was invited at thattime to visit Australia by fellow scholars.His arm has been twisted to write anarticle for STFA and give us a flavour of hislatest Antipodean adventure. Brian hasfocussed this article on the highlight of histrip which was his visit to the hot redcentre of Oz.……
be the mines officer for the area - licensing the everhopeful prospectors to mine for the opal. He and his wifeMerilyn live on the edge of the town in a cave - betterdescribed as a dug-out. However, this is no Fred Flintstoneexistence as it has all the facilities of a modern home,formed by excavating the soft rock with modern drillingmachines. No need for air-con as the solid rock keeps thetemperature inside this dug out around 20C all year round.When you put the lights out - it sure is dark! The localshave become expert at creating underground facilitieswhich are particularly suitable for the extremes of weatherfound in this dusty wasteland. We visited an undergroundchurch, a large underground hotel and the inevitableunderground opal emporium.
We took the opportunity to go with the 644km mail run tothe outlying areas. After 21/2 hours in a 4WD truck alongdirt roads, we arrived at Anna Creek station, part of theSir Sidney Kidman empire, 6M acres (bigger than Israel),the world’s biggest cattle station but because of thedrought which started in 2001, is only carrying 3000 headof Santa Gertrudis cattle. There are no sheep herebecause the station lies to the north of the dingo fencethat runs for 5300 km all the way across Australia to keepdingos and sheep apart. There are 18 souls living at AnnaCreek including 6 children who have their own schoolhouserun by a teacher who is the wife of a station hand. Themail run took twelve hours as it continued to WilliamCreek, Oodnadatta and finally to Mount Barry station withstill 100km to our starting point in Coober Pedy.
Our host Kim Kelly is the president of the Coober Pedy OpalFields Golf Club which has only recently negotiated the onlyreciprocal agreement with the Royal and Ancient Golf Clubof St Andrews. There is not a blade of grass to be seenon the course which has 18 holes set in 18 greens (oil andsand mixtures).
Yep, Coober Pedy is a way-out place,inhabited by way-out people in a land
that is a far away from reality.……… I felt a bit like Alice
in Wonderland!
road every day and are provided with meals,accommodation, a cold beer and a chance to stretch theirlegs before the final part of their journey to Ayres Rock.It does help having a good location! Life is hard in theoutback - they don’t take weekends off as there is nothingto do-no mobile phones and only one TV channel.The cookhouse girls’ tee-shirts summed it up quite well...
EVERYONE BRINGS US PLEASURE – SOME WHEN THEYARRIVE AND SOME WHEN THEY LEAVE !
The top end of the Northern territory had completelydifferent features to show us when we visited Bill Davy,another Nuffield scholar who had been “encouraged” toleave Zimbabwe by the present regime. Bill manages alarge fruit operation at Katherine, some five hours drivesouth of Darwin, on fertile soil with plenty of undergroundwater, courtesy of the tropical climate. Mangoes are themain crop early in the year followed by lemons andgrapefruit when we were there in March. Growingconditions are perfect for these crops and yields are high.The downside is that the inputs have to be brought in largedistances and the all important harvesting labour comesinto Australia on temporary work permits from SE Asia.Once harvested, these precious crops have to be movedsome 3,500 kms away to the populated S.E. of Australiaby the iconic road trains (three artics in a row) oroccasionally on the new Ghan railway.
We chose the Ghan railway to take us South through AliceSprings towards Adelaide. On the way we had to call in onanother Nuffield scholar at Coober Pedy, the opal miningtown. When the train pulled away from Manguri Halt in themiddle of a warm and sultry night, we were left with ourluggage standing in the bush, 40km from town with onlythe stars for company - my first astral connection!
Kim Kelly gave up farming around Adelaide and moved tothe mining town of Coober Pedy to sell“noodling machines” which reprocessthe opal heaps. He has sinceprogressed to
Brian Shaw
Introduction
The F-word has been a growing cause of complaintamongst farmers in recent months. By the F-word I meanof course fertiliser! Fertiliser prices have risen sharply inthe last 9 months with ammonium nitrate up 90%, potash108% and phosphate 144%. The rise in fertiliser pricesis particularly concerning because there does not appearto be any immediate prospect of relief. The other F-words;feed and fuel, have also risen sharply. However for the timebeing at least feed prices are falling on prospects for arecord world harvest. Fuel costs continue to rise butthese make up a smaller share of cost for most farmersthan feed and fertiliser.
The timing of fertiliser purchases will have a large impacton the costs incurred on individual farms. Forwardpurchasing is likely to have lessened the immediate impacton many arable units while a reliance on spring purchasinghas disadvantaged many livestock producers.
Determining where fertiliser prices will go in the next fewmonths is hard to predict but it is clear that farmers needto be taking steps today to minimise the impact that higherfertiliser prices are having on their business.
Impact of higher fertiliser prices
The price of nitrogen, phosphate and potassium fertilisersincreased dramatically between July 2007 and April 2008as Chart 1 and Table 1 details. Ammonium nitrate rose£139/t (90%), potash by £277.50/t (144%) andphosphate by £267.50/t (108%).
Source: SAC and Farm Brief
The price quotes for April 2008 in the table are mid rangeestimates and an extremely wide range of quotes are beingoffered particularly for potash (£320-£385/t) andphosphate (£430-£600/t). Not only that but availability isrestricted in several cases.
Table 1 - UK fertiliser prices
Source: SAC and Farm BriefNote - *change between July 2007 and April 2008
To illustrate the impact of rising fertilisers on grainproduction costs different purchasing patterns werecompared for winter wheat and spring barley in Table 2.
Table 2 - impact of rising fertiliser prices on grainproduction costs
Source: SAC. Note - fertiliser use as per SAC Farm Management Handbook.Yields; wheat 8t/ha & spring barley 5.5 t/ha
For producers of winter wheat who purchased all theirrequirements forward in July 2007, the impact onproduction costs for 2008 harvest will be relatively small;rising just £2/t of grain from £16.23/t for 2007 harvestto £18.25/t for harvest 2008. However, the impact willbe much greater for farmers buying fertiliser today (April2008) for the crop going into the ground this autumn.Based on today’s prices winter wheat production costs willhave risen by around £20/t in 2 years based purely onfertiliser costs alone.
The situation is similar for spring barley except averagefertiliser costs for the current 2008 harvest are likely tobe higher and to show a much greater spread reflecting
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whether purchases were made in the autumn or thespring. To put this into perspective malting barleyproducers who bought fertiliser at the last minute will needanother £18/t on the barley price to compensate.
These examples illustrates that the management of pricerisk now needs to encompass both input and output pricessince both are showing greatly increased levels of volatility.
Of all the sectors being considered, the cereals sector hasat least been able to secure a large increase in price fromthe market and this has (so far) more than offset these costrises, though of course there are also higher fuel, labourand machinery costs to consider. However, at presentglobal grain markets are dropping with new crop wheatprices in Scotland having fallen around £25/t to around£140/t currently for November. Obviously if the trend ofrising fertiliser prices and falling grain prices continue thenprospects for the arable sector will deteriorate.
Dairy farmers have also enjoyed increases in the price ofmilk but again they have also had to offset sharply higherfeed, fuel and other costs. Costing figures from Promarestimate that UK dairy forage costs will rise by around0.5ppl to 1.89ppl in 2008/09. SAC estimates see foragecosts on Scottish dairy farms rising 0.7ppl from 2008 toreach 2.5ppl by 2009. These cost rises largely reflect
higher fertiliser costs but higher fuel contract and labourcosts also contribute.
Considering forage production alone, Table 3 illustrates theincrease in production cost purely for fertiliser betweenbuying fertiliser in March 2007 compared to March 2008.The rise in fertiliser prices alone has added £162/ha(£66/ac) to the cost of making a typical silage crop. Interms of dry matter produced this has raised productioncosts by £13/t to reach £25/t of silage.
Table 3 - impact of rising fertiliser prices on silageproduction costs
Source: SAC and SAC Farm Management Handbook. Note - fertiliser use as per SAC Farm Management Handbookassumes per ha; 220kg N, 110kg K2O, 65kg P2O5, silage yield12t/ha DM over 2 cuts plus aftermath grazing
While all livestock sectors have suffered from higher fertiliserprices the effect has been particularly severe for thosesectors which have not benefited from significant priceincrease for their end product, particularly beef and sheep.
This STFA newsletter contains general information and is not a substitute for professional advice in individual circumstances. However every effort is made to ensure that the information here-in is accurate at the time of publication and no
responsibility can be accepted for any errors.
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CLOVER CAN HELPDr Stewart Jamieson of Cara Consultants has been farming organically since 2001. Formerly a
tenant on Buccleuch Estates, he runs 220 cows on 450 acres at Kirkland Farm near Thornhill,
Dumfries-shire. Past president and currently a board member of the Scottish Organic Milk
Producers Association, he is also one of Scotland’s representatives on the new milk levy board, Dairy Co.Outlook for fertiliser prices
Increasing agricultural production worldwide is stimulatingfertiliser consumption leading to record levels of globaldemand. This upward trend looks set to continue given thefollowing drivers:
• Impressive economic growth in Asia: between2006/07 and 2008/09, it is anticipated that some89% of the increase in world fertilizer consumptionwill come from East Asia, South Asia and LatinAmerica together.
• A tight grain market• Increasing demand for biofuel
Although 2007 was a record production year for mostnutrients, increasing demand stretched the capability ofthe industry to meet global requirements. Major capitalinvestment is needed to sustain existing global miningcapacity and develop new capacity. Such investments maytake up to seven years to become fully operational and asa result, prices may well remain high over this period.
NitrogenNitrogen fertiliser is made from energy - primarily naturalgas - and will be driven by energy prices and supplyconstraints. Global demand for nitrogen fertilisercontinues to increase, with Brazil and the Asian blockcountries dominating the market. China needs about 150million tonnes of product, which far outweighs the UKmarket at just 3.6-3.8 million tonnes. Over the pastdecade, much of the fertilizer nitrogen manufacturingcapacity has shut down in the US as a result of increasesin natural gas costs, lower-cost foreign competition anddomestic environmental regulations. The global ureamarket may remain tight in the first half of 2008.
PotashEven with a 15 percent increase in production over 2006,capacity to meet supply was stretched in 2007 byincreasing demand and a widening customer base (LatinAmerica, Asia and Africa). Capacity additions in 2008 willbe relatively marginal and it’s likely to be a few years beforeany big investment comes on stream to help bridge thesupply gap. Overall market conditions in 2008 areexpected to remain tight.
PhosphateAgain, high demand for phosphate fertilizers in 2007meant production at near capacity throughout 2007.Demand for processed phosphates is forecast to increasein Latin America (Brazil), South Asia and West Asia, and
to decline further in China.New DAP-MAP capacity isprojected to come on stream in China, Bangladesh,Pakistan and Viet Nam. In 2008, the global processedphosphates market is projected to continue to grow.
Reducing the impact of higher fertiliser prices
Current indications in the fertiliser market suggest thathigher prices will be here for some time yet. Whileindividual farmers cannot influence the price of fertiliserdirectly there are a number of ways that they can reducethe impact of further price rises on the farm business -
• Improved nutrient management – making the most ofexisting nutrients on farm either in the soil or in animalmanures is an essential step in cutting back fertilisercosts while at the same time leading to improvedenvironmental management. Regular soil and planttesting can ensure more targeted applicationsparticularly when combined with the use of precisionfarming systems. Higher fertiliser prices greatly reducethe payback time on precision fertiliser spreaders forexample. Appropriate timing of fertiliser application canincrease efficiency of utilisation.
• Make the most of legumes to fix nitrogen – for exampleclover in pasture and beans in arable situation.
• Improved purchasing power through buying groups
• Forward purchasing and storage – this can offer thechance to secure fertiliser at seasonally discountedrates. This of course needs careful assessment of theinterest costs, cash flow and borrowing requirementsof the business.
• Better marketing and pricing of the end product – beingaware of the impact of higher fertiliser and other costsis an essential first step in the effective marketing offarm output. Knowing production costs helps can helpin price negotiations and in alerting farmers to anyopportunities to secure margins through forwardpricing that the market may present. Currently this ismost apparent in the arable sector.
• Rent negotiations - again having an up to dateunderstanding of current and future production costs isessential in negotiations
The Impact Of Rising Fertiliser PricesThe Impact Of Rising Fertiliser Prices
We restrict white clover to our grazing fields and 2/3rdsof our grazing area has not been ploughed for 15 years. Inour early organic days we increased the content of whiteclover by spinning on 4kg/acre in late March, harrowingand rolling. Again establishment was variable but wecertainly have a good content of white clover in ourswards now. Bloat has not been a problem but we bufferfeed our cows with 6/8kg of silage during the grazingseason which probably helps. In the 5 years we havebeen organic we have lost 3 stirks to bloat, all in the monthof September after cold nights. One aspect on which Ihave no information is the maintenance of good cloverpopulations where significant amounts of bag nitrogenare being applied. However, some of the new modernvarieties have been bred under these conditions and shouldrespond satisfactorily to such management. Overall Iwould say our grass/clover swards are producing85/90% of the production achieved by grass swards withoptimum bag nitrogen.
We may not have the extended growing season of NewZealand but I am sure that clover will be a cost effectiveoption for UK livestock farmers to utilise their soil toproduce good forage. Try some in your next reseed – andit looks nice too!
The dramatic increase in fertiliser prices has led to anincreased awareness of the role of clover in grass swards.Organic farmers – I have an organic dairy farm – havealways placed great reliance on clover so I thought I wouldpass on some of my experiences.
There are two main types of clover; red clover, whichgrows tall, is for silage and autumn grazing; white cloverwhich has a low growing habit is for general grazing andonly has limited use in silage mixes. It should beremembered that both clovers take time to establish andfor the root nodules to be fully effective in supplyingnitrogen and I would say it would be 11/2 – 2 years aftersowing before they are fully effective.
Red clover has been a great success on our farm aspart of a rotation which involves grass 4 wholecrop peas4 wholecrop triticale 4 grass/red clover. We sow thegrass/red clover mix in the autumn as a direct reseed at15kg/acre of which 2.5/3kg is red clover and the restintermediate perennial ryegrass. Surprisingly we find thislasts 4/5 years before we put the field back to peas. Ihave consistently used two Swiss varieties Milvus andMerviot which have proved winter hardy. Red clover has ahigher moisture content than grass so these mixes needslightly longer to wilt but as we are now in the situationof needing only a 3-day window for our silage this hasnot been a problem. If two silage cuts are taken the feedvalue of second cut is usually enhanced by a highercontent of red clover than is present in 1st cut.This is because clover is slower to get going in the springbut it has a higher protein content than grass.We regularly have a protein contents in these silages of14/15% for 1st cut and 15/16% for 2nd cut.After silage we have found these swards can besatisfactorily grazed although red clover has a tendency tobecome mature and unpalatable quickly such that regulartopping is required even in September. An added advantageof red clover is that it has a deeper root than grass whichmeans that it is less susceptible to drought. To achievesome benefit of red clover without full reseeding we havein the past applied with a spinner 4kg/acre of red cloverimmediately after 1st cut silage and then grass harrow androll. This has given variable results but in the main,worthwhile establishment.
