Covid 19 – Rural property and business update

Commodity prices

Prime beef prices, somewhat to my surprise, held up last week. Following a conversation with a friend who runs a meat packing operation for one of the UK’s biggest suppliers it seemed the loss of food-service orders was set to bite – fillet steak is almost being given away. 

But, for now at least, that moment seems to have been deferred with kill numbers down on the week. Cow beef prices have, however, started to slide presaging perhaps a wider decline. The demand for cheap meat like mince caused some controversy as several retailers were “forced” to import supplies from Poland.

As predicted in this commentary last week, lamb values haven’t fared so well, tumbling over the past seven days. This may seem strange to those of you who, like me, left your Easter shopping to the last minute and were faced with empty shelves, bar a few packs of New Zealand sheep meat. It certainly highlights the complexities of the agricultural supply chain. Something that is already being scrutinised in the light of Covid-19.

A number of dairy farmers were forced to pour milk down the drain when some processors reliant on the foodservice sector failed to make collections. Although some milk buyers have already cut the price they pay to farmers, it is too soon to calculate the wider impact on overall farm-gate milk prices, but prices for bulk cream dropped from £1,280/t in March to £750/t. 

In the arable sector there was little material change to commodity prices.

The supply chain

As mentioned above, the Covid-19 outbreak has exposed the weaknesses of our current just-in-time supply chain when one or more of its links breaks or becomes disrupted. Shoppers experience empty shelves, while primary producers see prices fall. Millions of workers are furloughed, while food risks rotting in the fields due to a lack of labour. It often doesn’t seem to make sense. 

Recognising this, the House of Commons Environment, Food and Rural Affairs select committee has announced a fast-track enquiry into the impact of Covid-19 on the agricultural and food sector. It is due to present its initial findings on 1 May.  

Public access to the countryside

A snap poll conducted by Farmers Weekly last week revealed almost 80% of respondents thought that public footpaths in the countryside should be closed to help prevent the spread of Covid-19 via gate latches and other points of contact. 

However, Natural England has pointed out that farmers do not have the legal right to instigate arbitrary closures of rights of way across their land. Where possible, it suggests tying gates open.

Brexit timetable

The government has until the end of June to request an extension to the Brexit transition period that is currently due to end on 31 December 2020. The transition period allows time to agree a free-trade deal with the EU – considered by many to be vital for the agricultural sector - and finalise the many complexities of the UK’s exit. Without a deal we leave on WTO terms. 

Given the impact of Covid-19 on the negotiating process, there are growing calls for a “common-sense” extension given the original deadline was already considered somewhat tight to negotiate a full free-trade agreement. Others say it would be politically and economically unwise to extend the deadline. Watch this space as June 30 draws closer – the argument is sure to heat up.