Sheep, cattle and Schmallenberg virus

It was a little over a year ago that a new disease of sheep and cattle caused by the Schmallenberg virus (SBV) hit the headlines. As its name suggests the disease is caused by a virus which is spread by midges which bite the livestock and pass on the virus. The main impact is that it causes stillbirths and birth defects in calves and lambs which can obviously have a significant economic impact on farmers. The disease first raised its head in the autumn of 2011 when farmers reported stillbirths in sheep in East Anglia. It is thought that the ewes had become infected by midges which must have been blown across from the continent where the disease was already well established.
  
Up until recently however I have heard of few instances in this area but in the last few weeks everything has changed and farmers locally are reporting lambs being born with leg deformities in significant numbers and also some calves being lost.

Paddy Gordon from Shepton Vet Group said, "We have recently had a number of non-viable lambs presented with fused joints and we have now had positive results for Scmallenberg in both lambs and in our dairy herds. Our view is that it is likely there has been infection across the county but the effect on livestock will be variable depending on the stage of pregnancy. We are hearing reports of normal lambing and of flocks with a high proportion of lambs affected." Thus it seems the effect is sporadic rather than widespread, but if you are one of the farmers affected it can be a real problem.

This obviously demonstrates that during this summer infected midges must have been active in this area and one assumes the disease is now here to stay. However on a brighter note I understand that animals that have been infected can develop immunity which should help reduce the impact of the disease in subsequent years. One would also assume that if youngstock can gain immunity before they reach breeding age then this would again help reduce the impact of the disease going forward.

There may also be the possibility of developing a vaccine, as I believe vaccines exist for similar diseases but that still does not help those with livestock which have not yet developed immunity either naturally or via vaccination. In these herds and flocks it looks as though losses of calves and lambs could be a problem at least in the short term and it is certainly a worry to a growing number of farmers in this area. Unfortunately there is little that can be done at this stage, as infection will have been spread by biting midges during the summer. Finally I think it is worth mentioning that there is no known risk to humans.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Common Agricultural Policy (CAP) to be delayed

Following failure to reach agreement last week on the overall EU Budget for 2014 to 2020 it seems almost inevitable that this will result in the reform of the Common Agricultural Policy (CAP) being further delayed. This is because it seems difficult to see how the latter can be agreed in detail until it is known how much money there is to spend.

The current form of the CAP was meant to come to an end at the end of this year but with talks still at an early stage the timetable has already slipped a year and it seems now that 1st January 2015 is the most likely date for the reforms to come in to place.

Indeed Owen Patterson, our DEFRA secretary spoke at the European Ministers meeting in Brussels last week and urged ministers not to rush in to the reforms. He explained that the last CAP reform had seen the UK rush into an agreement only to be hit months later by £550m in EU "disallowance" fines. Whether this was the EU’s fault or that of our own Rural Payment Agency (RPA) who were tasked with administering the system, I am not certain.

Whoever was to blame, the introduction of the “Single Payment Scheme” back in 2005 caused chaos, particularly in England and we do not want this to happen again. The problems experienced were a symptom of the fact we carried out some very major reforms in a very short timescale and certainly the RPA did not have time to set up robust computer systems to cope with the complexity of what the politicians had agreed.

Therefore I think Patterson’s call not to rush the reforms this time around is sensible because I am sorting out one or two problematic cases where clients of mine are still arguing over the claims they made going back to 2005. This level of confusion and incompetence must not be allowed to happen again and so if the reforms are to be delayed to 1st January 2015 I hope this will give the politicians time to agree a workable package going forward.

However, farmers must appreciate that whatever is agreed it is likely that the level of support they will receive from the EU will fall in real terms over the coming years and with many livestock farmers still relying on these payments to make a profit, farmers must look to get their businesses in good shape now while market conditions are generally favourable.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Dairy farming and milk production

Following all the milk price protests earlier in the year, it is interesting to learn that UK milk production continues to fall sharply. I suspect this is a combination of the poor weather conditions, affecting the quality of forage and also the number of dairy farmers exiting the industry. What this means is that in October the UK produced 993m litres which is a 6.5% fall on last year’s production for the same month.

It appears that this phenomenon is not restricted to the UK alone. DairyCo, which is a not-for-profit organisation funded by dairy farmers to work on their behalf commented, "Milk production in the rest of the EU and in the USA is lower than expected, adding support to commodity markets. However, trade remains thin and any small change in market conditions could have a larger effect on prices."

Dairy farmers in the UK will obviously be hoping that the apparent shortage of milk production beyond our shores will have a positive impact on world commodity prices and then on milk prices paid to farmers here. It has to be remembered that one of the factors which was blamed by many milk purchasers for the price cuts which sparked farmers to picket milk factories earlier in the year was the low price of cream on the world markets.

One of the factories which was picketed was in Somerset, being the new Wiseman Dairies facility off junction 24 of the M5 near Bridgewater. Since building the facility Wisemans have now been taken over by Muller and so it will be gratifying to those farmers who supply them with milk that they will get a phased 1.5p/litre milk price increase to 30.5p/litre between 1 December and 1 February.

Ronald Kers, chief executive officer of Müller UK & Ireland Group said, "We want to return a higher milk price to farmers so that we can ensure security of supply for our customers in an environment where on-farm milk production is dropping," He went on to comment, "We are determined to be the leading dairy company in the UK and Ireland and the preferred home for milk produced by Britain's dairy farmers and we will work closely with the farmer board to this end."

These are positive words although they do seem rather hollow in the light of the sudden and dramatic price cuts Muller/Wiseman announced without warning earlier this year. Therefore, from the British Dairy Farmer’s perspective let’s hope this heralds the start of a new and more constructive relationship between dairy farmers and milk processors such as Muller because the problems encountered earlier in the year have done nothing to engender confidence anywhere within the supply chain.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Farming: planning for future generations

Succession planning is one of the most important problems to tackle when any business wants to continue in to the future, but for farmers in particular it can be a very thorny problem because it is not only a business it is also the family home which has often been farmed for generations.

In this context one of the biggest worries is divorce and the effect this may have on the ongoing viability of the family farm. There have been many cases where the cost of a divorce has resulted in part or all the farm having to be sold which not only impacts the husband and wife involved in the dispute but also the rest of the family who may have lived and worked on the farm all their life.

Consequently there has often been reluctance for mum or dad to pass the reigns down to the younger generations until very late in the day which can leave the recipients unprepared to take on the responsibility of running the business or in certain instances result in inheritance tax charges which could have been avoided.

Obviously if the older generation like and trust their daughter or son in law, passing the farming assets to the next generation may not be a problem but where this trust does not exist, concerns still remain. However, increasingly farming families are turning to prenuptial agreements which can be entered in to by the husband and wife prior to marriage which define how assets will be split in the event of a divorce thereby safeguarding the farming business going on in to the future.

It is only relatively recently that the courts have confirmed that such agreements are very likely to be taken in to account if the divorce becomes contentious provided they have been entered in to properly. In general this means the agreement must be in writing, both parties must have taken independent legal advice, both parties must have fully disclosed their assets, the agreement must not have been rushed nor should one or other party have acted under duress.

Ideally a Will for the husband and wife should also be written after the marriage to ensure it does not conflict with the prenuptial agreement in the event of death rather than divorce and also the issue as to how children of any previous marriage or children of the new marriage should be treated needs to be addressed.

In addition postnuptial agreements, which need to comply with the same principles as prenuptial agreements, can be used to unlock inter-generational “log jams” after the younger generation have married, thereby solving the problem of family succession.

Unromantic as such agreements are, they are undoubtedly becoming more important in the world of farming, where divorce has the potential to destroy everything a family may have worked for over several generations but it is clearly important that professional advice must be sought before entering in to such an agreement.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Personal Grooming

Will Mooney, Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, is getting up close and personal.

“Give me the child until he is seven and I’ll show you the man” is a quote attributed to the Iberian-born 16th Century Jesuit missionary St Francis Xavier and when you take a look round at our current crop of political leaders, it’s difficult to disagree with his maxim.

I suppose it was ever thus. But, at a time when the certainties of the economic and political systems with which we’ve grown up and come to depend upon to reinforce our position in the world are being challenged on all sides, we do seem to be examining the personal credentials of our leaders and our leaders’ lives rather more than when things were less shaky.

Indeed, the Leader of Her Majesty’s Opposition spent over an hour at his Party’s conference in the autumn giving us a glimpse of his 1980s’ teenage education at a North London comprehensive school. Yet, neither the school nor the personal disclosure were quite as comprehensive as they might have been. The state school in question has the exclusive ‘London NW3’ postcode and, even in the 1980s, many houses in its catchment area would have been nudging the million plus mark.

If the speech had been given in the 1980s by the Leader of the Labour Party, you would think he wouldn’t neglect to mention that his father was one of the leading Marxist’s thinkers of the 20th Century.

Yet in 2012, he did.

I bet Ralph Miliband could tell his youngest son a thing or two about the dangers of the cult of the personality.
   
So it was with some relief that a notable tweet from @BBCSport in that same week appeared to indicate, momentarily and in less than 140 characters, that sportsmen were better equipped than our politicians to sort out the ongoing financial crisis. It read: “ECB and Kevin Pietersen reach agreement”.

Sadly, the ECB of the tweet was the England and Wales Cricket Board and not the European Central Bank. So it was more wickets and bails and than bailouts.

Now then, KP’s relationships with England’s cricket establishment and his team mates are classic examples of both the cult of the personality and the over reliance on one person to deliver the goods.

So while in politics and sport, to focus too strongly on one personality can be fatal, in business to have a strong, charismatic leader at the helm of a company is often seen as beneficial. Not only that, but it appears that to get ahead in business as a bloke these days you don’t need to get a hat but a shaven pate.

That’s what a recent study by an academic at the University of Pennsylvania’s Wharton Business School has concluded. An accompanying newspaper article referenced Jeff Bezos of Amazon, Microsoft’s Steve Ballmer and UK-grown entrepreneur Allan Leighton as if to ‘bullet-head’ proof the theory in contrast to the luxurious mane of Nick Buckles of G4S.

The research, called ‘Shorn Scalps and Perceptions of Male Dominance’, concluded that we perceive shaven-headed men who sport the ‘power buzz’ fuzz haircut as more powerful than those with a full head of hair because the hairstyle (or lack of) is associated with über-masculine images such as soldiers and Hollywood blockbuster heroes.

You see why the only observation I make, by way of a conclusion here, is that the leaders of our three main political parties all have fulsome heads of well-coiffured hair. And then there’s the Boris.


Will Mooney MRICS
Partner
Commercial, Cambridge

Milk Quota for Dairy Farmers

Dairy farmers have been feeling the pinch recently but they should still ensure they are keeping up to date with all the latest professional advice because failure to do so could be costly. In this context Milk Quota springs to mind.
  
Milk Quota is an invention of the European Union (EU) which was introduced in 1984 in order to limit production and nearly 30 years quotas are still with us but how the farming landscape has changed in the intervening years. Back then farmers were subsidised to produce food and the markets were underpinned by intervention support which meant the EU (or EEC as it was then) used to purchase produce when the price fell below a certain level thereby underpinning the market.

This not unsurprisingly led to massive over production as supply was not linked to “demand” and as a result huge stocks of milk and milk products were stockpiled in intervention stores across the EU giving rise to the so called “milk lakes” and “butter mountains”. As a consequence the EU introduced Milk Quotas on 2nd April 1984 which prevented farmers producing more than their allocated quota by imposing penal fines for overproduction.

In the early years following their introduction, the volume of Milk Quota held by a farmer was the most significant limiting factor on production because almost overnight the amount of milk UK farmers could produce had been cut by approaching 20%. This was a hard time for dairy farmers and if they wanted to sustain their level of production they needed to acquire Milk Quota.

Thus a market to buy and sell Milk Quota soon developed and by the mid 1990s when milk prices were high in the immediate aftermath of the de-regulation of the milk industry in 1994, the price of Milk Quota rocketed. Farmers facing fines for overproduction were forced to buy Milk Quota at prices as high as 80p per litre.

However, since then the EU has decoupled subsidies from production and farmers are now exposed to world markets and as a consequence the rules of supply and demand are the primary drivers influencing production and therefore the EU intends scrapping Milk Quota in 2015. But herein lies a potential opportunity for dairy farmers because as production has fallen so too has the demand for Milk Quota which is now only worth in the order on 0.2 p per litre – less than a quarter of one percent of its peak value.

This may not seem like an opportunity but it is in that if a farmer can crystallise this capital loss by selling his Milk Quota and then purchase it back, this capital loss can be “banked” now and can be offset against any capital gains in the future. So, dairy farmers who have not already taken advantage of this opportunity should do so without delay although tenants should be aware that consent of their Landlord may well be required to sell Milk Quota.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Let’s go fly a kite…

08 October 2012, With apologies to Mary Poppins, Will Mooney, Carter Jonas partner and joint head of its commercial agency and professional services in the eastern region, is not in the party mood this conference season.

The mainstream political parties are in conference mode but these events are not, in modern times, the kind of seaside shindigs of old. Metropolitan locations of Birmingham and Manchester are preferred to Blackpool these days with just the Liberal Democrats sticking to the seaside tradition in Brighton this year.

But that’s not to say there isn’t breeze enough in these cities to encourage as much kite-flying on the policy front in the coming month as in the past one.

There’s been the great hope that the country’s fortunes can be revived by up to 8 metres worth of building extensions. Capitalising on the fervour of our victorious summer of Jub-Olympics, you’d be forgiven for thinking that it’s the patriotic duty of every householder and landlord of a small business unit to build on this success.

This is an offer for a limited period only and to no more than 25 ft or so, and as long as the property’s not in a conservation area or the owner of a listed property and other caveats which include not annoying neighbours.

Unfortunately, this kite is now being firmly tethered by local authorities who, although of the same political hue as central government, just don’t want to play that particular game.
You have to wonder whether this policy won’t go the same way as that plan to sell off the country’s publicly owned woodlands. If you remember that from last year. I had to be prompted myself.

Then we had another dusting down of the proposal for a British Business Bank (BBB). Vince Cable, as Business Secretary, advised that it would be a bank for ‘gazelles’ – those young, agile companies who were fleet of foot (or hoof) and would be looking for ‘patient lending’ over a 20 year period.

News of the BBB was received quite coldly by hardnosed financial commentators, not least because it was announced on the very same day that the Public Accounts Committee aired the failure of the Regional Growth Fund.

Launched by the Deputy Prime Minister in September 2010, with a target of making 36,800 jobs through a fund of £1.4 billion to ‘real’ companies, two years on from its launch, just £60 million of the Fund had been taken up by companies with less than one in fifteen of the jobs target reached so far (2,400 jobs).

Aside from ‘events, dear boy’, it’s all about timing in politics.

For on the same day (11 September), I attended the official launch of the Cambridge & Counties Bank (CCBank) - which is owned by Trinity Hall, one of the oldest of the Cambridge colleges, and Cambridgeshire County Council’s pension fund -and on whose attributes I’ve commented on before.

At the risk of sounding like an A level question, BBB and CCBank: compare and contrast. There wasn’t a national politician in sight at the CCBank launch, thanks to the Cabinet re-shuffle the previous week which saw both the former and the new Financial Secretary to the Treasury unable to fulfil the gig commitment made previously.

What there was, encouragingly, was the reaffirmation by the CCBank that it recognised that business finance is a long game. As a start-up business itself, it’s geared-up to lending for up to that same patience period of 20 years that the BBB would do.

Mingling with the great and the good of Cambridge - and beyond - at the CCBank launch, I sensed that is the very model of a modern business bank and I couldn’t help but feel sorry for the Business Secretary who’d floated his BBB proposal that very morning.


Will Mooney MRICS
Partner
Commercial, Cambridge