View from the East

As 2020 moves into autumn, we can look back on it as a year of pandemic, barley blues, eyesight tests and as a time when our hands consumed more alcohol than we did.

The new restrictions this week may well be the last throw to stop the virus from moving from pandemic to endemic before a vaccine arrives.

Our harvest and drilling campaigns are moving to a completion now in Ukraine, but were hampered recently in the west and Crimea by heavy rains in the last fortnight. Over 75mm has fallen delaying field operations, but reduced clods and bruising in our potatoes. Still, a lot less rain than in Louisiana last weekend.

Conditions have now improved and lifting is again in full swing. Temperatures have been up to 18°C this month but have dropped to almost half that this week.

Wheat yields are down 13% year-on-year in Ukraine. While there has been abundant rain in the west, hence our decision to farm there, further east and into the Caucasus and Southern Russia, it is much drier than normal and crop emergence is well behind average.

On a recent visit to Finland I found lower yielding, late harvested crops with lodging, secondary tillers and ear disease, all caused by late rains, in wheat, oats and peas.

My friends and contacts in Brazil and Australia tell me there has been a good harvest. In Brazil it's been soyabean and corn, with yields above average and last year.

The FAO and USDA have downgraded global yields this month by 2.5m tonnes, mainly maize, but the figure conceals an upward revision for global barley output. Notwithstanding this and the merchants of doom, we stand on the brink of yet another all time high global grain harvest, yet supply is still just in tune with increasing demand.

We now produce the same food that we produced from 1ha in 1961 on only 0.25ha due to technology and rising atmospheric CO2 levels. Well done farmers everywhere!

Our first harvest for our new business Central Plains Group, in Ukraine, has gone well in a tough year, with harvested yield, quality and price ahead of budget figures. Our historically good relations with local government, suppliers and customers have held us in good stead.

Some have even invested in the business or provided financial support. They recognise a successful team, which can deliver and navigate the landscape efficiently. Not a bad start and we're on track to deliver a strong profit.

This has encouraged us onto the next phase and funding round, institutional, private equity and crowdfunded. We have both a profitable and environmentally sound forward trajectory.

As I have said for many years, there need be no conflict between these two outcomes, whether in UK, or Ukraine. I am, however, worried about the unjustified froth and wilder claims around the precision ag-tech bubble and the proponents of what is being badged 'regenerative' agriculture.

Whilst we shouldn't throw the baby out with the bath water, we should be careful not to believe either will be a silver bullet, nor abandon current hard won successes and knowledge for unproven, gaudy, costly 'baubles'. Straws should be incorporated not grasped at.

Our plan is to vertically integrate the business with the addition of both starch and plant protein plants to develop added value processed products. Global starch and plant protein markets are growing strongly, at 5 and 7% year-on-year forecast for the next five years.

Potato starch has significant benefits over other starches and the bio-plastic market is a key target. These will be low/zero carbon and zero waste plants, utilising all crop residues and waste in an integrated system.

Our investment in temperature controlled storage, on our own site, will also allow us to provide crisping, fries and other processed potatoes well into the summer following harvest. The zero waste potato starch planned for next year will incorporate a biogas plant to minimise our carbon/energy footprint.

We are aiming at EBITDA returns of 30-plus% and ROE of 50% by 2025, exciting times with an increase in scale UK farmers can but dream of. Yet we all share our exposure to the weather.

In addition to these farming returns, we believe that with the legislation now passed in Ukraine to lift the moratorium on agricultural land sales, there are excellent future returns on land acquisition in Ukraine. It is not often in history that such large areas of such world class soils become available.

We have witnessed and benefited from, the very high returns on acquired land in neighbouring Poland over the last couple of decades. Our belief is that these returns will be at least mirrored in Ukraine, where land quality is even better. As they say "they've stopped making land."

In addition to our low production cost advantages, there is now a growing trend for wider availability of crop protection products here, some of which are unwisely no longer available to EU farmers.

It will be important to acquire and farm this land efficiently and well. This requires a skilled and knowledgable in country operator who can deliver for land purchasers. We believe Central Plains Group will be in an excellent position to fulfil this important role.

This week is a crucial week for post-Brexit farming, with the Agriculture Bill passing through the Commons after inspection and advised amendments from the Lords. Whilst agriculture is a devolved matter, the passage last week of the Internal Markets Alignment Bill, means that the Agriculture Bill will govern Scotland.

It is, thus, highly disturbing to hear reports that the unelected bureaucrat Cummings, you'll recall him, the one with questionable morals and eyesight, has 'decreed' that no amendments to ensure food safety should be made to the Bill.

This allows the spectre of a US, or any other trade deal, that reduces our farming, food safety and animal welfare to become a tangible reality. This will have severe effects on UK producers and consumers alike.

It's just as well that Brexit put an end to unelected bureaucrats meddling in UK laws ... oh hang on there! This is a UK Government 'huge on announcements' but 'poor on both delivery and implementation', whether Covid, controls or cattle.

This is on top of the 'dividends' of a no-deal Brexit where wheat trade will attract a 53% tariff (£80 per tonne). This, in a year when UK bread-making wheat is well short of demand, due to lower plantings and poor harvest conditions, both caused by ill timed seasonal downpours.

There is currently a scrabble to secure imported wheat in advance of likely no-deal price rises. In case you need a reminder, the tariffs under WTO are; fish 9%, potatoes 11%, pork 30%, lamb 48%, cheese 57% and beef 84%.

The claims and noise of 'Exaggeration Rebellion' had abated a little during the Covid crisis, but have of late resumed. It is still true, as Bjorn Lomberg has eloquently shown in his recent rigorously researched book 'False alarm', that they are agenda ridden climate alarmists.

No-one denies climate change is happening, as it always has, merely the rate and man's contribution to it, along with the balance between the costs of adaptation, mitigation and control.

A good example of adaptation was implemented last week, with the new flood defences protecting the beautiful city of Venice, as they have historically protected the farmlands of Holland. Adaptation can and does work.

In the meantime, there is no evidence of an increase in extreme weather events compared to historical records. Interesting to note, in the light of Johnson's announcements on windfarms, that another NI renewable energy scandal for windfarms has arisen.

This is likely to dwarf the 'Cash for ash' biomass boiler subsidy scandal, with likely extra subsidy costs of over £1.3bn. Due to the system, this will have a knock on to all UK electricity customer prices. Cheap energy?

Whether it is anti-CRISPR technology, anti-GMO, climate alarmism, elimination of safe pesticides, or even anti maskers and vaxxers, the fabric of our precious hard won 'enlightenment' is becoming unravelled at its edges, sadly.

The general public's ability to discern between real and fake news, truth or falsehood, or the difference between hazard and risk is diminished. He who lies most blatantly, then doubles down on that lie, carries the day it seems, at least for the moment?

This democratisation of expertise is leveraged, manipulated and multiplied alarmingly by social media. Challenging times for us all.