Inflation-watch look at the markets
Sales over the Christmas period hit a new record of £12.8 bn in the UK topping £12bn for the first time. This was an extra £1.1bn this December compared to the previous year, with sales of cough sweets a driving factor, up 54% from 2021.
However grocery price inflation was likely the real driving factor behind this rather than increased purchasing as sales volumes were actually down by 1% year on year i.e. mince pies saw value sales rise by 19% but volume purchases barely increased at all.
Own label product sales increased by some 13.3% compared to branded’s 4.7% increase as consumers continue the trend of 'trading down' to seek to save money. As a long term trend this may be concerning for the value of some brands,
Farmgate prices for farmers and food producers
However, not all food is receiving this inflation at the farmgates. Milk shortages similar to those for eggs may be seen in the second half of this year if there is any further fall in farmgate prices.
After an initial spike last year leading milk processors have already cut farmgate milk prices for the start of the year in response to increased production in Europe and negative market sentiment.
Any big farmgate price cuts could potentially collapse the milk market by disincentivising farmers from producing milk by the second half of the year. This formed part of the NFU’s call last month for dairy contracts to be standardised in the face of market volatility.
Oxford Farming Conference – Farming Minister Speech
Defra has announced farmers will receive increased payments for protecting and enhancing nature and delivering sustainable food production under the Government’s Environmental Land Management schemes. Government to pay more to farmers who protect and enhance the environment - GOV.UK (www.gov.uk)
At the Oxford Farming Conference, Farming Minister Mark Spencer announced more money for farmers and landowners through both the Countryside Stewardship and the Sustainable Farming Incentive schemes. He also confirmed an expanded range of actions under the schemes, which farmers could be paid for, would be published soon.
Mr Spencer stated that ‘making the shift towards a more sustainable, resilient food system is critical to feeding a growing population, to meeting our world-leading commitments to halt the decline of nature by 2030 and reach net zero.’
Additionally, research and development for the future was emphasised with the Farming Innovation Programme having over 150 projects underway it was stated the UK government will be investing £270 million in research and innovation that will boost productivity and enhance the environment. The Gene Technology Bill was also referenced as allowing the UK to remove unnecessary barriers to research .
Sustainable Farming Incentive (SFI)
Farmers will receive up to £1,000 as an ‘SFI Management Payment’ of £20 per hectare, up to 50 hectares of land entered into the scheme.
For a 50-hectare farm this represents a potential increase of 50%. Payments will be backdated to the start of an SFI agreement. An expanded range of SFI standards, which cover the actions farmers can undertake to enhance nature, will be published soon.
In line with published payment principles, Defra are keeping payments in all schemes under review during the transition period to ensure they work for farmers, provide value for money and deliver the outcomes they need.
Countryside Stewardship
Both new and existing CS revenue agreement holders will benefit from payment increases of 10% on average, backdated to 1 January 2023. This funds ongoing activity such as hedgerow management. For example:
- Rates for in-field grass strips – which allow pollinators such as bees to make their way across large fields from one strip to another, rather than sitting on the margins, and thereby increasing crop yields – are increasing from £624 per hectare to £658 per hectare.
- Sowing strips of land with a seed mix which will provide food for birds in winter, encouraging wildlife to remain on the farm year round and reducing the need for expensive artificial fertiliser, will increase from £640 per hectare to £732 per hectare.
- The payment rate for management of low input grassland in upland areas will also rise from £71 to £98 per hectare. This option provides grasses and wildflowers that provide nectar food and shelter for invertebrates and help attract ground-nesting and feeding birds to less productive farmland.
- The rate for creating successional areas and scrub has risen from £128 to £149 per hectare. These areas help provide habitats for birds and other important species and improves the quality of woodland edges, as well as restricting soil erosion and holding back water to reduce downstream flooding.
The majority of CS capital payments - one-off grants for things like hedgerow creation – will also increase from 1 January, with rates up by an average of 48%. The application window for these grants opens today. For example:
- Hedgerow creation increases to £22.97 per metre, compared to £11.60 currently – a rise of 98% - supporting farmers to create new habitats for beneficial insects and birds, in turn reducing the need for pesticides on crops. This also reduces soil erosion, improves drainage, and increases carbon capture.
- Improving or upgrading existing outdoor, uncovered yard drainage is important in helping to reduce foul drainage volumes and runoff, reducing the risk of water and air pollution in water catchment areas. Payment rates to support this have risen from £27.14 per square metre to £33.64.
- Re-wetting and maintaining moorland peatland habitats are important to help us deliver our environmental outcomes. The payment for capital works for grip blocking drainage channels to support this have risen from £14.80 per block to £19.06.
Revenue rates will remain the same for those in Environmental Stewardship (ES) agreements.
Health and Safety
In the food and drink industries machinery and plant causes over 30% of fatal injuries and over 10% of major injuries according to the HSE.
This month, Kent-based baking firm David Wood Baking Ltd has been fined £858k after a worker had his arm amputated after getting caught in an industrial food mixer. Lee Simpson’s right hand and arm were drawn into a paddle mixer when removing filling ingredients.
An investigation by the HSE found that the control measures in place to prevent contract with moving parts were ineffective as the guarding of the mixer was routinely not replaced after cleaning.
As the difficult commercial environment bites, it remains imperative that food businesses continue to ensure their risk assessments and safety measures are kept up to date and regularly reviewed, including HACCP and food safety and hygiene policies and allergen information.
ASA
Sony Interactive Entertainment Europe Ltd t/a Playstation Plus, playstation.com Upheld
Social media (influencer or affiliate ad) 21 December 2022 Two Twitter posts on Rio Ferdinand's account were held to be not obviously identifiable as ads. Sony Interactive Entertainment Europe Ltd - ASA | CAP
The CAP Code stated that marketing communications must be obviously identifiable as such, and that they must make clear their commercial intent if that was not obvious from the context.
Prominent branding logos and hashtags stating partnership, were found not to be sufficient to make tweets ‘obviously identifiable.’ It was also found that tweets made in reply could also form part of marketing communications.
There was a financial agreement between Sony Interactive Entertainment Europe Ltd (Sony) and Rio Ferdinand which involved a contract that covered an initial Tweet concerning Mr Ferdinand’s visit to “PlayStation House”.
The contractual agreement did not include the content of a reply tweet Mr Ferdinand made but he had used the hashtag “#PlayStationHouse”, and it was included in the Twitter thread started by the first ad.
Although the second tweet was not part of the contractual agreement the hashtag used referenced the PlayStation brand and Sony’s promotional event, and that the images used had been provided by Sony. The ASA therefore considered that in that context, Sony had exerted sufficient control over the content of the post, in conjunction with a payment arrangement concerning the first ad, for it to be considered a marketing communication falling within the remit of the CAP Code.
Although (i) the hashtag “#PlayStationPartners” was intended to refer to the commercial relationship; and (ii) Followers were likely to understand from the branding and set dressing this was marketing, the ASA still considered that the language used was not sufficiently clear to ensure that the posts were obviously identifiable as ads.
This shows that 'obviously identifiable' actually imposes an extremely high threshold and in order to be safe all marketing communications, including those within the thread itself, should be marked '#ad'.