Agriculture looks to be in a rosy position at the moment! Milk price is up. Beef price is up. Lamb prices are recovering. Pigs are still struggling but a continued marketing campaign should see that improve.
But we still hear cries the industry will collapse unless farm gate prices rise further.
Oh, I almost forgot, grain prices are double this time last year.
Unfortunately that's what has taken the shine from the livestock industry price rises over the last twelve months.
The thing is, Joe Public has really not complained about the price rises yet. The thing is, fuel has also nearly doubled over the last year. The price rise of food pales into obscurity by comparison.
However when inflation starts to filter through in the next 6 months, (already the Retail Prices Index has just been announced this week at 3%,) the people will really start to notice. Partly because the press will start to analyze why inflation is rising. If house prices continue to fall we just need a few job loses in construction and marketing and we will be deep into recession. The Government wants to keep a lid on inflation and Gordon has promised to do so. It will be his downfall.
All these land sales at ridiculous prices will soon hit home, if not sink a few businesses. Profitability in British Agriculture is based on premium products. In a recession premium brands are the first to be dropped by the consumer. Especially when the supermarkets wants to keep its profits up. Will they turn to high turnover and feet through the door, and not to promote the premium product line that has the most margin. Only time will tell. In a recession it's about self-preservation.
Don't think that the supermarkets haven't thought about this. Sorry am I being too cynical. Isn't that why they are being helpful to producers at the moment?
Alright they have to be helpful at the moment because the competition commission is breathing down their necks. If they have the largest range of products in store this gives them the largest percentage of all food shopping taking place within the supermarkets. Then when it comes to recession they control the entire food market and can promote or drop any product they like.
If it's a premium product on contract through the supermarket you're highly unlikely to have another outlet to sell your product.
Somebody's bitter experience led to the phrase "Don't put all you're eggs in one basket."
That's not just aimed at the free-range poultry producers!!