Scottish farms produce around 2m tonnes of spring barley each year, most for malting and distilling. But falling returns are now leading John Scott to think hard about the crop’s future on his farm.
Mr Scott is the fourth generation of his family to farm at Fearn, on the north of the Cromarty Firth in north-east Scotland. Just over 200ha (1000 acres) of ground range from heavy clays to sand in less than a mile-and-a-half.
This year Mr Scott plans to grow 133ha (328 acres) of spring barley, 73ha (180 acres) less than last year and the smallest area for five years. But the monotony of falling returns has convinced him to turn more of the farm’s arable land over to winter wheat, plus 14ha (34 acres) of peas for home-saved fodder and 8ha (20 acres) of turnips. Some land is also let for potatoes.
“Spring barley is our bread and butter. I’ve drilled a bit more wheat to spread the risk, and sold some forward through Frontier for distilling at Invergordon.
“It’s frustrating because we can grow a good crop of spring barley here. The soil types and the situation suit the crop well, it fits in with the mixture of livestock we have and we need a lot of straw for our own use as well as what we sell. And we’ve enjoyed good relationships with the maltings and our grain buyers.
“I’ve cut our area back again this year. At an average yield of 6.7t/ha (2.7t/acre) we should end up with about 860t of barley in the shed. Realistically we need to see £120/t to break even.”
About 720t of that heap will be sold, with the remainder used on farm. “But just five years ago we were producing 1500t. I have an agreement in principle with Scotgrain for 700t, but I’ve not signed anything yet, mainly because we still don’t know a price.
“It’s a big leap of faith to keep sticking it in the ground without even an indication of price and we’ve still got our fixed costs on top of what the barley costs to establish. But we’ve got to get turnover from somewhere.
“Basically, there’s just too much of the stuff about and it’s too easy for barley to be brought in from elsewhere.”
As most of Scotland’s barley goes into producing the country’s most famous export – Scotch whisky – Mr Scott questions why genuine Scotch doesn’t enjoy Protected Geographic Indication status, like Italy’s Parma ham or England’s Stilton cheese.
“It would make an enormous difference. Scotch whisky is a world-wide brand. Why should it continue to be made from barley that isn’t ours?
“Stability is what we need in the market, both for growers and maltsters. We don’t want to be fluctuating between growing 1500t and 700t in the space of five years – that’s ridiculous.”
But working with Scotgrain has provided some reassuring stability. “Last year we had 30 lorries come to collect grain – all in the same day. There’s no way we could have got that level of service if we’d been dealing with 30 different independents.”
Nevertheless, without a known price for this year’s crop, everything still hangs in the balance. “We started drilling on 21 March last year. Now we really need to get on and get ploughing. But this is the first day (5 March) this year with no frost in the ground.”
Spring barley establishment is relatively straightforward, relying on contractors for most of the operations. The variety of choice is Optic, a tried and tested performer on these soils. And Mr Scott hopes that the hard winter and deep groundfrosts will have significantly reduced the pest populations this season.
“I don’t think we will get a price before we drill it and I don’t think I will make a profit on barley this year. But there’s still a long time to go before harvest and problems could still emerge in other parts of the country that could alter the market significantly.”
The straw is an important consideration for Mr Scott, not just because of the 102 cattle and 1100 sheep on the farm, but because it will provide some secure income while barley margins remain doubtful. Without sales of straw – around 5000 4×4 bales are sold each year – the economics of even a small acreage of spring barley just wouldn’t stack up at all.
Last year, 4×4 bales realised up to £15 a bale with Quadrant bales up to £25 each, although Mr Scott sells more straw off the field. The regular rotation of stock either on new grass or stubble turnips helps replace the phosphate and potash removed in the straw.
And with no sign of improving returns from the farm’s arable enterprises, at least the Scot family are seeing better margins on beef and sheep sales.
About 40ha (100 acres) of new grass will go in this year, after stock have removed stubble turnips and incorporated some fertility back into the soil. In the past, this would have been drilled with spring barley, but the farm’s pedigree and commercial livestock enterprises will provide a better return on the extra grassland.
“Both Dad and I are stock-minded anyway, and that’s why we’re geared up the way we are here. I think driving the livestock side forward will probably be the future for us.”
It’s with this eye on the future that the Scott family have invested heavily in recent years. Mr Scott and his young family have moved into the main farmhouse, a new cattle shed has gone up at a cost of £120,000 and, despite the uncertainty around arable crop production, the family has pressed ahead with overhauling their grain storage and installing a new drier, match-funded by Scotland’s Rural Development Programme.
Although it’s been a capital-intensive couple of years, Mr Scott and his family were keen to complete major investments in infrastructure well before the Single Payment System comes to its scheduled end in 2013.
While Scottish farmers wait the full results of Brian Pack’s report into the future of agricultural support in Scotland, he acknowledges that major change is probably in store for countries like Scotland and Wales that adopted an historic receipts-based system of single farm payment. Many believe that basing farm payments in 2013 on the numbers of livestock and area of crops a farmer grew in 2000-02 is untenable.
“I don’t believe the current system will be wound down completely, but the system has to find a way of rewarding the most productive and highest achieving farms, without continuing to prop up farms that don’t ever have a hope of breaking even. As an industry we shouldn’t be scared of a good shakeup – how long can we continue paying for the parachute for the bottom third of producers?”
Single Farm Payment
Fearn Farm’s total single payment is worth about €140,000 before modulation, and while most agree that future farm support is likely to be reduced further, Mr Scott is more concerned about the wider economic outlook post-2013.
“It’s borrowing and the cost of borrowing that I think will be the big problem for all businesses. That’s why we’ve focused on getting our infrastructure sorted out now while we still have the single payment in place, so we’re prepared for the future.”
To that end, the Scotts have just completed a Whole-Farm Review with help from consultants at the Scottish Agricultural College. “In five years’ time my gut feeling is that we will need to be bigger, and so will probably need another member of staff. But it’s that same dilemma – you need more labour to get bigger, in order to be big enough to justify taking on extra labour full time.”
However, for the meantime Mr Scott knows he is lucky. When Farmers Weekly visited there was still up to a foot of snow on roadside verges and many farms on higher ground in north-east Scotland are still under a thick white blanket, having seen no grass since mid-December. “I’ve heard of one guy feeding three bales of hay a day. If that’s worth £30 a bale, imagine what that’s cost already to keep those stock fed.”