Matthew Naylor: A mixed bag for farmers in 2009
I used to think that the New Year was a time of promise and excitement. 2009 will be my 20th year of full-time farming so I have finally been disabused of that ridiculous notion. I’m trying to remain positive but you wouldn’t mistake me for a ray of summer sunshine at the moment.
Next year is already shaping up to be rather challenging. After two wet years, the soil is nearly in worse shape than the economy.
Supermarket sales for fresh produce seem to be stagnating and the retailers are responding by fighting one another with our money.
Packers and processors are struggling for liquidity and farmers can ill afford bad debtors or losses.
The fall of sterling against the euro and the dollar is inflating input costs. The banks have less money to lend and may even need some agricultural debts repaid.
So far, so gloomy. My stomach makes funny noises when I think about it.
We are bravely squaring up to these challenges on our own farm. We have totally restructured our management team to guarantee maximum efficiency. Below our MD (that stands for My Dad) we have allocated responsibilities between a production director, a head of human resources, a fleet manager, a technical director, an engineering and special projects manager, a commercial director, an operations director, a head of communications and a finance director. To keep the salary costs down Dad will be performing the first four of these roles and I will be doing the other six. We just need to toss a coin now to see who makes the coffee.
Luckily most farms can operate effectively without grand staff overheads. Unlike other industries, there are very few superfluous people in agriculture. In fact it is remarkable how we have managed to get our crops in and out of the ground in the last few years with so few Powerpoint presentations and strategy meetings.
Perhaps our practical and lean approach to business management will be adopted more widely in the post-apocalypse economy.
I reflected on this yesterday as I tried to negotiate contract prices with a customer, my phone pinned between shoulder and ear as I coupled a PTO shaft to the back of a tractor.
The person on the other end thought that they had got one hell of a deal out of me because all they could hear was grunting, groaning and gasping for breath. Although we only get one salary, most farmers do the work of two people. In my case, the work’s only done half as well.
It is a relief to be self-employed during a downturn. The main consolation is that you are unsackable:whatever fate befalls you, you will have a degree of control over the situation. I don’t want you to get as depressed as me, so in the interests of balance I’ve been wracking my coconut to think of some opportunities for 2009.
Food is still going to be needed, albeit from the cheapest source, and more people will holiday in the UK.
Some retailers could begin to regret the consolidation and complication of their supply base and may look for simpler and more direct relationships with farmers again.
As faith is lost in financial markets, investors may once again start to value real and tangible assets and the value of farmland may rise.
Interest rates are at an all time low. The weak pound will make imported food much more expensive and present export opportunities.
Economists have been promising us volatility for a few years and, for once, they have hit the bullseye. If this continues, some large businesses will be made and lost in the next 12 months. I hope that we all come out of this next year on the right side. A happy, healthy and lucky 2009 to all readers.
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