21 June 2002

50% set-aside high risk move

TAKING half your land out of production to protect total farm profits is a drastic step and growers need to give it very careful consideration before taking the plunge, warn business specialists.

Increasingly volatile grain markets could mean farmers opting for 50% set-aside this autumn could regret the move if prices improve by next harvest, they add.

With more land destined for less profitable second wheats this autumn, 50% voluntary set-aside may look tempting. But farms vary, and what suits one could be completely wrong for another, advisers stress.

Conventional wisdom suggests it suits more marginal land, but growers on heavy productive soils are also considering it. "For the first time we are seeing people on 4t/acre land with contract management agreements viewing it as a good option for both parties," suggests one source.

Host farmer Mark Ireland says lots of growers in his light land area expect to have more set-aside next season, but he doubts whether many will reach 50%. "When it comes to the crunch I believe most are prepared to give it another year before making desperate decisions."

"I dont believe too many farmers in East Anglia will want to go that route," agrees Framlingham Farmers chief executive Roger Adshead.

The knock-on effect of halving crop income cannot be over-emphasised, stresses ADASs Andy Wells. "If you are looking at 50% set-aside you really do have to make significant reductions in fixed costs."

"We have clients on moderate land with resistant blackgrass where on paper 50% set-aside looks quite good," adds David Wright, of Lincs consultancy J &#42 Walter. "But you have to think about how to handle fields when they come back out of set-aside. Some is lying very wet this year and that could reduce wheat yields substantially."

Dont underestimate its effect on potential take-all in following crops, adds the ARCs Mike Carver. "Set-aside is not a take-all break." &#42

&#8226 Must involve fixed cost cuts.

&#8226 Step too far if prices rise?

&#8226 Attractive for contract farming arrangements.

&#8226 Establishment and take-all issues.