By Vicky Houchin
ARABLE farmers are in danger of following the livestock sector into recession, with farm gross revenues now at their lowest level in 30 years.
A quarter of arable farmers are operating at or below production costs, warned the Home-Grown Cereals Authority (HGCA) today (Sunday).
Wheat prices are now £50/tonne lower than they were in July 1992, said Peter King, HGCA economist.
But the strong Pound, which is often blamed for falling prices, was only one factor behind a drop in returns, he added.
Sterling, which is worth about DM2.8 against the Deutschmark, is at the same level as it was seven years ago, he said.
Farmers profits have been hit by a lack of competitiveness and seasonal fluctuations in the market, Mr King told his audience at the Smithfield Show.
“Supply and demand affects the price on an annual basis, with grain values dropping at harvest time and then rising towards the end of the season when supplies become tight.”
Intervention prices could could be reduced by 20% under Agenda 2000 proposals to reform the Common Agricultural Policy, warned Mr King.
He also encouraged farmers to boost profits by cutting back on costs in preparation for the abolition of the European Unions £18/t rebate on exports.
“There must be a change in the arable sector,” said Mr King. “UK grain is uncompetitive on the world market.”
Profits could be improved if, as predicted, global wheat prices increase to £85-£90/t by the year 2000, Mr King said.