31 March 2000

Hill wage below half of national minimum level

By James Garner

HILL producers will take home less pay than the national minimum wage this year, with UK hill farm incomes forecast to drop below £4000.

This will be the fourth consecutive year that the sector, which is heavily dependent on exports, has suffered a fall in income, according to latest MAFF statistics on farm incomes released last week (Business, Mar 24).

But hopes that improved lamb prices and stable finished beef values – beef and sheep producers make up the biggest proportion of LFA producers – will filter through to the hill sector were described as unlikely by SAC economist Stuart Ashworth.

It appears that most hill producers are at the mercy of the market, says ADAS Redesdales research manager, Brian Merrell. "There arent many other technical changes producers can adopt. Most problems are caused by the strength of the £ and poor sheepskin values."

But better finished prices for beef and lamb have improved prospects for this year, which may halt the slide in incomes, but it is unlikely to be a spectacular improvement, says Mr Ashworth.

There is more optimism for hill farmers future from his SAC colleague Tony Waterhouse, based at Crianlarich, Perthshire, who believes hill incomes have turned the corner at last.

Next winter will see fewer sheep – because of a drop in size of the national flock – and there is some prospect of better store lamb prices next autumn, particularly as skin prices have picked up slightly, he says.

That will also help ewe prices, but he admits there is a long way to go before values return to levels of a few years ago.

Although the sheep sector remains unchanged by Agenda 2000 reform, that is not the case for cattle. Claiming super-extensification – by having an overall lower stocking density than 1.6 LSUs – will benefit beef producers in hill areas, particularly in Scotland, says Dr Waterhouse.

"Many Scottish hill units will be able to claim super-extensification, because of inherently low stocking rates, without the burden of difficult calculations that more intensive units may face," he says.

While there are some positive messages for beef and sheep producers, dairy producers in LFAs face more difficult times ahead, says Welsh Institute of Rural Studies agricultural economist Peter Midmore.

"There are many marginal, small dairy farms of 60-100 cows in LFAs in Wales. These face the strongest challenge for survival."

Allegiance

He believes Welsh dairy producers historical allegiance to Milk Marque has not helped their cause, leaving them susceptible to price cuts, while other options are less viable now.

He says one of these – converting to organic production – is less attractive now than three years ago. "At that time you could have funded conversion by leasing out extra quota, but I would not advise going for this option now."

One changing feature of hill landscapes that Dr Waterhouse believes will help bolster incomes is greater public access. He says hill producers are in the perfect position to make extra money by helping establish infrastructure for public access.

"There is demand for more access and producers have skills and equipment necessary to carry out footpath and cycle path building."

Building this infrastructure on their land, and or neighbouring land, will bring in extra income by farmers tendering contracts to complete the work and maintain infrastructure, he adds.

But Mr Merrell disagrees and says that while tourist hot-spots will remain popular, vast tracts of moorland are unlikely to pull in many visitors because there is a shortage of facilities.

"The organic scheme offers the biggest opportunity for hill producers, but this is over-subscribed," he adds.

HILL INCOMES

&#8226 Remain under pressure.

&#8226 Access may help.

&#8226 Organic scheme over-subscribed.

HILL INCOMES

&#8226 Remain under pressure.

&#8226 Super-extensification.

&#8226 Access may help.

&#8226 Organic over-subscribed.