14 November 1997

Not a minority, but more than half farmarea…

Hill and uplands producers face increasing challenges.

Our new series will look at

what can be done practically

to help survival and profit.

Emma Penny reports

HILL and upland livestock producers face increasing difficulties. Besides coping with farming in a harsh environment, political decisions, often seen to be taken with little regard to circumstances, are now having a major effect on the industry and its future.

Upland producers are often regarded as a minority – but thats certainly not the case. Throughout the UK, less favoured areas account for 9.91m hectares (24.49m acres) – about 53% of the total agricultural area.

While 60% of the UKs breeding ewes, and 70% of suckler cows are found in LFAs, these areas also have a significant dairy sector, with over 400,000 cows in England and Wales and 146,000 – or 65% – in Scotland.

But despite the numbers involved, it seems that upland livestock production is still seen by some as a cinderella industry.

Case in point

The results of this years HLCA review are a case in point. While producers in LFAs welcomed the governments decision to increase HLCA payments to £166m last year, the extra cash just restored expenditure to 1992 levels. And this year, HLCAs were cut back to 1995 levels – a drop of £60m.

But thats not a decision that the NFU accepts, explains LFA policy advisor Chris Peeler. "The additional aid given last year by and large helped to maintain incomes at 1995 levels, and kept them at a broadly acceptable level. But there will be a severe drop in hill farm incomes this year."

Besides the cut in HLCA rates, producers face other financial difficulties; the effects of the BSE crisis – for which the increase was awarded – have not gone away. Beef prices are still depressed, and low cull cow values have increased herd replacement costs.

While BSE had a positive effect on 1996 lamb prices, this year prices were not driven up to the same extent. And according to the NFU, the strength of sterling has hampered exports into the rest of the EU, while the lamb market within Europe has remained strong.

A strong lamb market within Europe, and a revaluation of the green rate, has meant ewe premiums have fallen from about £21 two years ago to an estimated £11 this season. For hill farmers, who produce fewer lambs a ewe, any strengthening in price is outweighed by the fall in premium.

Dairy producers in LFAs have also been hit by a double blow; falling milk prices, coupled with collection charges.

The NFU estimates that a small scale LFA dairy producer who has not switched to every-other-day collection, will have effectively seen a 20% drop in milk price by mid 1997 compared with the previous year.

Across all LFA enterprises the knock-on effect of reduced profitability is already becoming apparent. A survey undertaken by the NFU this autumn showed that nearly two-thirds of respondents were over 50, says Mr Peeler.

"The age structure doesnt look healthy. While hill producers are quite a tough lot, they are concerned about the next generation."

While 82% of producers replying to the survey had children, 43% of those said their children would not take over the farm when they retired. The main reasons for young people being discouraged from taking up hill farming were cited as poor annual income levels, long working hours and lack of long-term stability in the industry.

Rural depopulation

As people leave to seek employment elsewhere, depopulation of rural – particularly upland – areas is an increasing concern, as is the environmental effect of having fewer producers.

"Upland farmers produce both agricultural commodities and the landscape – both are important. The problem is maintaining enough income from both so that sons and daughters will want to take over farms – the NFU wants to maintain hill farm numbers."

Despite many upland producers already participating in ESA, Countryside Stewardship and SSSI schemes, not all farms are eligible for these schemes, meaning they receive no support for managing the environment.

The public also appears to want increased access, while environmental groups are increasingly interested in upland production – both groups demanding change with little, and usually no, compensation.

In the longer term, the main concern facing upland producers is similar to those of all producers -how the CAP will develop.

Hill farming – making it pay

This new monthly series will look at technical and management changes made by upland producers to help make hill farming pay at a time when support payments are falling. The FW livestock desk would be interested to hear from any upland producers who have restructured their businesses, or improved margins.

UPLAND CHALLENGES

&#8226 Reducing income.

&#8226 Increasing average age.

&#8226 Environmental demands.

&#8226 CAP reform.