25 February 2000

Optimism

underlying barometers response to change

Most of this years farmers weekly barometer farms are reacting positively

to the challenge of low produce prices. Andrew Blake reports on their

thoughts for coping with the downturn

UK growers produce bigger yields than most other cereal growing countries and should make the most of that edge, says Matthew Hanson.

East –

EU rebate negotiations key

JOHN Latham remains quite optimistic about the future for arable farming.

"The prospects are certainly better than in the livestock area because our sector is much more competitive globally.

"All farming is going through a very difficult time while politicians make up their minds what they really want. But British farming has had the raw end of the deal."

Much goes back to Mrs Thatchers negotiation of the EU rebate, he believes. "It had a big effect because it gave successive UK governments the incentive to spend as little on agriculture as possible."

Moves to link care for the environment more strongly to farm rewards are unlikely panaceas, he maintains. "I am all in favour of environmental schemes, but they dont generate income. They usually only compensate growers for losses."

One of the biggest challenges facing UK producers, especially after the recently failed WTO talks, is the question of welfare standards. Many restrictions imposed here do not apply elsewhere in Europe and the rest of the world, he says.

"As long as we are treated amicably within the EU we can compete with anyone. But there is bound to be a bigger problem as the Eastern Europeans join and our IACS cheques diminish."

South –

Good world harvests run

IN the short term Simon Walter expects good rewards from cereal growing to be hard to find. But he is confident of an eventual turn-around.

"I am optimistic that the wheat price will recover in 5 to 10 years time. You have to remember that we are operating in a world market."

Part of the current problem, he believes, is that all the key wheat producers have had a run of productive seasons. "It is very peculiar to have good harvests in all parts of the world at the same time."

West –

Lower margins inevitable

RICHARD Burt has no illusions about the future. "Farming has got to be prepared to adjust as every other industry has. In many instances they dont expect returns on capital of more than 4-6%. People have got to realise that the rewards are no longer going to be what they were and that we will have to learn to operate at lower margins."

Farms in most sectors have increased in scale over the past 15-20 years, he notes. "That expansion has been based on the need to increase profits. Now we are having to do the same thing simply to survive. We are continually looking over the hedge for opportunities."

North –

Playing to UK strengths

UK growers must play to their strengths in an increasingly global market, says Matthew Hanson. And by and large that means pursuing output.

"We are competing with the likes of Australia and the Argentine. They have the advantages of scale and simplicity. The only real advantages we have are yield and possibly the shorter distances between farm and consumer."

Rock Farms already produces organic cereals, and a price of over £200/t for organic milling wheat appears attractive. But geographical and soil conditions rule out any expansion in that sector, he

notes.

Midlands –

Diversifying hard

ALL growers must be prepared to accept change, says Robert Tallis. "I personally believe that it is no good hoping to fight what is going on in the industry. We have got to manage change.

"It seems that every other industry is going down the same route. We have already seen it happen with steel and coal, and farming is going the same way.

"But weve got to make a living from the countryside." The next twelve months is expected to see more redundant buildings developed for alternative uses, making the most of the farms proximity to the M1 and key distribution centres. Thereafter, organic farming might be considered, he says.

Scotland –

Outside income sought

"ITS not all gloom and doom," says Nicholas Davidson. "If it was I wouldnt be in the job. But I do see that a lot people are going to have to become hobby farmers."

Expansion, even where it is possible, is not the way forward at current land prices, he maintains. "The prices simply are not justified and I wont be buying."

Alternative income, like that from his recent short-term contract pressure-testing Danish pipelines, is expected to become increasingly important.

"But already we are seeing the government beginning to clamp down on supplementary incomes. On the one hand it tells us to diversify, but then it taxes us differently. Its disgraceful."

N Ireland –

Relying on livestock

WILLIAM Russells dependency on the fate of the provinces pig and poultry industries means he is not particularly hopeful for a speedy upturn in fortunes.

"We rely on them to use our grain and I am not sure how much could be taken up by other stock. Pigs here are suffering twice as badly as in the rest of the UK because the grain is dearer.

"We are still net importers." Even though the farm is close to the Eire border, the strength of the pound rules out most cereal sales there.

A new Belfast feed mill using oilseed rape has helped slightly by removing the need to transport the crop to Liverpool for crushing, he notes.

South-west – Contracting tough

THERE is little to get excited about as a contractor, says Mark Stevens. "From a business angle I feel pushed into a corner, with rising costs and little chance to recoup our extra expenses." Fuel cost rises alone will add £11,000 to his bills this year, he estimates. "Interest charges are the other main gripe."

But on the farm crops look better than in previous years. "We seem to have got a better plant stand through slightly higher seed rates. So I hope the arable enterprise will hold its own despite potentially lower prices next autumn. Certainly our autumn seed and nitrogen is better priced than last year. We shall have to wait to see what happens to spring chemical prices to get the full picture."

Direct drilling is getting a hard look to see if establishment costs can be cut, he adds. &#42

UK growers have had a raw deal from politicians, but can compete with the best elsewhere given fair treatment, says John Latham.

Simon Walter is sure wheat prices will recover – but not for a while.

Change means making best use of all assets, not necessarily for farming, says Robert Tallis.