Archive Article: 1997/12/13
GOVERNMENT and growers both had their say at Perth on CAP reform. For one side it was a generally good idea; for the other an approach that could wipe oilseeds from the Scottish rotation.
Scottish minister of agriculture Lord Sewel said Government support for the Agenda 2000 proposals was not unequivocal but he was still at a loss to answer fully critics who saw a clear threat to combinable crops in Scotland.
The main concern among the leading farmers present was the severe impact on oilseed rape of a reduction in support prices to that of wheat, itself due a 20% cut in aid.
NFU cereals convener Douglas Morrison predicted Agenda 2000 could spell the end of oilseeds production for Scottish growers who were already switching to wheat away from malting barley. With oilseeds likely to be a main target for the US in forthcoming world trade talks, the future was very uncertain for the sector.
Lord Sewel pointed out that deep cuts in production were the only policy option available under an unreformed CAP to deal with surpluses, including 58m tonnes of cereals in intervention by 2005. Even this European Commission figure was an underestimate, given that it assumes 17.5% set-aside in the intervening years.
"Production cuts would have to be deep, with set-aside rates going up to an eye-watering 25% or beyond. Reform of the CAP suddenly looks like a reasonable alternative."
Lord Sewel further criticised the CAP as a highly inefficient way of helping rural communities while encouraging farming practices which damaged the environment. He warned that taking the present CAP to new EU member States in eastern Europe would be hugely expensive. "Ironically, countries which were long lambasted for the inefficiencies of their centrally managed systems now operate farming policies which, though far from perfect, are mostly a good deal closer to world markets than the CAP," he said.
Change would lead to an economically sustainable industry into which the brightest and best of new entrants could come once subsidy was no longer capitalised in high land values. Lord Sewel also urged farmers to stop whinging about the power of the supermarkets whose success came from gaining the trust of the consumer and supplying what he or she wanted.
PRECISION APPLICATIONS
THE advent of precise soil mapping and satellite-controlled equipment to make variable spreading possible has highlighted a "scandal" in nutrient application, said crop consultant Dr Keith Dawson.
Liming, in particular, was still being carried out with a broad-spectrum approach which was often not justified by the soil analyses from fields. Variability of nutrient requirement within fields could be as much as five-fold, said Dr Dawson, of Perth-based CSC Cropcare.
Spending around £1.85/ha (75p/acre) per year could save 10-15% on a farms basal fertiliser bill. Not only was there a financial and agronomic benefit but there was an environmental advantage through fertiliser only going to those parts of the field which really needed it. However, he expected GPS technology to be limited for the near future to lime, P and K application, followed in the north by variable seed rates.
Dr Dawson said disease control had the greatest impact on costs after nitrogen. He favoured tackling fungal disease at very low levels of infection with targeted rates rather than waiting for higher infection levels and using higher rates of fungicide.
MALTING CONTRACTS
MALTING barley growers have been "taken to the cleaners", admitted Berwick maltster David McCreath. Contracts had been "bastardised" by some operators, he said, and the malting industry had used this to its own benefit. "I think it is a disgrace," said Mr McCreath.
However, he suggested that, since for Scotland, the distilling industry is more important than brewing, one future route for growers would be to take out longer contracts of three to four years which could give all parties a greater stability.
There was potential for malt exports from Scotland which had an advantage in nitrogens over the Danes and the French who had to use low price as their main competitive weapon. Demand for malt was rising steadily and there were signs buyers would pay for the correct specifications.
Mr McCreath also urged cereal growers to consider their options to avoid being a weak seller of grain. Storage could be vital in some years to avoid selling at the bottom of the market. They could also hedge against the market by following strategies such as selling a third forward, a third at harvest and holding on to the rest.
STAND TOGETHER
ONE way of overcoming the weakness of growers in the marketplace was suggested by Alan Whiteford, of Highland Grain, who was one of the prime movers behind Scottish Quality Cereals.
He too criticised the existing system of farmers doing business with maltsters through a contract handled by a merchant who was inevitably the servant of the maltster and not the grower. However, Mr Whiteford said farmers must accept blame for making a rod for their own back.
"For too long the industry has blamed everyone else for its ills; supermarkets, merchants, and of course everyones favourite kicking horse, the maltster," he said. "But in truth, blame rests closer to home."
Mr Whiteford suggested the current culture of each farm making unilateral decisions put the industrys future post-CAP reform in serious jeopardy. "True, there is some co-operative marketing but it is still insignificant and fragmented. Until we attempt to take some control of the supply, we will continue to be dealt with harshly by a much stronger and unified market."
LOOK EAST
THE search for real profits from arable farming without subsidy has moved eastwards but Chris Graf Grote, of Farmwealth, warned it is paved with pitfalls.
He even admitted that he might advise a wealthy overseas investor with sufficient resources to invest in East Anglian farmland and the stability offered by the UK.
However, few farmers or other investors looking to expand overseas had the wherewithal to buy large portions of land at UK prices. In Poland, Czech Republic or Romania, the cost of land or rent for 1,000ha (2,470 acres) could be a fraction of that in the UK. Whereas a UK holding of that size might make a loss if subsidies were withdrawn, healthy profits were possible from combinable crops in the three eastern countries.
On paper, Romania offers the greatest potential. But potential investors in eastern Europe had to be clear about their intentions. Always allow twice the time and twice the money from their impressions, and work with a trusted local partner.