Archive Article: 2001/01/19
Farming has changed a
lot since the 1930s, so
can comparisons
between the current
depression and the one
at that time really be
valid?
Is the current depression as bad as the 1930s? Many are saying it is. But few farmers operating today were doing so 70 years ago and realistic comparisons are distorted by memory, the passage of time and changes in monetary value.
Our forefathers also farmed differently, with real horsepower, real manpower, and not much technology.
East Anglian farm accountants Larking Gowen have addressed this in an interesting exercise. An anonymous client supplied them with an unbroken series of farm accounts from 1924 to the present. The firm has reviewed them, adjusted the results for inflation and created what must be a unique real-terms comparison of incomes for the farm in question.
In passing it is fascinating to note that in 1928 a Fordson tractor was bought for £130. It was sold in 1932 for £60 and, significantly, not replaced. In the 1931 accounts horses were valued at £19.7s.6d (£19.37) and cattle at £20. In 1926 barley sold for £1.15s a comb (£17.50/t). The following year the price dropped to £1.09 and by 1929 to 85p. A halving of grain values in three years feels familiar. But the farm lost money in only three years in the early 1930s.
To assess the value of incomes through the period inflation must be eliminated. On that basis there was a stuttering recovery up to 1939 when the Second World War led to a sharp rise. Through the war food shortages kept returns healthy and, although they tailed off, reasonable profits were made in most of the next 25 or so years. The main exceptions were caused by exceptional weather as in 1959 and 1963.
In 1973 Britain joined the EEC and in 1974 farm profits soared. That year also saw a massive rise in commodity prices, led by oil, and what came to be called the Great Grain Robbery when the Russians, who had had a disastrous harvest, tricked the Americans into selling them more grain than they had in stock. The world price trebled in the space of a few months. Wouldnt that be nice to see again?
Since the mid-1970s profits on the farm have declined sharply, until in 1987 and 1989 they were almost as low as in the early 1930s. The devaluation of sterling, when Britain left the exchange rate mechanism in 1992, brought about a remarkable recovery for a few years. More recently it was back to lean returns, although on the farm being reviewed not to the same loss-making levels as the 1930s. Not yet anyway, but they are still falling.
A true comparison between then and now is fraught with difficulties. For instance, the populations standard of living has increased and remains high. Farmers are part of society and cannot escape the social pressures that implies. Tax rules were different. In the early 1930s tax authorities did not try to tax farms because they expected losses. Most farmers lived off their land, killing a sheep or a pig now and then and growing their own vegetables. Today, much of what they did to survive would be illegal.
But eventually there were significant measures to help farmers. The Agricultural Mortgage Corporation was formed from a consortium of banks and supported by the government to provide credit for buying land whose price was on the floor. Marketing boards were launched for most main commodities leading to guaranteed markets for what farmers produced. And for sugar beet growers the British Sugar Corporation was formed. Partly government-owned, it amalgamated previously privately owned sugar factories under one management with guarantees of fair treatment to farmers.
These were real responses to the dire straits to which the farming industry had sunk. Whether they would have happened if Hitler had not threatened war is difficult if not impossible to tell. But without the recovery in food production, in which these measures played a crucial part, Britain might not have survived World War Two and the U-boat blockades of food convoys bringing produce from the empire anything like as well as it did. And the War Ag Committees, which, when it was over, were converted into the National Agricultural Advisory Service (later ADAS) as a free extension service for farmers, were the basis for much of the success of farming for many years.
Sadly there is no similar mood in government to help todays farmers out of the current depression. The main priority seems to be to cut farm aid, not increase it, with a deliberate objective of reducing production, importing more food and eliminating large chunks of domestic agriculture and employment. There is, of course, no sign of another world war – thank goodness.
So, UK farmers, it appears, will be left to take their chances in unequal competition with the rest of the world. At least, until the next disaster. For one day there will be one. It will cause major food shortages and price rises and self-sufficiency will once again become an issue. Maybe then our political masters will see the error of their ways. How sad for farmers and consumers that, unlike us, they cant see it coming.
UK farmers, it
appears, will be left to take their chances in unequal competition with the rest of the world. At least until the next disaster.