Archive Article: 2002/02/01
Has the dam finally
burst? Has the
government finally
made farming too unattractive to be
bothering with?
I have been anticipating and forecasting in these columns that there would be an almighty exodus from farming. I may have been slightly premature. Those leaving the industry, or handing over the management of their land to others through some sort of contract farming or partnership agreement, amounted at first to a trickle, then later to a steady flow of mainly small operations. Since the New Year, however, I have heard of so many sizeable businesses in this area that are planning to take that step that I am wondering if the dam has finally burst.
Beyond the psychological effect of passing from one year into another it is not entirely clear why the race to the exit has suddenly gained momentum. Indeed, it is probably a combination of several factors that has built up sufficient weight of worry and disillusionment to threaten to break the bank and/or will of those concerned if nothing were done. In any event news reaching me over recent days, of people deciding to quit whatever The Food and Farming report (which will be published by the time you read this) says, has shocked and saddened me.
Perhaps it was late IACS cheques that persuaded some people to get out. Ours is late too, although we did receive notification on the very morning that I am writing this that ours should be paid into the bank within days. Thank goodness for that.
Maybe it was news of yet more regulations to restrict the way we farm. The latest is the Uncultivated Land and Semi Natural Areas Regulation that slipped in almost unnoticed to take effect from the date of this issue. Lord Whitty said it was to help minimise the regulatory burden.
But it will require Environmental Impact Assessments to be made of permanent or semi-permanent grassland before they can be ploughed. And as friends have pointed out, it will mean land entered in good faith into Countryside Stewardship Schemes could be caught in a trap. For if it is rolled on into the new scheme it may end up in 10 years time unable ever to be cultivated again and, therefore, of potentially lower value. Let me be clear, I do not advocate the destruction of historic pastures, although some farmers are said to have put the plough in while they were able. But ill thought out, blanket legislation of this kind is surely against the public interest.
Perhaps the outgoers have just calculated their profit, or more likely loss, for 2001 and come to the realisation that the situation last year was worse than the year before. Further, that as they peer forward into the gloom there is not a glimmer of light that has any obvious prospect turning into better fortune.
Forward prices for wheat and barley are trending downwards as we move through the year with off-the-combine values next September in the low £60s – several £/t less than last harvest, with inadequate increments thereafter. Few in the eastern counties can genuinely grow grain across their entire acreage for less than £80/t. The IACS cheque goes to make up the difference and to pay the rent or mortgage interest.
And with major livestock producers throwing in the towel, arable farmers must consider what demand there will be for the extra acres of grain they have in the ground this year. Latest figures from the MLC indicate UK meat production in 2001, for instance, was well down on the previous year. Beef was down 8% compared with 2000, sheep meat production declined 28%, pork 17% and bacon 6%. A fair proportion of those reductions can be blamed on F&M, of course. But when, over the next few months, the latest batch of livestock producers disappear to be replaced by imports, there will be even less demand for grain for animal feed. It is entirely possible there will be a bigger exportable surplus after next harvest than merchants currently anticipate. The depressing effects that would have even on currently quoted prices do not need spelling out.
But perhaps the major reason so many are giving up the struggle is that they have finally concluded the government is not going to provide significant help. We may get a little more for environmental and diversification schemes but they will be funded by more modification. DEFRA is entitled, according to agreements made in Brussels, to deduct up to 20% from area aid and to redistribute it among other countryside causes which it favours. Almost alone among EU member states, Britain has initiated a modulation scheme to allow this to happen and seems likely to take it further in future years. And as DEFRA secretary Margaret Beckett has made clear, she is more keen to please the WTO than she is to save British agriculture.
So, who is right? those getting out or those who will undoubtedly take on their land? Only time will tell. But one thing should be clear. The days of unrestrained competitive bidding for such "opportunities" are over. The number of farms offered for contract farming over several months and still not taken up should ensure that. And some realism may even return to the situation.