Diverse views, one aim
Where better to seek answers in difficult times than the annual Crops Conferences, sponsored by CPBTwyford? Here are the highlights for those who couldnt be there.
Rural grants are con trick
DONT fall for the Governments Rural Development Programme "con trick", warned policy analyst Robert Gooch of Eurinco. These new grants are not in growers best interests, he argued.
"The UK farming industry has been brainwashed into thinking that the IACS direct payments will inevitably disappear and that rural development schemes are the only long-term form of support available. This is nonsense from a European perspective," he said. "The French will never let this happen."
Instead growers should be lobbying for the cross-compliance option: linking IACS payments to environmental requirements. This would put politician-proof protection around IACS, and ensure that support was safe within the "green box" as regards the WTO negotiations and the next stage of CAP reform in 2003, he said.
MAFF has stated that it wants to see IACS discontinued as a point of principle, favouring a free global market instead. It prefers the Rural Development option because this provides a means of limiting the cash spent on farming; both IACS and Rural Development grants are co-financed between the Treasury and Brussels. Cash taken from growers via modulation – which is taxation on IACS – is being redirected into rural development. But MAFF is able to impose a spending ceiling on grant schemes, and so money can run out; the over-subscribed organic conversion grant is an example. Some businesses will fail to win funds from the new Rural Development Programme; it will be a case of first come, first served in the scramble for support. This is not a fair system, said Mr Gooch.
Elsewhere in Europe, cross-compliance is favoured. France, Denmark and Holland have already announced compliance plans, he pointed out. "There would be problems with cross-compliance – more red tape and new environmental prescriptions. But if youre going to manage your farm to suit this new environmental age, you might as well do the job properly and get paid properly for it."
Government help at hand
THIS Government is taking action to help hard-pressed arable farmers, insisted Elliot Morley, countryside minister. He cited a list which included the Governments U-turn on paying some agrimonetary compensation, the emergency measure allowing flooded land to be switched into set-aside, the bundle of new grants in the Rural Development Programme, and the successful re-negotiation of the 2m hedgerow ruling.
Organic growers will see 50% more cash on offer when the new scheme opens in January, he said. "1,270 growers have successfully applied for conversion grants in the last 18 months."
Taken to task about the declining payment rates for Countryside Stewardship Schemes, Mr Morley said that this was because this support was directly linked to arable profits foregone. As profitability declined, then compensation for stewardship measures inevitably went down as well. "We have to be realistic. But when Stewardship comes up for review, we will argue growers case."
"Further CAP reform must be tackled urgently," he said. "This Government wants to push ahead with changes as fast as possible." But no mention was made of cross-compliance as a means of securing IACS cash. Instead, Mr Morley favours the decline of IACS payments, with Government-controlled grant schemes taking over as the channel for any financial support. The Rural Development Programme is a watershed, marking a radical shift in the way farming is supported – on a par with the 1947 Agriculture Act, he stated.
The battle against red tape is succeeding. "We are taking your concerns seriously," said Mr Morley. As part of the Action Plan for farming, IACS will be simplified and the Government is also arguing the case in Brussels for an easier CAP. "The environment must be protected but in doing so we must avoid creating unnecessary burdens on farmers."
Opposition spokeswoman Baroness Hazel Byford criticised Labour policy as being based on a "handout" mentality. "We want an agricultural support system which isnt based on handouts, but on securing a level playing field.
"We need to protect our ability to produce food. It is not in the national interest for us to be food importers. The £1.6 billion on offer in the Rural Development Programme is not there to help farmers produce food, but to do other things."
Lady Byford called for fewer support schemes, a reduction in regulation and relaxation in the strict planning rules. "Farmers are being asked to diversify, but then find they are blocked. Arable producers need to be able to look forward and plan."
Co-operation down under
TRUST the Australians to devise a radical means of marketing their grain: a national buying and selling co-operative, run by growers, for growers – without any government support. The Australian Wheat Board has moved from its old guise of being a statutory marketing authority into a body run by the industry itself.
Chairman and farmer Trevor Flugge reckons that having control over export markets – which are the main outlet for Aussie grain – means the farmer can be sure of receiving the best price without the traders taking their slice of the cake, he told the conference. And there isnt much "cake" in Australia. Wheat production is unsupported; the world market governs price and typical yields might be 2.6t/ha.
Hes now moving the AWB in the direction of matching grain to specific end use requirement. "Customers want a product which suits their end needs and will pay a premium for quality. For us, accepting a farm gate price is no longer viable. We must find ways to ensure that at least some of the value created beyond the farm gate is captured by the grower."
With a background in retailing, Patrick Davis, until recently managing director of Group Cereal Services, knows this only too well. "Food and drink is massive business, totalling £125 billion annually. Yet farmers see less than a 7% share."
The Aussie solution – a national wheat board – probably isnt realistic in the UK, but growers should be following the same principles and working together more, he said. Mr Davis wants to see more power going to farmer-controlled co-operatives, perhaps through mergers. Such rationalisation has happened with supermarkets: the top four, Tesco, Sainsbury, Asda and Safeway, will have 55% of the market by 2005. Growers need more selling muscle to compete.
Working together should also extend to closer partnerships with end users, so that growers can exploit niche added-value opportunities, he said. "Stop hating the supermarkets!"
High output is the target
COST savings made by UK growers put them nearly on par with producers in the US, said Richard Crane, of farm accountants Deloitte & Touche. "We have done well. But I am worried about rising fuel prices," he said. "Spending on fuel is now at £20+/ha – this could double."
The companys forecasts for results from the 2000 harvest are that average producers of combinable crops will slip into the red on net farm income, losing £18/ha, and this excludes rent and finance charges.
Keep output up, he advised. "In 1995, we needed wheat yields of 4.5-5t/ha to break even. In 1999, it moves up to 8t/ha, and in 2000 it will be 9t/ha."
Beware trying to reduce overheads by taking on more land – and then finding you cannot pay the charge," he said. "You may be better off shrinking your business, and having someone pay you £70-80/acre instead. The good news is that were now seeing the first signs of agreements coming down to more realistic levels, in the £75-80/acre range."
Buckinghamshire grower Robert Jones reckons his make-do-and-mend, simple machinery policy keeps his business in sound financial shape. Buying second-hand and never exceeding a carefully planned budget means that even for a smaller cropped area (223ha), the figures stack up, he told the conference.
"I set my target costs at less than a competitive contractor rate, ideally half," he said. "These costings are used to set the budget, starting at the bottom and working up. Dont get side-tracked into buying something more expensive." Proof of the pudding is in Mr Jones figures for wheat establishment in 2000: an impressive £43/ha.
He hasnt gone down the lo-till route as a means of reducing costs: "I prefer a simple traditional plough system." In contrast, Alastair Leake, manager of the Focus on Farming Practice project for CWS Farms Group, Hydro Agri and Profarma, put the case for lo-till as a means of reducing costs and raising output.
"We have cut costs by £59/ha, and raised margins by £76/ha," he said. Other benefits are a higher work rate, benefits to bird life and a massive increase in earthworms from 6g to 1kg/sq m. However, autumn nitrogen may be necessary: "We have found 25kg/ha produces a dramatic effect. Without ploughing theres little nitrogen released; the crop doesnt tiller well and is uncompetitive.
"Organic matter and soil structure in lo-till systems are better than with organic production, which is heavily reliant on the plough."
All the speakers agreed that output must be maintained at a high level. To that end, plant breeder John Blackman of CPB Twyford offered a drastic solution: "Throw away your Recommended List."
His reasoning is that the UK variety data quoted in the List are averages, and not as relevant to specific regions, drilling dates or rotational position.
A balanced rotation is still more profitable, less risky and "more fun" than switching to all wheat, he said. "Thats as long as you do it well, and aim for high yields." The 50% set-aside option doesnt stack up, he argued.
Mr Blackman is speaking from experience. His field with wheat variety plots averaged 11.3t/ha this year – no mean feat given that the site included plot walkways and some 1,584 varieties, many of which had mediocre yield potential. These plots are given very high inputs to tease out maximum performance, but even with these extravagant costs included, gross margin without area aid comes to £262/ha. High output should be the target, he reckoned. "The UK average wheat yield – about 7t/ha – is unprofitable. If thats where you are on output, then try another hobby…"
• Turn to page14 for highlights of the Scottish Conference
"There is no pot of gold in Brussels for us in the UK. We have to find the cash ourselves."
"More governments have fallen and more wars have started in the last 500 years because of a change in the price of wheat than for any other single reason."
"Agricultural traders are in the Dark Ages with their approach to selling grain as a commodity."
"Following fashion and following tradition are two common pitfalls in farming."
"Throw away the Recommended List."