By FW staff
CEREAL farmers in East Anglia face swings in cereal prices and must brace themselves for a bumpy ride to the year 2000, claims the latest edition of Farming in the Eastern Counties.
The reports author, Dr Michael Murphy of Cambridge University, suggests cereal prices will remain volatile sue to uncertainties about the impact of the El Niño weather phenomenon and low cereal stocks.
“The tide continues to turn against cereal farmers and results for the harvest years 1994 to 1995/96 are unlikely to be matched in the future,” writes Dr Murphy.
The rise in Sterling has had a devastating effect on cereal prices, he adds.
“Cereal farmers who hesitated to sell grain early in 1996 saw prices plunge to as low as £70 per tonne, from which they are yet to recover.”
The turning point was the harvest year of 1996/97, Dr Murphy notes. Real gross output fell more than 5% to £731 per hectare, while variable costs climbed 4.1% to £256/ha. Gross margins before compensation payments fell by 7.5% on the previous year.
Net farm incomes on all farms surveyed declined by 36 % after inflation. Even in the eastern counties, mainly cereal and mixed cropping farms would not have been able to cover production costs without area aid payments, writes Dr Murphy.
Incomes on cereal farms are likely to have fallen by a further 50% in 1997/ 98 to £100-£150/ha. The decline will continue this year although it is expected to be less severe.