Flexibility key to CAP success

ARABLE BUSINESSES need to be more flexible in the way they operate if they are to thrive after CAP reform, warns the Home Grown Cereals Authority.

Volatile prices, uncertainty over CAP reform and EU enlargement were some of the main issues affecting farmers, chief economist Gerald Mason told delegates at a breakfast meeting at the Cereals 2004 event on Wednesday.

But there would be opportunities as well as threats, and farmers needed to restructure to maximise their profitability in the future, he added.

Forward-thinking producers would take on more land under short-term and contracting agreements, with land supply likely to increase as other farmers sought to retire, said Mr Mason. “We will see a lot more liquidity in the way that farming operates.”

Forward budgeting had to be as accurate as possible, and was key in helping farmers to make the right decisions. By switching fixed costs to variable costs, producers would be allowing themselves the flexibility to react to market forces, said Mr Mason.

Farmers should also remove the single farm payment from the equation when budgeting for the future.

They must be able to survive without direct farm subsidies or export refunds from the EU, he added.

“New EU countries will potentially add to the cereals surplus and my guess is that we‘ll have another CAP reform fairly soon looking at export refunds and intervention.

“That will make us much more open to the volatile world market.”


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