NFU report warns that UKs efficiency on slide

15 May 1998




NFU report warns that UKs efficiency on slide

By Robert Harris

BRITISH farmers are in danger of losing their reputation for being among the EUs most efficient producers.

In the first edition of a new annual farm economics report*, the NFU warns that farmers must become more business-minded as other member states restructure their businesses and close the gap.

"These countries are shedding labour at a faster rate and in many cases their yields and productivity are rising more quickly than the UK," says Sion Roberts, NFU chief economist. "All EU member states are converging in terms of profitability, but UK is declining more rapidly than most in the top flight."

Using measures of competitiveness like farms size, yield levels and productivity of labour and capital, the UK generally makes the top five of member states.

The UK has the biggest average farm size in the cereals, beef and dairy sectors and fares well in pig and poultry farm size too. But other countries, notably France, Spain and Germany, have plenty of large units, says Mr Roberts. "Some people think France is full of peasants. That is definitely not the case."

UK yields are also high. Only the Netherlands and Belgium beat the UKs cereal yield of 6.6t/ha, and it looks set to retain its position, as yields are climbing more quickly than in southern countries.

Milk may be a different story. The UK lies fifth, with France, at 5400 litres a cow a year. But the French may soon exceed UK output. Italy, too, could soon join the elite.

Labour productivity (measured as real output value produced by agricultural labour including farmers, their families and part-time workers), is falling behind, too. Once ahead of other member states, it has not changed in the past 16 years.

Overall, UK farm productivity is sliding faster than most other EU countries, says Mr Roberts. Using net value added per labour unit, which shows how efficiently farmers convert inputs into outputs, Belgium, Denmark and the Netherlands have performed consistently well since the early 1980s, with net value added figures about twice the EU average. Luxembourg and France are 40-50% above it.

The UK started the 1980s almost 90% above the EU average. Mr Roberts now estimates it is just 15% higher.

*Is UK Agriculture Competitive? A European Perspective – phone 0870-606 0032. &#42

NO UNIVERSAL STRATEGY

The UKs decline in productivity must be addressed as world trade becomes freer, the EU enlarges and the single currency grows. "There is no universal strategy for success," says Mr Roberts. "Some farmers looking to reduce costs will need to benchmark their businesses with others, to see how they measure up. Others may be able to increase income from agri-environmental schemes. Others may put more effort into marketing and adding value to their produce." Many could benefit by becoming more export-led, like their European counterparts.


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