Set-aside might double unless grain price rises

23 August 2002

Set-aside might double unless grain price rises

SET-ASIDE seems set to double for the 2002/03 cropping year, slashing UK wheat production by 2m tonnes unless grain prices firm considerably, says Grainfarmers, the UKs largest farmer-owned arable business,.

In a regionally and statistically representative survey of its members, 28% said they intend to go to 50% set-aside this autumn, sending set-aside in England soaring from 12 to 27%.

"This survey highlights the severe economic difficulties faced by cereal growers," says managing director Tim Pollock. "If the trends indicated are replicated on a national basis then we estimate UK wheat production will fall from about 16.5m to 14.5m tonnes."

Barley production would tumble from 6.7m to 5.6m tonnes too, the loss to set-aside being exacerbated by the low malting premiums being paid, he adds.

Over 42% of farmers indicated they intend to share machinery with neighbours, showing a growing willingness to co-operate to cut overheads, and 49% are seeking opportunities to take on more land.

Grain prices for harvest 2003 have firmed since the survey and are now nudging £60/t. But even at that level, the survey indicated set-aside would still go up to 21%, reflecting the average estimated cost/t of production for wheat across England of £65/t. Yet 40% of growers were unsure of their cost/t.

"Perhaps that is something they should take a look at."

The survey also revealed 9% intend to leave the industry within the next year and 19% plan to reduce their workforce. Such radical restructuring is directly attributable to the low grain prices brought about by the EU decision to lift tariffs on Black Sea origin grain, says Mr Pollock.

"The earliest we can hope for any change to that position is January 2003, and even that is a very tight timescale." &#42

&#8226 28% of growers to go for 50% set-aside.

&#8226 Average cost/t production £65.

&#8226 42% intend to share kit.

&#8226 49% looking to expand.

&#8226 Source: Survey of 530 out of Grainfarmers 4000 farmer members.

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