Farming Matters!

September 2004: - Harvest payments: Milk prices; ARC-Addington
November2004: - Farm Closures
December 2004: - SFP; OTMS
February 2005: - SFP - concern over delayed payment

Deloitte and Touche has published its annual farm results report to June 2004. Net farm income rose to £200/ha (£80/acre) in 2003/4, up from just £43/ha (£17/acre) in the year ending June 2003, but it says the 2003/4 boost to incomes will be short-lived and predicts a much lower net farm income figure for the 2004/5 year. Farm incomes in England are forecast to drop by more than half in the coming year to just £84/ha (£34 acre) and the amount farmers earn from food production could become increasingly unpredictable in the future.

This income which has to support the farmer's family and fund future investment in the business could, on a farm of around 400ha, have swung from £17,000 up to £80.000 and back to £33,000 over three years.(NB - income and not profit.) The main factors behind these swings in income were poor summer weather and world market conditions.

Earnings from non-farming activities are rising, but 2003-04 was probably the first time in five years many farms had made money from growing food. Income from non-food production, such as tourism and property letting, has risen by £35 per hectare, according to the 2004 results. The study forecasts a steady income for farmers from tax-backed environmental schemes.

The report's forecast for 2004-05 takes account of a "very difficult" 2004 grain harvest and low prices. Only about half the wheat in the country was harvested in 2004 and entire fields of crops were left to rot because of prolonged heavy rainfall. Continued price pressure in the dairy industry will lead to another year of poor returns for milk producers. Many farmers may stop farming altogether.

Deloitte predicts that there will be three types of farmer in the future:

• The part time farmer who supports their income with non-farm related activity
• The part time farmer who supplements their income with sub-contracted work on other farm related activities
• The full time farmer - probably very large scale, highly efficient and closely tied to the food industry supply chain.

Details of a national reserve, exemptions from the 2m rule on hedges and information on grazed orchards and land used by horses are being released by DEFRA. There are also details of the new entrants scheme, for those who do not have entitlement to the historic element of the SFP, which will apply to all four of the devolved regions.

Information is available in more detail for Scotland and Northern Ireland and on the Farmers Union of Wales websites.

The 'Over Thirty Month Scheme' is due to be scrapped during 2005 and replaced by a scheme which will remove cattle born before 1 August 1996.

Farm Business Closures
The Dept of Agriculture for Northern Ireland has published figures from its June Census. This shows that 13 farm businesses per week are closing. In the year to June 2004 there were 667 business closures with the loss of 1200 farming jobs. The Ulster Farmers Union has called for more support for the industry and expressed concern that the future of many more farm businesses is uncertain.

Prompt payments for rain-afffected harvest:-
Farmers whose crops were hit by wet weather during the summer harvest will get priority when annual subsidies begin to be paid out in a few weeks. England's harvest is now virtually complete, and expected to be bigger than last year's, but many arable farmers were hit by heavy rain which affected the quality and value of crops and increased harvest costs. Now government ministers have agreed with farmers' leaders that a special effort will be made to make sure payments to arable farmers due in mid-November reach those in the worst affected areas promptly. (www.defra.gov.uk press release 22 September)

Milk prices continue to cause concern:-
Milk Link has said that it is not preparing to drop prices, at the request of Arla, as was recently rumoured. Asda has announced that, in recognition of the challenges facing the dairy industry, it will not be dropping the price paid at the farmgate. It is hoped that other supermarkets will follow suit

The milk price was dropped almost immediately after this was written

See also the report on milk prices below

Prices

Some prices paid to famers are up, partly due to the summer drought. Beef prices are the highest they have been since 1996

An average increase in farm incomes of some 15% last year -
see Facts about Farms - February 2003 for details. However latest news is less encouraging. The rise in incomes is mainly it would seem from non-farming activities. Dairy incomes dropped by 40% and cropping incomes by 19% in the year up to February '03. See also Exodus

Buying local produce is popular not only with the public but also with some members of the catering and tourist industry. Local councils are now increasingly being encouraged and given advice on how to to 'buy local'.

Farmers Markets continue to be popular.

Many communities and churches continue to support farming and its dependent communities.

The ARC-Addington Fund, administered through the Arthur Rank Centre, has started its new Housing Scheme It has already helped to re-house a number of families losing their homes through leaving non-viable rural businesses.

Farmers continue to be concerned at the rise in fuel prices and the threatened rise in fuel duty as they approach their busiest time of year.

The recent report, by the Commons Rural affairs committee, on the price of milk shows the gap between the price paid to the farmer (below the cost of production) and the price paid in the supermarkets by the consumer. Farmers get 19p, the superstores 10p, the dairy firms 3p and the consumer pays 50p per litre. This leave a gap of 18p which is not accounted for. In the West Country 60% of dairy farmers are operating at a loss and many are quitting. Ten years ago farmers received 59% of the price of a litre of milk, today it is only 37%. Receipt of at least some of the 'missing' 18p would go a long way to help them return to profit and remain in business.