Exit of small farmers at a steady rate is the result of poor prices

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REMEMBER last Thursday? A glorious spring day, which started with a dawn duet (no chorus as yet), and developed into a very sunny warm day; why, I saw a bumblebee in the garden, and the snowdrops looked distinctly uncomfortable, as the first daffodil in the garden burst into bloom. Unfortunately, Thursday was followed by Friday and Saturday, which were dull and wet, returning us to reality; but we had a glimpse of what is to come.

It is now March, and I need it to be dry. The farm is totally waterlogged and before things can get going, we need some drying wind, and sunshine too please. An early spring needs to start now.

What an eventful week it has been. It started with the announcement that Nocton Dairies had withdrawn their planning application, and the large scale dairy unit in Lincolnshire will not now be built. Contrary to some of the rubbish in the media, this decision has been taken due to the Environment Agency stance, and the cost of meeting their demands. This decision is therefore site-specific, and does not bear any reference to future plans to build large scale dairy units, should that happen.

n The WI has now raised the profile of large scale units, by sending a resolution to their Annual Conference, calling for such units to be prohibited or words to that effect. I welcome this, and I think that the debate with society over the future of food production in this country is well overdue, and I am certainly making myself available to take full part in this debate.

We have heard from the minority groups, the pressure groups, the anti farming groups, the people haters, and the anti capitalism, banking, government (indeed anti everything) groups. What about the silent majority? What about everyday folk who outnumber the vocal minority by several thousand to one? What do they think?

n Last week the price of soft commodities (cereals, soya etc) dropped dramatically as the markets got caught up in the turmoil spilling over from the unrest in the Middle East. Wheat prices dropped to £150 for next harvest, as concerns mounted over trading with large importing countries such as Egypt.

Investors/speculators rushed to exit the market (losing their appetite for risk), choosing oil as a better bet, driving the price to almost $120 a barrel. Soya prices fell as China started to shift from US product to the cheaper Brazilian supplies, at the same time, forcing their banks to increase their reserves, which created further fears of a reduction in liquidity, cooling demand for commodities.

Adding pressure to the price of soya, is that the Brazilian harvest is now underway with new forecasts predicting a record crop of 72million tonnes; up from last year’s 69 million tonnes. In Argentina, recent rains have boosted the soya crop there, after the dryness suffered last year and as harvest is imminent, it also has an effect on world price.

The wheat crop for 2011/12 is now predicted to rise by 24 million tonnes, and planted area to increase by 3 per cent (to 224million hectares) to the highest level since 1998; the increase in production driven by the high prices of late, leaving a forecast for the second largest global wheat crop on record (this column has often referred to fallow land which would be attracted back to production by higher prices). However, given that it is predicted that the world needs around 10 million increase year on year to stand still, the increase in production supply is only expected to keep things in balance.

As the billion hectare barrier was broken last year in GM planting since the genetically modified crops were commercialized 15 years ago, with 15.4 million farmers in 29 countries using the technology; given the turmoil in certain parts of the world, the weather patters of late affecting Australia, Russia and South America.

Do we really think that we can operate our agricultural programme in isolation; choosing the size of farm, the methods of farming?

Those niche markets are there to serve those who can afford to buy such foods, just as we have other important niche markets such as organic, but do we really believe that the average consumer in the street, suffering from government cutbacks (which have yet to bite), attempting to make ends meet, or afford the family holiday this year, will pause for even a moment in the local supermarket to ponder over how large a dairy farm the milk came from, or whether the beef was produced from grass?

n As British farmers we hope that a choice to buy British, choosing the Red Tractor, will be made, but we are under no illusion that we have to be competitive, both on welfare, environment and standards (Red Tractor), and on price. Only a very few shoppers are in a position to, or indeed choose to look closely at labels to see if chicken for example has been produced in a certain way. We saw Caroline Spelman leading a successful campaign last week to demand no delays in implementing the battery cage ban in Europe, where some countries have not complied, and the UK have spent £30 million doing so (and supermarkets are increasing egg prices in the store, as they slash the price paid to farmers and processors despite the massive increase in feed and energy costs.).

Dairy farming is a good example of what happens when we operate in isolation. Due to the lack of interest by processors in exports and outside markets, choosing to tear each other to pieces in the domestic market, the price paid to the farmer is not only poor and not comparable to the European or world market, but it results in the very thing we are told is not wanted; small farmers exiting at a steady rate, halving the number of dairy farmers every ten years. This exports our industry as more imported products such as cheese and butter, yoghurt and other value added products flood in.

We see in the sheep markets, French buyers arrive when there is demand or the currency is right, lifting prices here as British buyers have to compete or do without. The dairy marketing strategy is flawed in that we do not have that outlet; that competition for our product. What is the result? I’ll tell you. We are now faced with 40% of dairy farmers not prepared, in most cases due to lack of capital, for the NVZ (Nitrogen Vulnerable Zone) legislation, which will become law at the end of this year. Winter storage for slurry is very expensive, and can only be met if farmers invest. A farmer with no succession, many tenant farmers, those who simply can’t get the banks to lend, and those without confidence in the future will not or cannot invest.