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Challenging year ahead for farmers -
but grounds for optimism
Edwin Gillanders
Editor: Farm North East
Filed 16 Dec 07
©Edwin Gillanders
This article was originally published
as a Leader in
Farm North East, no 24 December 07.
It is reproduced here with the kind permission
of its author and of the Journal
As we come to the end of another traumatic year in farming, we can
look forward to the future with some confidence and optimism. If
only on the basis that next year can’t possibly be worse than
this year! Or can it?
In truth, it is a mixed bag. Foot and mouth is
hopefully behind us – if DEFRA can get its act together and
prevent any more leaks from Pirbright – but Blue Tongue disease,
which has swept through large swaths of England at an alarming rate,
is the new looming worry. Winter frosts will keep the midges at
bay for the present but the disease will inevitably hit Scotland
next summer.
Arable and dairy farmers have seen a dramatic
turn-round in their fortunes. Grain prices have doubled –
although off the peak to which they were driven by the speculators
– and the ex-farm price of milk is creeping up – nay,
leap-frogging – to around 30p a litre. Who would have thought
so a few months back? The transformation in outlook for grain and
milk must give other sectors confidence for the future.
But one man’s meat is another man’s
poison and higher grain prices mean higher costs for livestock farmers.
The pig and poultry sectors, where feed accounts for such a high
proportion of total costs, have been particularly badly hit –
compounded for pig producers by the FMD movement restrictions and
closure of the export market which is so important for sow-meat.
And not a whiff of support for either sector – both of which
are unsupported - to help them ride out the crisis.
The real concern is that Scotland’s livestock
industry will lose critical mass, which will have serious repercussions
further along the supply chain, as pig, beef and lamb producers
de-stock or get out altogether – particularly with the arable
sector now offering an attractive alternative.
However, sheep farmers should proceed with caution.
This year is a write-off but the disastrously low price of lamb
can be attributed entirely to livestock movement restrictions and
lack of an export market, nothing to do with market forces. The
export market has re-opened and ewe numbers are falling throughout
Europe and even in New Zealand, so there are reasons for optimism
here as well.
Beef is another matter and the recent reports
from McKinsey for the Northern Ireland beef industry and from Quality
Meat Scotland on the profitability – or non-profitability
– of suckler herds do not make pleasant reading.
It is difficult to see beef prices rising to the
level needed for producers to make a profit so perhaps ANM Group
chief executive, Brian Pack, is right in advocating the return of
some form of subsidy for suckler herds, which can probably be justified
on environmental grounds.
We also have the Common Agricultural Policy “Health
Check”, flagged up in our last issue, which holds out the
prospect of less red tape, the ending of set aside and milk quotas
and some relaxation of cross-compliance and the competition authorities
are at long last threatening to bear down on supermarkets which
will hopefully lead to the stamping out of some of the iniquities
in their dealings with suppliers. For example, why have lamb prices
in the shops risen by 2.2% at a time when lamb prices have collapsed
by 28%?
Nor has the new Scottish Government been found
wanting in their support for agriculture, as the welcome £6
per ewe aid package for sheep farmers and cull of lightweight lambs
for which there was no market, has demonstrated. The announcement
of a National Food Policy for Scotland puts food at the heart of
Government policy.
So there are grounds for optimism but it will
also demand that farmers continue to improve their efficiency and
meet the requirements of the market in terms of specification and
volume. It has been said before – and farmers are sick to
death of hearing it – but it is a truism worth repeating.
©Edwin Gillanders
Editor, Farm North East
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