Arable News

  • Written by: Farmers Guide
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David Bolton Opinion – December 2018

Agribusiness consultant David Bolton provides a thought-provoking and in-depth overview of the current state of British Agriculture. And as we prepare to leave the EU, he points out that, at the very least, farmers need the prospect of reasonable profits commensurate with the work they do and the risks they take.

The extremes of weather experienced over the past 12 months tested most farmers’ patience, nerve and determination. Whether rain, snow, cold, heat or drought in abnormal quantities, it all arrived this year. To discover that the financial results of our client arable farmers have uniformly exceeded their budgets to a greater or lesser extent this year is now a relief. Their profits will all exceed their Basic Payments too. Even sugar beet is less disappointing when early lifts at only 55–60t/ha find their sugar percentages are over 20 per cent.

While finding corn barns were not full when doing post-harvest assessments and stock valuations around the end of September, higher prices with negligible drying costs have made a significant difference to those crop values. Wheat and quality barleys have approached or exceeded £200/t and even shrivelled feed samples have found good prices. From AHDB Cereals & Oilseeds Market Information, it currently looks as though early August would have been the right time to sell 100 per cent of 2018’s harvest, and 2019’s as well!

Now November’s winds and wet have put an end to an excellent 2019 winter planting season, the UK crops from south to north all look extremely promising, set off by bright autumn colours and neatly trimmed hedges. The pheasants and partridges as well as magpies, jays, blackbirds, rooks and robins, all seem plentiful and well fed. The pigeon scourge on the oilseed rape crops has not started yet.

A need to prosper

Professor Dieter Helm chaired the Natural Capital Committee set up in 2012 to provide advice to Government on sustainable uses of natural capital. Thinking first and foremost about the UK’s agricultural and rural sectors, and their essential need to prosper among competitive global challengers, it’s essential to recognise his influence on Michael Gove’s Agriculture Bill to see how that may help farmers and the whole food production chain to grow over the next 25 years.

The UK policy, in its final form, needs to be closely related to sustainable food production in sufficient quantities to be strategically worthwhile without direct support payments, to be phased out by 2027.

Farmers, owner-occupiers, tenants or contractors do take care of the natural capital resting in their hands. This includes soils and sub-soils, minerals, fresh water, the atmosphere and ecological communities as well. The Government wants it done better in future. The benefits are obviously food and timber – but also clean air, amenity, fertile and healthy land for leisure and relaxation, biodiversity and conservation. No one could state categorically this approach could not be improved in specific situations, but a broad and shallow approach to the agricultural environment will ensure a far wider uptake.

Cross-compliance must not demand more from farmers tomorrow than it does today. The previous penalty system has had too small a margin for error, is disproportionate to the damage an error causes, and is severely reducing farmers’ enthusiasm to join future schemes which may limit their flexibility. Even a park keeper has a view about the look of his park. Lighter regulation (extremely welcome) would result in lower production costs. Hopefully the new Environmental Land Management Scheme (ELMS) will pay heed to this. An example would be the simplification of currently required husbandry practices demanded by agri-environmental schemes.

Fiscal reality

The original proposal to cap individuals’ basic payments has been resisted. Reality says the larger the area a business uses the greater its impact on water and landscape will be, and so the greater its contribution to climate regulation too. The larger land user may have better management and organisational skills and is thus likely to be more efficient at delivery and efficacy. At the same time that business will sustain economic growth and (probably) employment. Nevertheless it looks like 200–600ha farms will lose 20 per cent from 2021 and bigger ones 25 per cent. It will be zero for everyone by 2028.

If European labour can no longer come into the UK as easily as in the past, then farmers will have to pay more to attract UK workers back from other industries. Extreme suggestions are that labour costs could increase by 50 per cent, thus having a massive negative impact on the UK horticultural sector, which uses large quantities and whose products are not easily harvested mechanically, or by robots yet.

Free trade needed

In recent years the UK has been a net importer of agri-food products. Over 60 per cent of the food consumed here has been grown and processed here. Significantly though the Irish send us £150m worth of butter and about £200m worth of baked goods. Our vegetables and, particularly, our fruit are largely imported (so is wine!). No country yet can rival the value of the UK’s whisky exports. The UK needs the freest possible trade in agri-food products with high levels of EU market access, and to do that our farms need to produce competitively and on a fair and equal playing field. As a premium grower of malting barley, the UK can anticipate markets for its barley and its malt across the world – Asia, Africa and the US. While our assurance schemes are well established they will not alone replace price and the perception of value in the face of competition.

With the probability of a smooth green exit from Europe and this first opportunity an English politician has had for over 40 years to write a British agricultural policy – we hope the rhetoric will be matched by its success for farmers, giving them the prospect of reasonable profits commensurate with the work they do and the risks they take. Meanwhile a declining budget for farmers and the rural sector over time would seem to be a certainty but remains the biggest unknown. Chancellors and ministers will be facing competing demands for health, housing, defence and road expenditure for a still growing population.

We shall soon see which interests society will value most.

David Bolton Partners (DBP) is an agribusiness consultancy operating across agriculture and the food chain. David Bolton can be contacted on: 01953 714030.

  • Written by: Farmers Guide
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