Opinion: Farming hasn’t followed other sectors out of recession
David Richardson
Where does agriculture stand in relation to the rest of the UK economy?
Increased traffic when I drive into Norwich at rush hour, crowded trains in London and full restaurants when we venture out for an evening meal would suggest the government’s claims that Britain has emerged from recession are justified – so long as you forget the size of the national debt.
But farming is not enjoying a resurgence of prosperity as other trades seem to be. Indeed, for most sectors of our industry it is the opposite.
And in case non-farmers pick up a copy of Farmers Weekly and accuse me of whingeing, let me quote some statistics to support my claim.
My perennial source for such evidence is Defra’s annual analysis as recorded by university departments, entitled Agriculture in the UK, the latest edition of which refers to 2014.
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Given my opening question, it includes the information that the proportion of annual household expenditure on food consumed at home in 2014 was 8.6% – marginally down on the year before.
Food eaten out accounted for 5% of average expenditure and alcohol 4.4%. And those percentages include wholesalers and retailers margins.
Not much scope there, you might think, for consumers to accuse farmers or the food trade of overpricing.
The document also reveals that half of UK farmers earned less than £20,000 in 2014 and that if husbands’ and wives’ labour were to be counted, one-third of farms would have made no profit at all.
Returns have fallen further since those figures were calculated and forecasts suggest they will be lower still in future.
Exchange rates
Those figures include income from the public purse – mainly the EU – which was down 12% in 2014 compared with the year before, partly because of the strength of sterling against the euro.
And as sterling has strengthened again, we can expect future payments to fall.
Furthermore, those income figures have to pay for necessary investment in farming businesses as well as household groceries and other living costs.
As Agriculture in the UK shows, 2014 was not just a one-off.
Farm incomes have trended downwards since 2010. Last year, which was notable for almost perfect weather and, as a result delivered high yields, prices fell more steeply.
Cereal production was up 39% on 2013, partly because of a bigger acreage, but prices were down 21%, leaving a deficit in farm accounts.
Similarly there was a big crop of potatoes and prices were 30% lower.
Overproduction
Paradoxically, we farmers crave big yields to talk about in the pub, but usually make more profit when there is a shortage.
Indeed, overproduction was part of the problem with milk.
Quite apart from the world surplus, last year saw higher UK milk production from an increased number of cows, whose yields were also higher. Imports were up too – hence the collapse in the ex-farm price.
Now that milk quotas have gone, will we see a repetition, despite the exodus of many producers?
The truth is the world’s farmers are producing more than markets can currently absorb.
Most of the disciplines and protection Europe has previously enjoyed have been removed and replaced by free markets and that has not done us any favours.
Food security is still a huge concern for the future but, as Farming in the UK 2014 states, although Britain produces only 62% of its food, the EU is 90% self-sufficient, so no worries.
Unless, of course, next year’s referendum takes us out of Europe. Has anyone considered that possibility?
David Richardson farms about 400ha of arable land near Norwich in Norfolk in partnership with his wife Lorna and his son Rob.