Editor’s View: Heavy contraction leaves me feeling pained
© Tim Scrivener Everywhere you look in our upcoming special outlook section (in partnership with Andersons) there is talk of sectoral contraction.
Take sheep, for example. The national flock now stands at 13.8 million head, the lowest figure since 1996 and a further drop is expected.
It’s a similar story for beef, with cow numbers seeing sharp falls this year and last.
See also: Outlook 2025: Lower inflation offers hope for UK economy
About the author
Dairy beef faces an ever-harder task to make up the shortfall as cattle numbers dwindle in that sector too – although with less of an impact on national milk output as cow efficiency continues to improve.
Barriers are well known – dwindling area payments in England hitting the ability of marginal businesses to continue to operate, increasing costs eating into margins everywhere – although some input prices are well back on last year.
And of course, for all farms, there is that famed barrier to investment – uncertainty – as we enter another year of agricultural policy being in a state of flux.
When there is a downturn, financial markets and most people are selling but there is still someone buying.
Someone with a different outlook (or access to better information) thinks they have spotted an opportunity to capitalise – and “buy the dip”.
Well, regardless of everything that is going on in Westminster with inheritance tax, I think this year some food producers will conclude it is time to do the farming equivalent.
Maybe you already are and, if so, I’d like to hear from you privately or through the Letters page in the coming weeks.
Let me make the case for qualified positivity. Right now, the market is sending a very strong signal with high prices, particularly in livestock, that it wants more supply.
This is not a blip – some markets have been well in excess of long-term averages for 12 months or more.
Good farmers of beef, lamb, pork, chicken, eggs and dairy are already making money as it stands.
The loss of subsidy in England, and the fact it has been eroded by inflation elsewhere, will cap the ability of poorer businesses to expand, meaning output will not grow as quickly as it did in the past, reducing the risk of a glut.
Global food production, for the time being, is also tight, limiting the ability of supermarkets to bring in dramatic amounts of additional foodstuffs from overseas.
Notwithstanding recent choppy inflation data, interest rates are still set to fall gradually this year, reducing the cost of borrowing.
A recent trip to speak at the Irish Farmers Monthly’s Shaping the Future of Dairy conference left me feeling humbled.
While the dairy sector now has some serious headwinds, the farmers in that room had all participated in a 40% increase in milk output since 2015.
What sector in the UK has seen even 10% output growth in the past decade? It feels like an almost impossibly tall order.
But my wish for this year is for UK agriculture to at least start to stem the losses. The market wants it, even if the politicians don’t.
As for us at Farmers Weekly, we’ll continue to bring you more of the best stories before anyone else and be your partner in triumph and adversity. Happy new year.