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Time to get real about farming - before it's too late

By James Hall |

In 2007 I spent a lot of time on farms, looking at the economics of farming. I had access to “the books”, plenty of hands-on experience (cow-milking and the like) and full and frank discussions with many farmers, farm managers, the National Farmers Union etc, etc. The prognosis was appalling. Peter Kendall, the NFU president, told me that the cheap food sold in supermarkets was “morally questionable”. Meanwhile,  Sir Stuart Hampson, the then-John Lewis boss and author of a report on farming, said that a sustainable UK rural economy was “close to being lost forever”. It was bleak stuff.

So two years on, how have things changed? Food prices in shops saw a sustained period of inflation over the last year - surely a good thing for farmers? - and we are hearing less about farmers’ plights than we were back then. Are they finally happy?

James with a Pedigree Berkshire sow at a farm in Warwickshire
James with a Pedigree Berkshire sow at a farm in Warwickshire

Sadly, no. In fact, things are worse than they were two years ago. Prices to farmers are actually falling and input costs - fertilizer, fuel, feed - are rising. On top of this farms are having to deal with ever-greater reams of red tape. They are still closing at an alarming rate.

In his newsletter to members this month, Mr Kendall of the NFU said the following: “With prices of agricultural produce around the world continuing to fall for most sectors, coupled with the high costs of many inputs, we will all use whatever time we have available to look at what production is viable for the coming year.” Hardly encouraging words.

Dairy farmers are on their knees. “It’s a dead industry,” the chairman of the Royal Association of British Dairy Farmers told The Grocer magazine this week. The collapse earlier this year of Dairy Farmers of Britain - one of the UK’s three co-operatives - and a slump in the milk price have killed off many farms. The result is that production in the UK is at its lowest for decades. To counter this, supermarkets are sourcing increasing volumes of milk from abroad, putting further pressure on the troubled domestic sector.

A herd of dairy cows
A herd of dairy cows

Farmers talk of a “dire” situation today. A recurring (if not new) issue is that farmers’ customers - the all-powerful retailers - constantly squeeze them on price. “Our margins are so so skinny. The supermarkets’ margins are 30-40pc, but ours are pence,” one farmer tells me. Something is wrong in the food chain, they argue. Producers - be they wheat farmers, strawberry growers, or dairy farmers - take all the risk, pay for the production, the packaging, (in most cases) the distribution, and often the marketing  but get very little in return.

Administration is another headache. Most of it comes from Europe and it takes up a ludicrous amount of time. On beef farmer tells me of a crazy dictat that means that he has to put two plastic tags in his cows’ ears. If these fall out, he is fined. Quite apart from some cows’ ears looking like slices of emmental cheese, the rule presents a Catch 22 situation. “I can’t stop a cow putting its head in a bush to rip these things out, yet I am not allowed to put them in a barn to stop them from doing so as then I am not animal-friendly,” he says.  Media outrage over e-coli outbreaks - as has occurred this week over the Kent farm incident - and silly stories about cows toppling onto people simply serve to increase the pressure for needless red tape at a time when it should be cut.

We all need to get real. For a sustainable, safe, secure food chain in the UK three things need to happen. Firstly we - consumers and retailers - need to pay more for what is on our plates. Secondly farmers need to act collectively and with more business nous. And thirdly, red tape must be cut.

As one farmer puts it: “Farmers must become more organised and understand what business is about, retailers need to give a bigger gross margin, Joe Public has to realise what the cost of production is, and the Government has to make regulation more sensible.”

It will take a lot of effort and pragmatism - and a lot of angry supermarket shareholders - for this to happen. But the alternative is a dead industry and UK supermarket shelves full of cheap imports with unknown provenance.  The effects of this eventuality on our health, on our economy and on our heritage do not bear thinking about.

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