Farmers count the cost

Source: Food and Drink Digital

Date :28/08/2007 15:56:27

Food producers dig in: Anthony Gibson, Communications Director of the National Farmers’ Union (NFU) looks at the challenges posed to the industry this summer.

The food industry has taken a hit from unpredictable disasters this summer – and the UK’s farmers are the most exposed players in more ways than one.

Written by Anthony Gibson

There has been something distinctly biblical about the summer of 2007. First the Great Flood, then the Great Pestilence; all we need now is an earthquake and our misery will be complete!

Farmers are used to coping with the weather. It is all part of the job. But the rainfall this summer has been truly exceptional. I have in front of me the rainfall figures for a farm in the Cotswolds. In the three months from May to July, 22 inches fell, which is 266 percent of the long-term average. What made it even worse was that – Friday July 20th apart – the rain didn’t arrive in great lumps. Through June and July especially, we barely saw two dry days together, making it impossible to make any worthwhile progress with hay-making or harvest.

Then there was the flooding. In June, it was Lincolnshire and South Yorkshire that bore the brunt of the deluges; in July, Worcestershire, Gloucestershire and Oxfordshire were submerged. Thousands of acres of some of the best and most productive land in the country were under water for days on end. With summer flooding, crops and grass that have been under water for any length of time do not recover. They rot. And because of the sewage and other filth mixed up in the floodwater, they stink as well.

The total cost of all of this is hard to assess at this stage. Some farmers – like the Worcestershire farmer who had potatoes and vegetables worth £200,000 ruined in the Severn Valley – already know the worst. Thanks to the wonders of modern combines, most cereal growers should be able to salvage a half decent harvest, even if it will cost them an arm and leg in fuel to dry their corn. But there’s nothing much that can be done about spoilt hay or sub-standard silage, and we won’t know the full cost of that until the end of the winter, when dairy and beef farmers come to tot up how much extra concentrated feed they’ve had to buy, to make up for poor quality home-grown forage.

Then there is the cost to rural tourism, which is so important to so many farming businesses in these diversified days. Bookings have been hit hard, and the effect will probably spill over into next year, as people opt for guaranteed blue skies in far away places, rather than the uncertain glories of an English summer.

Put it all together and you’re probably looking at the best part of a billion pounds worth of lost revenue and extra costs. Other than in one or two extreme cases, farmers won’t receive a penny in compensation, and nor would they expect to. In farming, you have to take the rough with the smooth. We’ve had a run of reasonable summers and easy harvests, and something like this was bound to happen sooner or later. The blow has in any case been cushioned by a very welcome and long overdue boost to cereal prices. Dairy markets are stronger as well, thanks to the apparently insatiable appetite of the Chinese for dairy products. The farming sector was much better placed to shrug off the impact of one bad summer than it would have been say five years ago, when incomes were at rock-bottom.

Ironically, it was during virtually the one fine week in the entire summer that foot and mouth arrived, like a bolt from the blue. Thanks to vastly improved contingency planning and really effective co-operation between the farming organisations and the Government, the outbreak does seem to have been snuffed out and there is every prospect of getting the livestock industry back to something like normal within a month or so.

But the cost will still be huge. The export ban on meat and livestock is costing at least £10 million a week. Market prices, particularly for lamb, have also taken a big hit, and this at a time when the economics of red meat production were already looking precarious. Farms, abattoirs, hauliers, contractors, markets and organisations like the NFU have all faced significant extra costs from the disruption, the crisis management and the lock-down in livestock movements that any outbreak of foot and mouth – even one as efficiently handled as this one – will inevitably involve.

The only compensation from Government funds will be for the slaughtered animals. Some of the other losses may eventually be recoverable through the courts from whoever was responsible for the leak of virus from the Pirbright complex, but we know from past experience that most of the damage will be excluded from redress as being too remote or unquantifiable. Very much as with the weather damage, farmers will just have to take it on the chin.

But the fact has to be faced that, for some farming businesses, the combination of appalling weather and foot and mouth could prove to be a knock-out blow. That doesn’t mean bankruptcies necessarily (although some tenant farmers are in dire straits) but it could very well mean not bothering any longer with a farming enterprise, and particularly with a livestock farming enterprise.

The 2005 reforms of the Common Agricultural Policy have fundamentally changed the name of the farming game. The single farm payments that have replaced the old production subsidies are essentially there to reward farmers for their social and environmental role. You don’t have to keep animals or grow crops to qualify for them.

So, if the growing of crops or the rearing of animal cannot be done at a profit, the farmer is better off not bothering with it, and either putting his land down to corn, or simply keeping it neat and tidy and doing something else to earn a living. Beef and lamb production wasn’t profitable, even before the floods and foot and mouth. After these latest set-backs, even more livestock farmers – especially in the hills and uplands, where cattle and sheep are so important to the environment and the economy – will be wondering whether it is worth soldiering on.

To that extent, this summer’s double whammy could not have come a worse time. On the other hand, if it focuses the minds of the livestock farmer’s processor and retailer customers on the threats to a sustainable supply chain and the need to do something about them before it’s too late; it might just prove to be a blessing in disguise.

Anthony Gibson is Communications Director of the National Farmers’ Union (NFU)