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Farmers struggle to keep their heads above water

Scottish farmers are struggling to cope with the aftermath of an incredibly wet summer and extreme volatility in the prices they receive for their produce and pay for their inputs.

The anger expressed by UK dairy farmers at the poor prices they were receiving for their milk during the summer was well-publicised in the national press. While they have received several price increases in recent months, many of the less-efficient are still getting less than the cost of production.

It's much the same for other milk producers throughout the rest of the EU, and that prompted about 2000 dairy farmers to stage angry protests in Brussels at the beginning of last week.

Along with about 1000 tractors, they blockaded parts of the city and sprayed the European Parliament buildings, and some officials, with milk through powerful hoses.

Whether their protests are as effective as their British counterparts remains to be seen, but at least it let those participating vent their anger at the politicians.

The wet summer forced cattle farmers to house their beasts earlier than usual to avoid poaching pasture – that's where heavy hooves trample wet grassland into a sea of mud – and dairy farmers in particular had a much shorter grazing season than usual.

Not surprisingly, winter fodder is of poor quality, becoming scarce and very expensive to buy. There is also anecdotal evidence that cattle have been less fertile as a result of the poor breeding season and there appears to be more barren cows than usual.

Arable farmers also fared badly, and this year's harvest has been one of the most difficult and expensive in living memory.

Yields were well down, quality of grain was much poorer, costs of drying were higher than usual and some crops remain unharvested. Worse still, sodden land has prevented farmers from sowing all of next year's crops.

Those crops that have been planted may well fail due to waterlogging, disease and pests like slugs.

It's been much the same for farmers who grow fruit and vegetables. The Potato Council revealed last week that potato production in GB this year, at an estimated 4.56 million tonnes, is 25% lower than last year and the worst potato harvest since the 1976 drought.

Sheep fetched lower prices at the autumn sales, and while cattle prices have been at record levels recently, few of those who breed beef cattle are making profits. The fundamental problem is that everyone is being squeezed between higher costs and inadequate returns from the marketplace.

Worst affected by this squeeze are livestock farmers who are having to cope with higher feed prices as a result of poorer harvests around the world – be it due to the wet conditions in GB or drought elsewhere.

Pig and poultry producers, where feed can account for between 60% and 70% of the cost of production, are particularly hard hit.

Many economists are predicting that farm profits in GB may have levelled off and could be set to fall over the next few years.

Farming follows slightly different rules from the rest of the economy. Agriculture is generally slower than the rest of the economy to go into recession, but once it does, it is often much slower to recover.

Because food is a necessity, we all have to keep on buying it. So when a recession hits, and folk lose their jobs or find their incomes squeezed, they carry on buying food – albeit cheaper goods or at discounts.

Unfortunately, when the economy begins to pick up again, they are slow to readjust their spending habits and loosen the purse strings again.

Sadly, as we move out of recession, the cost of the inputs that farmers buy like fuel, fertilisers and machinery, as well as wages start to rise faster than the prices they receive for their produce.

Signs of the economy picking up again are few and far between, but optimists are beginning to see some hints of the green shoots of recovery.

Unfortunately, I believe farming in general is now going into recession. It also seems inevitable that the current round of negotiations on the future EU budget will leave many European farmers receiving lower subsidies from Brussels in the future. I hope I am wrong, but I suspect average farmers, across the different sectors of the industry, are going to have to tighten their belts and suffer a few years of losses, or non-existent profits.

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Contextual targeting label: 
Agriculture

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