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Farming’s financial woes could hit the wider economy

08:07 30 January 2016

A farmer ploughing his field near Aylsham. PHOTO: ANTONY KELLY

A farmer ploughing his field near Aylsham. PHOTO: ANTONY KELLY

Archant Norfolk 2014

The most complex agricultural recession in a generation could take its heaviest toll on East Anglia’s youngest farmers – and the many ancillary industries which rely on the region’s food chain.

The stark warning was issued by farming leaders after the release of a government report outlining a bleak economic outlook across many key sectors.

Defra’s Farm Business Income forecasts for 2015/16 are derived from information on prices, animal populations, marketing, crop areas, yields and input costs.

After two years of bumper harvests and ideal growing conditions, a global over-supply has forced prices downwards for most commodities, with a particularly harsh impact in the dairy and pig industries.

The report shows income for cereal farms dropping by 24pc compared to 2014/15, general cropping down 17pc, pig farms down 46pc and dairy down 45pc.

Industry leaders said the financial woes are not limited to the farming community – they will knock on into an extended food chain estimated to be worth £3.5bn to the Norfolk and Suffolk economy. And the deepest damage could be felt by farming’s youngest generation.

Tony Bambridge, managing director of contract arable farmers and seed potato producers B&C Farming in Marsham, near Aylsham, is also the National Farmers’ Union council delegate for Norfolk.

He said: “It is very seldom that everything is as low as it is now at the same time. Some of it is of our own making.

“Three years back the harvests were not so good, world stocks were deemed to be critical and everyone talked about the world having nine billion mouths to feed – so we had to crank it up. The industry worldwide took these signals and succeeded in increasing production. We have all done such a wonderful job as farmers in producing very good crops and so we have produced more than is needed.

“Agriculture is cash poor but asset rich. Farm borrowing has gone up to an all-time high as they try to maintain their business. We are borrowing more but we are in a fortunate position that we are able to borrow on the collateral value of our land. If there are going to be casualties it will be new businesses and young people who are renting land and don’t have that collateral behind them to extend their borrowing.

“We also need to understand the impact on other businesses. Farming is just one part of the food industry. It is the primary producer, but if it is struggling every other aspect will struggle as well.

Ken Proctor, a dairy farmer at Shipdham near Dereham and former NFU Norfolk chairman, said continuing delays to the payment of Basic Payment Scheme (BPS) subsidies had exacerbated the cashflow problems.

“The report is pretty gloomy reading,” he said. “The long and short of it is there is too much stuff on the market. Stocks are at an all-time high, there is no money in the markets and that is almost the perfect storm. Until the output is lowered, the prices won’t come back.

“It is very much hand-to-mouth out there. The Basic Payment Scheme has been somewhat held up, and without that it is pretty obvious a lot of farmers won’t survive. It is survival of the fittest, and that is a horrible thing to say.

“I am 58 and I have never seen a situation where every commodity was depressed, with the exception of white meat and eggs. The whole agricultural industry is really in a depressed state. But it is not just the farmers that will suffer. There are lot of other companies, whether that’s concrete companies, building companies, machinery suppliers, or general maintenance... the farmers will have no money in their pockets to pay for these people. So this is not just isolated to farmers.

“The really sad thing is the youngsters in the industry, the people who should be moulding the industry and going forward. They have got a massive challenge to survive.”

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7 comments

  • cathartis: is that this one? Google Boosting food crop yields 'can protect biodiversity' I noted on the Sunday Politics that Defra do not have a contingency plan in place if Blighty opts for Brexit: is that that wise? is it good governance?

    Report this comment

    martin wallis

    Monday, February 1, 2016

  • well they can always put one of the range rovers on e-bay for a few quid

    Report this comment

    ted

    Sunday, January 31, 2016

  • This is an interesting report concerning farming profitability and land use:................. http:www.bbc.co.uknewsscience-environment-35427741 ......................The measures it proposes are interesting, but it's hard to believe there will be enough concerted action to make them effective. The alternative future is very frightening, but looks inevitable.

    Report this comment

    catharthis

    Sunday, January 31, 2016

  • The utility of a measure such as 'average' farm income by sector is not clear to me: surely individual farm business incomes vary considerably, depending not least upon the scale of operation, the mix of enterprises, the level of indebtedness, the ratio of land ownedrented... how many farmers have got all their eggs (or milch coos, or tatties...) in one basket? very few, I'd guess. "... we are in a fortunate position that we are able to borrow on the collateral value of our land.". Fortunate indeed! "... The Basic Payment Scheme has been somewhat held up, and without that it is pretty obvious a lot of farmers won’t survive". Farming without subsidies from the taxpayer would be unthinkable! What happens if Blighty opts for Brexit? Stewart Agnew MEP (UKIP) will be a happy chappie... he's a poultry farmer: £145,000 per farm on average! and 8% up on 201414. FG HOB is alluding, I think, to the old saw... "yew never see a farmer on a bicycle". MOST of the world's farmers - ekeing out a subsistence in Africa, Asia and Latin America - would be grateful to own a bicycle!!! In this country we're now whingeing about China 'dumping' steel on the EU market at below the costs of production. EU farmers have been dumping surpluses on the world markets at below the costs of production for decades... Ooops... did I just hear the sound of a 12 bore being loaded :-)

    Report this comment

    martin wallis

    Saturday, January 30, 2016

  • well it doesn`t matter earlier this week we were told the dualled A11 will bring all sorts of tech companies, only another few hundred million in council bribes to these tech companies and we will not have any fields left.

    Report this comment

    kevin a

    Saturday, January 30, 2016

  • The headline is over-egging things somewhat. According to Norfolk County Council only 2.4% of the county's population work in agriculture (or did in 2011 when they last checked) http:www.norfolkinsight.org.ukdataviewstabular?viewId=198&geoId=15&subsetId= . Perhaps our farmers should look at diversification in order to protect their incomes, they own large tracts of land that could be also used for many other purposes, leisure and sporting, that can generate a great deal of income. Many around here just let out their land for a shoot and get very little from it, whereas other sports and events can bring in tens of thousands.

    Report this comment

    john smith

    Saturday, January 30, 2016

  • On the other hand, will sales of bikes rocket?

    Report this comment

    F G HOB

    Saturday, January 30, 2016

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