Sense of optimism in the air

A general air of optimism has returned to farming after five fairly difficult years, according to a raft of commentators.An upbeat Charles Whitaker, of Norwich-based property and business consultants Brown & Co, said: "New opportunities exist for the region's arable farmers if they look hard enough.

A general air of optimism has returned to farming after

five fairly difficult years, according to a raft of commentators.

An upbeat Charles Whitaker, of Norwich-based property and business consultants Brown & Co, said: "New opportunities exist for the region's arable farmers if they look hard enough.

"For the first time in several years cereal growers can lock into prices above the cost of production. Wheat prices are £25 per tonne higher than last year and autumn feed wheat is trading in the mid-£80s."


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Next year, an estimated three million tonnes of wheat will feed biofuel plants planned for the eastern counties - that's roughly

the equivalent of the UK's exportable surplus.

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However, Mr Whitaker sounded one note of caution: "What goes up can come down, and visa versa.

"Farmers can expect to see greater volatility, and with this comes increased risk - but also increased reward. How they manage this risk will be critical."

David Douglas, head of rural business at Clydesdale Bank, said farming's prospects had definitely improved in the past 12 months.

He added: "Progress on beef exports, biofuels and the Single Farm Payment (SFP) head a healthy list of 2006 positives. This has helped towards a general improve-ment in a number of commodity sectors, the clear exception being dairying."

But he added that building on the advances of 2006 would continue to be a demanding process, particularly for those in charge of agriculture businesses whether at individual farm level or on a national scale.

Bob Pitt, Lloyds TSB's regional agricultural manager for East Anglia North, said: "There is a feeling of increased confidence in a number of areas. Cereal prices, driven by poor harvest in some key production areas in the world, strong demand from China and India and the burgeoning bio-fuels industry, are looking firm.

"With exports back on the agenda and increasing interest in local and regional food, more opportunities for profitable sales are showing in the beef and sheep markets. Only dairy farming remains in the doldrums."

Mr Whitaker warned there was no room for complacency despite the general air of optimism.

Farmers would face greater crop competition, with the potential for set-aside to disappear in 2008/2009, so there was a real risk of cropping areas increasing.

"Farmers are also battling rising costs - around £40/acre over the last five years - equating to £10-£15/tonne on every tonne of grain," warned Mr Whitaker.

"Farmers need to improve profitability not just for business stability but to provide a sensible return on capital and for reinvestment."

Between 2000 and 2005 the average arable net farm income in England was just £13,000.

Clydedale's Mr Douglas said: "While 2006 has clearly been a year of improving prospects, the really positive message for today lies in the future and what agriculture's business leaders might achieve in

2007.

"That's the year that really counts now, and I think we're well placed to keep making progress."

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