Sunday, November 19, 2017

Fighting for food and farming

January 3, 2017 by  
Filed under Clodhopper

Town and country face similar challenges in 2017, says Clodhopper.

The festive season is always a time for reflection. And with the New Year here already, the winter months give us farmers time to look back – and more importantly forward.

In the run-up to Christmas, chancellor Philip Hammond used his autumn statement to tell MPs that Brexit would force the government to borrow £122bn more than hoped – even though the economy had performed well since the referendum.

Our national debt is colossal. If these figures belonged to a public company, the share price would drop like a stone. The company’s directors would fall on their swords, pushed by angry shareholders.

But these figures belong to Britain – a country that has lived beyond its means since at least the start of the second world war. Austerity is about living within our means. Fast forward to the 2017 agricultural year and farmers are faced with their own war – again.

We have uncertain promises on subsidy payments and mounting problems with endless paperwork. Combine this with uncertain commodity prices and adds up to a familiar farming story. Farmers are used to uncertainty in business and the rest of the country must learn to catch up.

Down-trodden

Let us consider the words: living within our means. In simple terms, as my dad used to say, we must base our financial calculations on what we earn now, not what we might get or what we think we should earn from farming if everything is in our favour.

Our industry has long been downtrodden with restrictions on lending. Major banks frequently fail to support British farming – not only by making lending more difficult but by appointing bank managers who are no longer allowed to manage.

Many local bank managers have been stripped of powers to authorise bank lending. Instead, decisions are made by credit controllers who possess little understanding of agriculture. As a result, the farming industry is propped up, like the country, by rising debt.

Bigger farms – like big companies – can maintain debt by outside investments and low interest rates. But the average family farm struggles along. It is hard to keep for us to keep our head above water when low prices mean combinable crops must be sold at below the cost of production.

Old-fashioned accounting

Yet the family farm can also suffer from old-fashioned accounting in so much as important decisions regarding profit and loss can sometimes become overlooked by sentiment and farmers who look back rather than forward.

It often takes an outsider or independent financial adviser to sit the farming family down and diplomatically read the riot act. It is never easy to tell an ageing parent or a bone idle brother or sister that they must reduce their outgoings or find alternative employment.

But the modern farm has to look forward. Most of us have reduced our costs as much as possible – and many of us have looked into every conceivable form of alternative income. Yet it is still proving difficult to stay afloat.

In many ways, the modern family farm is like Theresa May’s government. They both know they will require all their skill and strength to guide themselves through the forthcoming years. And from a farming view point, even if Brexit had not reared its head, trouble was heading our way.

The National Trust wants all subsidies scrapped and replaced by environmental payments. Instead, the charity and other conservationists want farmers paid only for environmental services such as wildlife and nature protection.

I am sure it is not farmers who are the sole blame for a declining number of wildlife species in this country. But the subsidy system is certainly flawed and expensive. The biggest farms receive the biggest cheques but they often do the least for the environment.

The points raised by the National Trust certainly seem far reaching. Change is difficult to manage and implement. But post-Brexit, taxpayers who have up until now remained relatively quiet, may be similarly unwilling to provide farmers with a subsidy payment for every acre farmed.

Quite who decides, on a farm-by-farm basis, which farms deliver the most public benefits is a tough call. Rewarding the most environmental friendly with the most subsidies creates its own problems – not least because the sole purpose of a farm was and still should be to produce food.

Destabilise competitiveness

Farming within environmental boundaries does not always produce good crops and good returns. To destabilise British agriculture with a radical change to the subsid system could also destabilise the competitiveness of UK agriculture and its ability to produce food.

Many people want food to remain cheap. But I dare not put the word cheap in front of food. I believe people must be prepared to dig deeper into their pockets. It is certainly true that all the ingredients mentioned above may not produce food cheaply for much longer.

In conclusion, I think the farmer’s life in 2017 will once again be turbulent. But optimism must prevail. Living within our means must come first but we should can also look forward to better returns – for the coming 12 months if not longer.

If our own house is in order, then we have every chance of running a successful business. Let’s hope Theresa May and Philip Hammond are singing from the same hymn sheet in Westminster. Happy New Year!

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