Friday 29 May 2015

Wish there was something positive to say...

I wish there was something positive to say in the world of agriculture but today farmers are under pressure across all sectors.

This will undoubtedly put severe strain on some farming businesses where the squeeze on cash flow is going to be a problem in the coming months.

Wheat, milk and lamb prices are now down 32, 26 and 17 per cent respectively compared to this time last year.


Meanwhile, although finished beef cattle prices have only fallen by around five per cent, many beef rearing units are really struggling. This is because they rely on making a margin between the price of the young cattle they buy and the price of the finished product, but this spring they have found the price of young cattle has been very strong, leaving them badly exposed to potential losses if the finished beef price does not rise significantly.

The whole situation is further compounded by the Rural Payments Agency (RPA) making a pretty good hash of introducing the new Basic Payment Scheme (BPS) through which farmers receive support payments from the EU.


In the past farmers have become used to receiving these payments in early December but agricultural consultants Andersons are suggesting farmers should not budget to receive this year’s payment until March 2016.

In contrast the RPA chief executive Mark Grimshaw said he would be very disappointed if most claims under the BPS were not paid out by the end of January. Obviously the sooner such payments are made, the better, but even if payments are made by late January this will still be two months later than in the recent past which will put pressure on many businesses.

That is not to say all farmers are struggling and in the milk sector in particular some farmers are still on favourable contracts and are being paid a reasonable price for their milk. In these circumstances good profits can still be made but the gap between the best and the worst milk contracts has widened enormously with the result that some will be losing large sums of money very fast indeed.

However, excluding the lucky few, most farmers are experiencing very challenging times and with the pound remaining strong on the foreign exchange markets this is making our exports less competitive and imports comparatively cheap, which is not helping any of the agricultural produce prices in this country.

Farmers are set for challenging times ahead and at present there are no obvious bright spots on the horizon.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells

T: 01749 683381
E: james.stephen@carterjonas.co.uk

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