DEFRA must get a grip on this payments shambles

Defra secretary Liz Truss must deal with the shambles that is the Rural Payments Agency and make it fit for purpose.

As the deadline for submission of 2016 Basic Payment Scheme applications has passed it has become clear that although the new online application system has been reasonably effective where all the field information is correct, there are significant problems where errors have occurred over last year’s claim. 

Consequently some farmers have still to receive any payments from last year and many of those who have received payments have been given the wrong sum.

Most of the problems seem to stem back to the fact that for one reason or another land parcels do not seem to have been properly connected to the farmers who claimed against them in 2015.  This may be because the Rural Payments Agency has not yet processed the many land changes which were notified to them almost a year ago, or because of human error or technical glitch.

Whatever the reason, the result is that some farmers have had to submit this year’s claim based on information submitted last year but not updated on the RPA’s online mapping system, which is going to compound the problem in processing this year’s claims. 

Also many farmers are having to submit their claim partly online and partly on paper where the land is not shown properly on the digital plans.  I can only imagine the chaos this will cause trying to re-unite these two parts of the same claim.

This leaves many farmers feeling vulnerable to problems that may arise as a result of errors that should have been addressed last year but which may now have a hangover effect on this year’s claim as well. 

I hope that if errors from last year affect this year’s claim through no fault of the applicant, the RPA will take a pragmatic view and just get on and sort out the problems without penalising the farmer. Sadly there is no guarantee this will happen. 

In the past it was often “heads we win” and “tails you lose” as far as such problems are concerned.

It is also clear that a lot of errors have occurred in relation to the number of BPS entitlements held by farmers. 

To make a successful claim a farmer needs to match one entitlement with one hectare of eligible land.  However, my experience is that following last year’s claim a significant minority of farmers have found that the number of entitlements they have been paid on is less than the number of hectares they declared in 2015 and in turn the number of entitlements carried forward into 2016 has been similarly reduced.

This is a double whammy as these farmers have not only had their 2015 claim reduced but they are in danger of being paid less going forward in 2016 and beyond unless the original problem can be rectified.

These are just a few of the many examples of problems and glitches which have ocurred in the new online system for which one can obtain no logical explanation from the RPA.  They now have their work cut out to sort out the many problems that remain from 2015 before the 2016 payment window opens on December 1, which must seem worryingly close already for those in the RPA responsible for making the BPS system work.   

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Farmers' income and the effects on the commodity markets

As farmers’ incomes slump the big question is how long it will be before enough of them - at home and abroad - reduce or cease production to rebalance the commodity markets.

This will surely happen at some stage and result in incomes rising to previous levels, but understandably most farmers are hoping it will be their neighbour and not themselves who will be first to give up.

DEFRA has released its first estimate of what it calls the UK’s Total Income from Farming for 2015. The TIFF figures represent the profit produced by farmers and it is not surprising that 2015 witnessed the most dramatic year on year fall since the turn of the century when farming was in the depths of an agricultural recession.

The report explains that in real terms the TIFF dropped by 29 per cent from 2014 to 2015 which in monetary terms means a fall of more than £1.5bn to just under £3.8bn.  This huge fall is reflected in the TIFF for an individual farmer which slid to just under £19,500 a year.

The primary driver behind these figures is the slump in world commodity prices.  This has been well reported and it is probably no surprise that the dairy sector has fared worst, with the value of milk produced falling by £940m despite a 2.6 per cent increase in production.  However other sectors also suffered with the value of wheat for example dropping by £432m.

And as the overall economy strengthened, so too did the value of sterling which had a detrimental impact on exchange rate for the conversion of agricultural support payments from euros into pounds.  This resulted in a fall in the value of EU support payments of £150m.

On a brighter note, some of these losses were offset partly by the fall in value of energy costs and livestock feed which are estimated to have dropped by £215m and £201m respectively while the value of fertilisers fell by £114m.

The weather was also good resulting in excellent growing conditions which yielded a bumper harvest in 2015 with huge quantities of grass and other fodder crops also grown.  But this is in part why commodity prices have fallen because such good growing conditions have contributed to increasing world stocks of food and therefore depressed prices.  

So, although from an individual farmer’s perspective it is great to see one’s own crops yielding well and cows producing more milk, this exacerbates the imbalance in supply and demand and until the supply side of this equation falls, there is unlikely to be a significant increase in commodity prices any time soon. 

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

DEFRA and red tape

It seems hard to credit that farmers were until recently banned from carrying out simple maintenance of ditches without applying to the Environment Agency for consent.

This is an example of the ridiculous red tape that can be imposed without understanding the consequences and I welcome the news that DEFRA secretary Liz Truss has seen the error of this crazy policy.

As a result farmers across England can now undertake low-level work on their own land without needing to seek EA consent. DEFRA recognised the paperwork was an unnecessary burden on farmers and this would allow the EA to focus their efforts on wider strategic flood-risk management.

The exemption only applies to man-made ditches, land drains, agricultural drains and previously straightened watercourses but it does not apply to natural rivers.  This will be particularly welcome on the Somerset Levels where the maintenance of ditches is vital to the farming systems.

The new flood risk activity permits allow farmers to dredge and maintain ditches up to 1.5km long without needing to fill out extensive forms.

Liz Truss said the government wanted to ensure farmers had the right conditions to thrive, which would include providing them with the means to protect their land from flooding.

“That is why we are cutting red tape for our hard-working farmers,” she said, “reducing flood risk and allowing them to do low-level maintenance work without unnecessary paperwork.”

DEFRA are keen to emphasise that this empowers local people with the best knowledge of local risks of flooding to clear waterways themselves.

However, strong safeguards will still be put in place to limit the impact of some activities – for example protecting Sites of Special Scientific Interest and spawning fish.

The move to relax the rules follows successful pilot schemes run over the last couple of years which showed that farmers and landowners can carry out this work in an environmentally sensitive way.

So we have a sensible relaxation of unnecessary red tape destined to achieve very little for anyone and no doubt the EA do not have the staff to enforce such rules.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Defra's updated version of its Farm Business Income

Defra has published an updated version of its Farm Business Income (FBI) estimates for the 2014-15 year which shows that 60 per cent of cereal farms failed to make a profit if income from EU support payments and other diversified income is excluded.

This not only demonstrates the challenges facing farmers in light of the fall in commodity prices but it also demonstrates the importance of diversified income streams without which many farms will struggle to survive. And here the widening digital divide is becoming an increasing problem.

For example when contemplating the conversion of farm buildings to offices, one of the most important features to consider is whether it is possible to provide access to broadband. This is even beginning to impact on the letting of some residential properties on rural estates I manage here in the South West.

Anyone living and working in Wells, as I do, will be all too familiar with the inadequacy of our digital infrastructure and mobile phone reception, but there is hope that these inadequacies will eventually be remedied.  However, in more remote rural areas there may be very little hope of ever being connected via the existing infrastructure.

As a result of this widespread rural problem the Country Land and Business Association (CLA) has submitted written evidence to an inquiry by the Business, Innovation and Skills Select Committee on the digital economy. 

The CLA noted that the government has put significant emphasis on how digital technology can increase productivity in our economy and, in their evidence, highlighted the appetite in rural areas to use new technologies.  However, the CLA raised worries about how the lack of connectivity in rural areas is contributing to the ever widening rural-urban digital divide.

This is becoming a big problem for all businesses in the countryside, not least farmers who are increasingly being required to submit information electronically such as registering cattle identification and movement information or VAT returns and these requirements are only going to increase.

Failure to address this digital divide will result in farmers and other rural communities becoming increasingly isolated from the wider economy, which is a serious concern for the future of the countryside.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Small number of applications for the CSS have been confirmed

Natural England have confirmed that only 2,314 applications for new Mid-Tier Countryside Stewardship Scheme (CSS) were received by the deadline of September 30. This is a disappointing figure and raises concerns that many farmers in agri-environment schemes will now simply withdraw their land when the existing scheme ends.  

Also, because the new scheme is competitive I expect a significant number of applications will be turned down.  

This is perhaps no surprise as the existing scheme which included the “broad and shallow” Entry Level Scheme (ELS) was easy to enter and critics would say it delivered little in environmental gain. However, it did get many farmers and landowners involved in agri-environment schemes to the extent that around 70 per cent of English agricultural land is covered by some form of environmental scheme and this must have delivered some environmental benefit.

But, as funds have got tighter, the demands of the new CSS have increased and it appears they have risen to such a level that they have discouraged many farmers from even applying.  This is despite the difficult economic situation facing many of them.  

It seems the new scheme has either been designed to discourage all but the best applicants or it has been “over-engineered” - making the application and delivery of the scheme too onerous and expensive for most farmers.  My guess is that it is a bit of both but we know for certain that many farmers and landowners will not be entering the new scheme when their existing one expires.

As a result, the Country Land and Business Association (CLA) is calling for comprehensive revision of the scheme for next year.

CLA president Henry Robinson said: “Landowners and farmers want to protect and improve the environment, and we want the new Countryside Stewardship Scheme to succeed. However the chaos of the new scheme’s introduction and the complexity of its requirements have put land managers off participating next year.

“We have been warning the government for months, but they failed to take the swift and decisive action that was required to salvage the scheme. England’s natural environment and wildlife will pay the price. This is a big step backwards in our efforts to improve the environmental management of our landscapes.

“Defra must now enter into open discussion with land managers to ensure that next year’s scheme is much improved both in terms of being viable for applicants and also delivering the best environmental benefits.”

However, it remains to be seen whether Defra will listen to such calls or whether attracting only limited numbers of committed farmers and landowners is the purpose behind the new Countryside Stewardship Scheme. 


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

The farmer protests in Brussels

The farmer protests in Brussels remind us that the problems facing our dairy industry are EU-wide. Indeed they are worldwide as supply is outpacing demand.  

This is bad news for everyone other than the consumer but ironically, at least in this country, I suspect many shoppers would be happy to pay more for their milk if this helps our dairy farmers survive.

However, with supermarkets facing fierce competition they are desperately trying to attract more customers into their shops and a price war on milk has been one of their battle grounds. 

Some movement has been seen in recent weeks with various supermarkets agreeing to pay more for liquid milk and milk being made into their own brands of cheese. But this still leaves many of our dairy farmers producing milk at less than the cost of production which cannot last for long before farmers are forced to quit the industry.

It is the impact these prices have on an individual farmer’s cash flow which is crippling those who do not have sufficient financial resources to survive a downturn such as this.  

That is why the EU has agreed to make 500m euros available for dairy farmers across Europe to help relieve this cash flow crisis.  It is likely this will translate in to around £29m in the UK but my fear is that we will now enter a prolonged argument as to how this money should be allocated with the result that by the time it is eventually paid, it may be too late for some businesses.

When such payments have been made in the past they have usually come on a flat rate basis to every farmer which makes it easier to get the money out quickly.  However, because there is such a broad range of milk prices being paid to dairy farmers I believe this money should be focussed on those receiving the lower milk prices.

Such decisions, and the mechanism for payment need to be agreed quickly and I urge government ministers in DEFRA to focus their efforts on getting this money out as soon as possible. 

They must also continue to fight EU bureaucrats to relax the rules and allow the new Basic Payment Scheme funds to be released as early as possible in England where it is currently feared technical checks may hold up payments when farmers are struggling across all sectors, not just the dairy industry.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

£8 million is now available for rural businesses looking to expand and promote tourism

Farming Minister George Eustice says another £8 million is now available from the Growth Programme for rural businesses looking to expand and promote tourism.  

Hopefully this new funding will help unlock the potential in farming businesses across the country, but understanding how to access the money does not seem straightforward.

The Growth Programme provides grants to aid projects in England which create jobs and help the rural economy grow. They are funded by the European Agricultural Fund for Rural Development (EAFRD).  The Rural Payments Agency manages the grants, working with Local Enterprise Partnerships (LEPs).

However, the LEPs are not well equipped to manage the process of handling these funds.  In the past similar grant schemes have been various handled centrally by DEFRA and then by the Regional Development Agencies (RDAs) and following their demise in 2010, by the newly created LEPs.  

LEPs are a rather strange invention of the last government which simply scrapped the old RDAs for ideological reasons and then left it to local authorities and businesses to set up their own LEPs.  This has proved a difficult task and now these bodies are being tasked with coordinating the delivery of funds such as the EAFRD which will prove a big challenge. 

Having looked at the website for the Heart of the South West, which is the LEP covering Somerset and Devon, there is no obvious reference to this latest tranche of funding although in the August newsletter, rural businesses are signposted to the LEADER scheme that is described as “one element of the Rural Development Programme for England, funded by the EU and Defra. 

“There is in the region of £12 million of funding available for projects that meet the eligibility criteria throughout most of rural Devon and Somerset, and the funding is available until December 2020.

“Grants will be available to support the local rural economy, and will be particularly aimed at increasing farm productivity, developing micro and small enterprises and farm diversification, rural tourism, rural services, cultural and heritage activity and increasing forestry productivity.”

The funding is being administered by eight Local Action Groups (LAGs), each covering a specific area and focused on the things that matter most to their local economies. For Somerset you are directed to contact www.somersetleader.org.uk which covers the LAGs for Western Somerset; the Heart of Wessex; parts of Making It Local; and the Levels and Moors. 

So, if you are a Somerset farming business interested in getting hold of some of this funding I suggest that in the first instance you contact the Somerset LEADER scheme in the hope they will have some idea about how you can access them.


James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Distant mandarins of DEFRA

The distant mandarins of DEFRA are building a reputation for incompetence.

The flagship Countryside Stewardship Scheme (CSS) opened for applications on July 1, but it came as no surprise to farmers who have endured the introduction of the new Basic Payment Scheme that DEFRA failed to publish the full terms and conditions of the scheme, leaving potential applicants in limbo.

The CSS replaces the existing Entry Level and Higher Level Environmental Stewardship schemes which have closed to new entrants. However, there is now less money available so the new scheme will be competitive, unlike its predecessors.

Statements of Priorities have been drawn up that cover all of England and applicants to the scheme need to choose options and capital items that meet the environmental priorities for their geographical area. As the scheme is competitive, applications are scored and agreements offered on the basis of meeting the environmental priorities applicable to the area where the applicant’s land is located.

The CSS comprises three core elements:

• Mid Tier – this will be open to any farmer to make an application and if successful they will be offered a five-year agreement

• Higher Tier – this is predominantly an invitation led application process for “environmentally significant sites” where more complex management is required. Again these agreements are likely to be for five years

• Capital Grants – these are one to two year grants which focussed on work being carried out on field boundaries, projects leading to water quality improvement, small scale woodland creation, etc.

Natural England had already identified a number of potential applicants for the Higher Tier scheme and they were invited to complete an “expression of interest” form online by June 30, but that date slipped with the deadline put back to July 15.

With this sort of incompetence surrounding the new flagship environmental scheme I wonder whether the September 30 deadline for submission of applications will also have to be postponed if the terms and conditions of the scheme are not published very soon.

This lack of clarity has prompted the NFU to warn farmers and other potential applicants against formally committing to the CSS before they know just what they are signing up to.

So yet again we are witnessing the chaotic introduction of a new EU-funded scheme where high level decisions have been made which seem almost impossible to implement on the ground within the timescales set by Whitehall mandarins.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Does farming still appeal to young people?

A government survey has confirmed my view that farming does not appeal to young people with no family background in the industry.

DEFRA announced last week the results of their annual Farm Business Survey which began to collect data about farm business succession arrangements in 2013/14. The survey gathers information from a sample of around 1,900 farmers on the financial position and physical and economic performance of farm businesses in England.

The data is then weighted to represent all farm businesses that have an output of at least 25,000 euros a year. There are about 58,000 such businesses in England.

The key findings of this first survey on succession are:

• Just over a third (37 per cent) of farm businesses had a nominated successor and unsurprisingly the vast majority of these businesses will continue within the family.
• Of the other business that responded, 29 per cent said it was too early in family or business circumstances to answer who would become the nominated successor. This response was most common for farmers under 40 years of age which can hardly be surprising as they probably have only just succeeded their father.
• A further 27 per cent of farm businesses said they had no nominated successor. This response was most likely for spare and part-time farms and for sole traders.
• Only six per cent of the nominated successors would be new to farming.

This latter finding is perhaps the most telling and one that politicians and farm leaders need to heed. Whenever I go to talks where government ministers or policy makers are present, there always seems to be emphasis on how to get “new entrants” in to farming.

This is largely pie in the sky and although it is perfectly possible for college leavers to become farm workers or farm managers, I think the chances of a person who does not come from a farming background, becoming a full-time farmer in their own right is slim and the results of this survey bear this out.

I am not saying that there is no chance of a new entrant developing a career in agriculture, but building up an owner occupied or even tenanted farming business in one’s own right is very difficult unless one has the resources of an existing farming business behind you or the availability of a lot of capital from outside farming.

Perhaps the emphasis should be more on how to ensure the next generation of successors to our existing farming businesses are best trained and equipped to tackle the economic challenges that lie ahead, rather than encouraging new entrants to enter a world where in reality the opportunities in mainstream farming are contracting rather than expanding.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Who is an “active farmer”?

Well that is a question that has been vexing a number of “farmers” for some time because under the new Basic Payment Scheme (BPS), it is only “active farmers” that will be eligible to receive EU support payments from 2015 onwards.

Up until now the definition of an active farmer has not been entirely clear and as a result there has been concern that for example, those farmers who have successfully diversified may no longer qualify as an active farmer even if they are clearly still farming in a reasonably significant manner.

However, what we have known for some time is that there is a “negative list” of non agricultural activities that will not qualify which are as follows:

• airports
• railways
• waterworks
• permanent sport and recreational grounds
• real estate services

The first four categories seem reasonably straightforward but the fifth category has always caused concern, not least because no one understood what “real estate services” really meant. But now things have become clearer following DEFRA’s latest publication on the subject.

We now know that ‘operating a real estate service’, applies to professional property developers, real estate agencies and people managing real estate on a fee or contract basis.

However, what is perhaps of more importance to farmers is that renting out accommodation facilities on a farm, apartments or homes that are in a farmer’s private property for housing purposes, parts of buildings or surfaces on the holding and agricultural land to third parties will not count as real estate services. This should cover many potential diversification activities.

But, in addition farmers who operate any of the 5 non-agricultural activities may still qualify as active farmers if they meet one of 3 ‘re-admission criteria’ which are as follows:

- The farmer’s annual payments for the Single Payment Scheme or BPS (including the greening payment and any young farmer payments) are at least 5% of their total non-agricultural receipts in the most recent financial year

- The farmer’s total agricultural receipts are at least 40% of their total receipts in the most recent financial year

- The farmer has at least 36 hectares of eligible land

So it seems that after all this uncertainty and confusion, the simplest way to ensure you will always qualify as an active farmer is to farm at least 36 hectares or 89 acres. Why 36 hectares is deemed to be the magic number goodness only knows; it is just yet another of those bizarre interpretations of EU legislation but at least it will mean “active farmers” now know where they stand.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Quietly confident about the introduction of the BPS

DEFRA has recently published its latest update on the CAP reform rules which surround the introduction of the new Basic Payment Scheme (BPS) next year.

It is ironic that farmers are being urged by DEFRA not to delay registering themselves for the new Basic Payment Scheme (BPS), and yet the registration rollout programme itself has been delayed. With the memories of the disastrous introduction of the Single Payment Scheme (SPS) back in 2005 still heavily imprinted on the mind of most farmers and land agents, one hopes the current delay is not a portent of things to come.

However, a DEFRA spokesman has commented, “We have learned a lot of lessons from the past. What happened in 2005 is still in everyone’s mind – but that is not going to happen again”. Indeed having met a number of the senior Rural Payments Agency team myself earlier in the year, I genuinely think they have a much better grasp of what is required than was the case back in 2005.

Therefore I am quietly confident that the introduction of the BPS will go better than its predecessor scheme, but equally farmers should not underestimate the time that may be required getting registered on the new system and then learning how to use the online mapping tools and the new application process.

The most important initial step will be for farmers and land agents to verify their identity on line. This will involve logging on to the Gov.uk Verify website where your identity will be verified by one of five third-party identity assurance providers.

In order to do this farmers will be asked a number of questions about their personal circumstances and finances and to make this process go smoothly you will need either a current driver’s licence or passport and details of at least two of the following; bank account/credit card, personal loan or mortgage, gas or electricity bill, mobile phone contract or voter registration information.

It is understood that if you have all the necessary information to hand the registration process can be relatively simple and will only take 10 minutes or so but if not you will be directed to a telephone helpline and in extremis you will be able to contact a digital support centre, the nearest of which in this area is currently in Exeter.

However, unlike when the SPS was introduced in 2005, DEFRA has recognised the importance of the professional advisors who for many years have played a vital role in assisting farmers complete their application forms. Thus, with everything now having to be submitted online, DEFRA is encouraging professionals, such as land agents like myself, to help farmers get set up for the new digital era which is upon us whether we like it or not.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

Latest update on the CAP reform

DEFRA has recently published its latest update on the CAP reform rules which surround the introduction of the new Basic Payment Scheme (BPS) next year.

There are still areas of uncertainty but the long awaited rules concerning hedges and how they can be used to contribute to a farmer’s “Ecological Focus Area” (EFA) requirement have been clarified.

Any farmer who has more than 15 hectares of arable land will have to “set aside” 5% of their arable land as an EFA. There are some exemptions to this rule for farmers with a high proportion of grass but if these exemptions do not apply farmers will have to incorporate the appropriate EFAs in to their farming system.

There are five different types of EFA:

1.Fallow land
2.Hedges
3.Buffer Strips
4.Catch crops and cover crops
5.Nitrogen fixing crop

It is the rules concerning hedges which have been exercising farmers’ minds in this area because they are an obvious ecological resource which many would like to use towards their EFA requirements and now the rules have been clarified in what appears to be a reasonably sensible manner.

Basically every metre length of hedge is to be regarded as providing 10 sqm of EFA and so farmers will need to measure the length of qualifying hedges on their land to calculate the deemed EFA area. But importantly DEFRA have also clarified the definition of what will be considered to be a hedge and which hedges will qualify as an EFA.

As far as the definition of a hedge is concerned, there are no maximum or minimum width or height limits but the hedge must be more than 20m long and there must be less than 2m from the ground to the lowest leaves. Gaps of up to 20m, including gateways are allowed in hedges.

However, not all hedges will qualify as an EFA. It is only those hedges which are on or adjacent to arable land in the farmer’s control that will qualify although hedges which are separated from the arable land by an ineligible feature under the BPS rules, such as a ditch of more than 2m wide or a hard track will not qualify. If the hedge is separated from the arable land by a fence only the hedge will qualify.

If the farmer is responsible for farming both sides of the hedge, even if one side is in permanent pasture, then the full 10 sqm per m length of hedge can be claimed but if the other side of the hedge is farmed by another farmer then only 5 sqm can be claimed. If the other side of the hedge is a road, the farmer can make a full claim.

Finally DEFRA had originally stated that using hedges to contribute to a farmer’s EFA requirements may result in a delay in the farmer receiving payment of the BPS in 2015. However, DEFRA have now said there may not be delays as they are looking into an ‘approach’ to prevent this. What this will be we do not know but it seems DEFRA are backtracking a little on their previous warning.

Therefore, although there is still plenty of work to be done before the first BPS claims can be made next year, some of the crucial detail is beginning to become clear.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk

News from the 'Beef Summit'

Last week saw DEFRA’s Farming Minister, George Eustice chair a so called “Beef Summit” with a view to dealing with the desperate situation the British Beef Industry finds itself in. In the last year beef prices have plummeted by around 20% which is posing very real problems to beef farmers, particularly those who “finish cattle”.

What is interesting to note here is that most farmers who finish cattle, purchase animals, called “store cattle”, from other farmers usually by auction at livestock markets. Here it is argued there is fair and open competition and thus the price paid represents the true open market value of the livestock purchased.

However, once the animals have been fattened they have to be sold to the dwindling number of abattoirs who in turn sell the majority of meat to the big supermarkets. It is this processor/retailer section of the food chain where the “market” becomes much less transparent. Thus many beef finishers are finding themselves having to compete for stock in the open market and then having to sell at “fixed” prices to abattoirs without any transparent competition in the system.

It was issues such as this that stimulated the beef summit where representatives from farming organisations, processors and retailers met in Westminster to discuss the problems facing beef farmers. The outcome of the meeting was that representatives from the farming unions and the British Meat Processors Association (BMPA) will meet over the summer to discuss a code to increase transparency.

The code will cover how trading terms, abattoir specifications and penalties are communicated to beef producers. This represents one of the areas of concern facing farmers but the retail sector is also another big issue where the perennial problem of clear labelling and fair pricing of meat is important.

Farmers appreciate that markets do go up and down but if supermarkets truly want to retain beef production in this country they need to work with the industry to give some certainty as to what prices are likely to do over a period of time.

To some extent supermarkets such as Waitrose are doing this and have recently announced that they will hold prices at no less than 345p/kg for their producers through to October. Tesco has also started a promotion of beef although from the advert I have seen includes British and Irish beef which illustrates the problem of labelling where nothing ever seems as transparent as it should be – will it be British or Irish beef that you actually have on your plate?

So it seems that although some progress has been made and that a code of conduct will be a good thing, there is a lot more still to be done before British beef farmers will feel they are at least being treated fairly by the processors and retailers that dominate the food chain “upstream” from the farm gate.

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk