Milk price optimism as production shrinks

In the last two years we have seen milk prices slump to unsustainably low levels for many farmers because world markets became oversupplied.  However, it appears supply and demand are now coming back into balance as dairy farmers cut production.

Here in the UK dairy farmers have probably reacted to this problem more actively than in many other parts of the world.  This is exemplified by the latest Agriculture and Horticulture Development Board dairy milk production figures which show milk production in the first two weeks of July was down 10.2 per cent on last year.

In the same period the number of producers in England and Wales has fallen by 239 but that only represents a drop of 2.4 per cent.  Therefore, assuming these producers were representative of the average dairy farmer, this indicates that the cut in production has been across the whole industry, including many farmers who intend remaining in production. 

I suspect the reason is that many farmers have cut back on feeding expensive concentrates in favour of maximising production from fodder, a cheaper form of production which generally gives lower yields.

As a consequence supply has tightened and in the UK in particular this has also been exacerbated by the fall in value of sterling following Brexit which is making imports more expensive.  Accordingly milk prices appear to be on the rise as demonstrated by recent announcements from dairy companies such as Dairy Crest and First Milk.

This is most welcome news for dairy farmers, although even after the latest milk price rises many will still be struggling to make a living - especially because the fall of sterling is a double edged sword which is likely to force up many input costs such as fuel and fertiliser.

However, I am hopeful that the tide has now turned in the milk production cycle, which will mean dairy farmers can expect to see a period of growth in commodity prices. 

Of course that will probably also mean food price inflation in the shops which is something the government will not want to see just at a time of interest rate cuts and more quantitative easing. 

But the long term consequences of our exit from the EU is quite another story of potential opportunity and risk which has yet to unfold.

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

Wear sunscreen

The NHS “Cover Up, Mate” message particularly applies to farmers here in the West Country.
It is a rough, tough industry but workers who spend long periods of time outdoors are urged to protect themselves against the sun this summer because of the dramatic increase in skin cancer across the south of England.

Farmers, builders, sportsmen and gardeners are all being targeted by NHS England South’s Cover Up, Mate campaign because of their prolonged exposure to the sun – and men are a particular focus because research indicates that they are much less likely than women to slap on the sunscreen.

Latest statistics from Cancer Research UK show that since the late 1970s, skin cancer incidence rates have more than quadrupled in Britain. The increase is larger in the male population where rates have increased by 544 per cent, compared to 263 per cent in women.

Public Health England say that in the South West there was a 31.9 per cent rise in incidence of malignant melanoma between 2009 and 2014, from 1,444 cases to 1,906 cases. There was also a 14.5 per cent rise in mortality from malignant melanoma, from 248 deaths in 2009 to 284 deaths in 2014.

NHS England South West medical director Caroline Gamlin said: “Being outdoors is clearly crucial for farmers, builders, gardeners, Post Office workers and others, but there are simple steps can be taken to lower the risk of skin cancer and be sun safe.

“Men in particular need to take much more care. They need to use at least factor 15 sunscreen and apply it generously on all exposed skin – not forgetting their necks, ears and bald patches.”

National Farmers Union South West Regional Board chairman, James Small, who farms on Mendip, said: “Working in the rough, tough world of farming, we often want to brush things off and just get on with the job, but there are times when that kind of resilience can come back and bite you and this is one of those.

“We owe it to ourselves and our families to take the risk of skin cancer seriously and above all if we are bothered by something to not dismiss it, but get it checked out.”

Top sun safe tips include:
•    Use at least factor 15 sunscreen in the sun and plenty of it

•    Apply sunscreen to all exposed skin – don’t forget your neck and ears and your head if you have thinning or no hair

•    Wear sunglasses and a hat

•    Take particular care if have fair skin, moles or freckles, red or fair hair, or light-coloured eyes.

So as harvest is just getting under way and hopefully the sun will be shining throughout the rest of the summer, farmers here in the South West need to take heed of this health hazard and I for one will be dusting off my hat to cover my head where the skin appears to be relentlessly healing over my hair.

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

A future for small family farms in the UK?

Is there a future for small family farms in the UK?  That is the subject of a report commissioned by the Prince’s Countryside Fund and the answer appears to be yes for some but life will continue to be tough for all.

One of the questions we need to address first is whether the survival of such farms really matters. Certainly advocates of small family farms make a strong case for the positive contribution they make in local communities and the environment.

The report explains that the relationship between farm size and the environmental and social benefits they may bring to the countryside is highly complex.  As a result, in some instances where farm size, farm type and the farmer’s attitude and behaviour all interact favourably, this can result in a very positive role for small farms  - but by implication this is not always the case. 

The report also highlighted how complicated it is to even define what a “small family farm” is because the term encompasses a whole range of structures from retirement holdings, lifestyle farms, part-time farms to “main living farms” and because of this variety there will be a range of futures for the different types.

The report recognises there is not necessarily a future for all small family farms and explains that there are powerful economic forces driving change in farm size and structure - and little can be done about this. However, the report does say there are initiatives that can improve the resilience of a small farm.

These include the need to improve farm management skills and performance through targeted and co-ordinated advice and training, some of which should be provided by farmers themselves, mentoring others to improve their skills.

Other important challenges include finding ways to shorten the supply chain so farmers can gain a larger share of the value of the end product, which is particularly important for small farms where there are limited opportunities to take advantage of economies of scale.

Also, there should be initiatives to encourage new entrants and this raises a whole variety of issues surrounding succession planning and helping older farmers to retire with dignity.

Overall the report highlighted there is no “one size fits all” answer to the challenges that face the huge diversity of small farm businesses dotted around the countryside. 

However, what was also clear is that these farms provide a very important role in the structure of our agriculture and wider rural communities whose loss would be a huge detriment to Britain.   

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