Yet more evidence has recently come to light concerning the affect last year’s terrible weather had on farming. This time it is milk production which has come in to focus following figures produced by DairyCo, which is a not-for-profit organisation, funded by a levy taken from dairy farmers with the aim of providing British dairy farmers with the up to date information they need to manage their businesses profitably.
DairyCo’s, latest report concerned milk production which showed milk deliveries in the UK were down by 5.3% in January compared to the previous year. This bucks the European trend where milk production was marginally up but just goes to reinforce the impact last year’s weather had on our farmers in particular.
The problems our farmers faced were obvious. After one of the driest winter’s on record the rain started in April and did not let up for the rest of the year with this area being very badly affected in particular. The Somerset Levels, which in dry years is often the envy of those farming on the side lands of the Mendip Hills where the grass “burns up”, found itself under water and in some places the flood has now persisted for months.
The argument as to who is responsible for this flooding is a topic of hot debate with the Environment Agency (EA) being accused of not de-silting the main rivers and thereby contributing to the problem. The EA admits they have not been cleaning out the rivers but whether budgets will allow regular or extensive dredging to take place in the future remains to be seen. It may be that farmers and landowners will have to take back some of this responsibility going forward but a clear policy has yet to be agreed upon.
Obviously for those whose land has been under water for months, the impact of the weather has been devastating but even in drier areas the grass just did not grow properly. The quality of both grazing grass and that which was made in to silage was poor and as a result milk yields are down. This has been compounded by the cost of supplementary feeds such as soya or rape meal which have been extremely high and so many farmers simply could not afford to supplement the poor quality grazing and winter silage with higher quality feed.
It is appreciated everyone is probably bored of hearing farmers complaining about the weather but anyone who grows vegetables in their garden will have more than a passing sympathy with the farming community. Indeed I have heard a number of gardeners say that last year was one of the worst year’s they can remember and that they were glad they did not have to make a living out of what they had grown - but unfortunately farmers do.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
I cannot let this week’s column pass without the mention of horsemeat. It is clear the revelations concerning the contamination of a whole variety of processed beef products with horsemeat has taken many food producers, retailers and politicians totally by surprise. Indeed I think this is a “wake up call” for us all in that I suspect very few people knew the complexity of the supply chain which leaves huge scope for errors or deliberate fraud.
This is particularly frustrating for UK farmers who, following the BSE crisis are subject to the strictest rules regarding cattle traceability. I suspect most people would be amazed by the level of detail farmers have to go to registering every calf born with a unique identification number and then recording the movement of an individual animal every time it moves on and off a farm until it is eventually slaughtered. As a consequence it is possible to trace exactly where every bovine animal in the UK was born and where it has moved throughout its life – far more detail than we would have on humans.
Thus it seems almost incredible that although traceability has been maintained from the calving shed to the abattoir, something seems to have gone very badly wrong in getting certain products to the shop shelf. This will inevitably result in mistrust of the meat industry by consumers but I hope there will be a, or perhaps a number of silver linings to this particular cloud.
First, retailers and meat processors must realise that they now need to take a much higher degree of responsibility for managing the supply chain. Horsemeat is obviously a problem but if the contamination had had a serious public health dimension, the apparent lack of traceability and controls within the supply chain would have caused even more problems.
My hope is that retailers and processors will look to shorten the supply chain to manageable levels where traceability and quality will become the driving force. Our farmers have had to absorb the costs involved in the introduction of the British Cattle Movement Service following the BSE crisis and it is hoped they may now be able to reap the just rewards for the quality assurance this brings, which is something that it seems cannot be said for many products sourced from abroad.
The second potential silver lining is that I hope consumers will increasingly look to buy meat locally from known and trusted sources. This is a trend which is already happening but food scares such this must surely be a very good reason to support your local butcher and to encourage all our supermarkets to source meat from the UK where the traceability and quality of the product is assured.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
Last week Natural England announced that the Catchment Sensitive Farming Scheme will open for a short period from March 1st to 30th April 2013. For the first time this will include a large part of Somerset which has been identified as one of the 79 priority catchment areas nationwide.
Many farmers in mid Somerset will now fall within the Somerset Levels and Moors catchment area and will be able to make an application for a capital grant to help with funding more than 40 different project types. These include installing water troughs and tracks, roofs over manure and silage stores, fencing works to keep livestock away from streams, and pesticide handling facilities.
The aim of the scheme is to help farmers and land managers tackle diffuse pollution into water courses. Applicants can claim up to £10,000 from a national pot of £15.5 million, with no minimum claim. The scheme will pay up to 50% of the actual costs of approved capital works.
My experience of this grant scheme in the past is that it involves a relatively straightforward application process and can provide very real and practical benefits for the both farmers and the environment.
Farmers who have not had grants in previous years or have received less than £2,000 and those who already have an active agri-environment scheme agreement, such as Entry or Higher Level Stewardship, will receive priority.
It is clear that funds are in limited supply and so if anyone is minded to make an application they should make preparations as soon as possible because 1st March is not far away and it is likely to be the “early bird that catches the worm” in this instance.
Details of the Capital Grant Scheme funding priorities for 2013/14 can be found at www.naturalengland.org.uk with a map showing catchments and target areas. Alternatively for more information on the scheme and the eligible catchment areas please call Jennifer Towill at Carter Jonas, Wells office on 01749 677667.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
DEFRA released its provisional figures for the 2012/13 farm incomes which make sobering, although not altogether surprising reading. They demonstrate that despite relatively high commodity prices, the bad weather and high input prices have had a negative impact on farm incomes across the board.
The least badly affected have been arable farmers, who despite the wet weather, difficult harvest, low yields and poor quality crop, have only seen incomes fall by an estimated 11% in England. The reason they have fared relatively well is because of the high commodity prices on the world markets; it could have been an altogether different story if the rest of the world had had a good harvest.
The dairy sector had another difficult year with profits estimated to be down by approximately 42% while the livestock sector fared even worse with profits down 44%. This latter drop is probably in part due to the recent crash in lamb prices which means many farmers are receiving between £20 and £30 less per head for lambs this year as compared to last. This is a reflection of the increased level of New Zealand lamb imports as well as falling exports to continental Europe. However, with the pound weakening against the Euro in recent weeks there may be some hope for our export trade.
If one turns these percentages in to pounds and pence this means the average income of arable, dairy and livestock farmers throughout England was £84,000, £50,000 and £18,000 respectively. These figures are averages and I suspect the arable income in this area will be lower than the average because farms here in mid Somerset are generally smaller than they are as one goes east.
However, the figures for the dairy and livestock sectors are probably more representative of what is happening in this area and although at £50,000, the income for a dairy farm may look reasonable one has to remember this very often has to support at least two households, cutting the income to around the average wage. This of course then does not leave much spare income for re-investment which will be a big problem in the long term. In the case of the livestock sector the average income is significantly lower than the average wage which brings in to focus the importance of the support payments that livestock farmers in particular receive from Europe via the Common Agricultural Policy (CAP).
The whole of the CAP is under review at present and our politicians in general favour the abolition of such support payments but they should pay heed of the fact that without them, many livestock farmers simply could not exist. That is perhaps not a reason to maintain the payments in their current format but before politicians call for their complete withdrawal they must also assess the impact such an action would have one certain sectors of the UK farming industry.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
Will Mooney Carter Jonas partner and head of its commercial agency and professional services in the eastern region, is on tank patrol
Think tanks parked on the lawn
Will Mooney, Carter Jonas partner and head of its commercial agency and professional services in the eastern region, is on tank patrol
Two recent reports have reinforced the value of think tanks to those of us charged with the day-to-day nitty gritty of bringing-in the deals.
The first, published at the end of last year, is Lord Heseltine’s 'No stone unturned in the pursuit of growth' which, in as much as one person who is a former defence secretary can be a ‘think tank’, looks at the crucial role the UK regions and our metropolitan cities - other than London -could play in kick starting nationwide growth.
The second was published just at the end of January by the Centre for Cities, which is an independent think tank, although is does have the support of the Local Government Association.
Now, at the risk of sounding like an A-level essay question: Using your regional business experience, compare and contrast these two reports.
To take Lord Heseltine’s first, then. It’s got gravitas. It’s published under the auspices of the Department for Business, Innovation & Skills and Lord Heseltine has got form for getting things done in the regions. Those of us interested in such matters back in the 1980s are unlikely to forget the image of Tarzan – Lord’ Heseltine’s sobriquet at that time- striding across the abandoned post-industrial landscape and docksides of Liverpool ahead of national policies which help revitalise those and other deeply-urban areas of the country, including London’s docklands.
However, even at the time of its publication, there was word that the report might get kicked in to the long grass, politically. And Lord Heseltine admitted that he was unsure as to how many of his 89 points, laid out over 228 pages would be picked up and acted upon by central government.
Getting things done is what we all want. Who, in business, wouldn’t wish for a handbook in which 89 ideas were clearly mapped out in a compelling vision of how to make things better and give us more of a leg-up than the good kicking we might feel we’ve had for, coming up to, five years?
While not a handbook, I see the Centre for Cities annual report, Cities Outlook 2013 as being of much more use, operationally.
In drawing together and examining data for English cities, it highlights elements and trends which are of particular interest to those in business in the development and property-related sectors. And it’s no surprise that you don’t have to drill too far down in to the data to see the significance of this region of the country to the growth agenda.
For instance, in the decade between 2001 and 2011, the top five fastest-growing cities by population were, in rank order from first to fifth, Milton Keynes, Peterborough, Swindon, Ipswich and Cambridge.
Cambridge features frequently in the report and not always in the way you might think.
It has, as a city, by far and away the most number of patents approved per 100,000 residents – with Oxford in fourth position, by the way, below Edinburgh.
In the league table of 10 cities with the highest business stock per 10,000 population – here, business ‘stocks’ means the number of businesses as opposed to property units – Cambridge is in eighth position.
.
Yet, it is in the lower tier – position 61 – when it comes to cities with the lowest proportion of private sector employment, sandwiched between Swansea and Dundee. Pardon?
On face value, this seems at odds with the orthodox thinking about Cambridge but when I thought about it for a moment, it became apparent. Two of the biggest employers in the city are in the public sector: the University and Addenbrooke’s Hospital.
Thinking is not only for those in think tanks.
Lord Heseltine is one of the political jungle’s big beasts with big, sweeping policy ideas in the report on which we are relying on the jungle’s other inhabitants to act before it’s of use to us.
The Centre for Cities report is rigorous and useful. Driven by data, the Cities Outlook 2013’s authors put housebuilding at the centre of national recovery and tips the cities that can bring in growth quickly. Cambridge is one of these.
Will Mooney MRICS
Partner
Commercial, Cambridge
I have recently read a thought provoking booklet entitled “Farming’s Value to Society” which was published with the support of Bristol based solicitors, Burges Salmon, the RSPB and Volac, a dairy nutrition and supply company. The report was produced to provide information for this year’s Oxford Farming Conference which took place in early January and was themed “Confident Farmers Delivering for Society”.
The booklet covers a reasonably complex subject although what was clear to me was that farmers and “society” are probably better placed now than at any time in the last 50 years to work together positively to achieve benefits for all.
To understand how the relationship between farmers and society has developed in recent times one probably has to look back to the end of the Second World War when large parts of Europe were literally starving. At that stage society was acutely aware of the importance of farming and the need to produce as much food as possible. Farmers responded to the financial incentives put in place by politicians and massively increased food production but at a cost.
As a result, by the 1970s and 1980s, society began to question whether the benefits of increased food production were worth the cost of disappearing hedgerows, falling bird populations, increasing pollution and animal welfare issues. Many also began to question the need for subsidies being paid to farmers via the Common Agricultural Policy which reached the ultimate in madness when farmers were paid to take land out of production in order to reduce overproduction.
However, in the last decade or so, the growing concern about climate change and population growth has brought the importance of food production back in to focus. Also, politicians, particularly in this country, have realised that if society is to continue supporting farmers financially, then they need to see a return that goes beyond just producing more food. As a consequence there has been and will continue to be an increasing shift in the emphasis of subsidy away from food production towards the delivery of environmental benefits.
Thus after a period of outright hostility in parts of society towards farming I believe we are witnessing a shift in thinking; society, although largely disconnected from the day to day activity of farming, now realises the importance of farming both for the food produced and the landscape we live in. Many conservation organisations realise that to preserve our wildlife, those working the land also need to be able to make a profit, but equally farmers need to realise they cannot ignore society’s concerns about some of the less palatable results of agricultural intensification.
What is clear to me is that now, more than any time in the last 40 years, there is an opportunity for farmers to re-connect with the wider general public. This may be done through a variety of means such as the provision of local provenance food through farm shops, hosting farm open days for the public, welcoming schools for educational visits, providing demonstrations at shows or embracing agri-environmental schemes. But what is important is that that these connections are made and strengthened because this will be to the benefit of farmers and the society in the long term.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
Having had a few reasonably good years, it seems that the last 12 months have seen a bit of reversal in fortunes for farmers as evidenced by the fact that farm borrowing has increased by 9% in the year to last October. Latest figures released by the Bank of England show that total lending to agriculture rose to £13.5bn, which is £1bn higher than in October 2011.
This is no surprise in that although some of the increase will be for capital investment, a significant amount will simply be to fund working capital requirements as a result of increased input costs and in some cases the reduced value of outputs. The weather has obviously been a factor affecting the value of arable crops in particular while sheep farmers are suffering very low lamb prices at present which is something I touched upon in last week’s article.
However, what farmers need to appreciate is that although they have been looked upon reasonably favourably by banks since the banking crisis in 2008, this may not last forever. In general farmers have benefitted from a dramatic increase in the capital value of their land over the last 5 or 6 years and at the same time most have seen their profits rise, certainly as compared to the very difficult years they experienced in the early 2000s.
Consequently banks have looked upon agriculture as one of the safer places to lend money in recent years, but as the wider recession continues and banks are forced to hold higher cash reserves this will make them even more careful about who they lend money to. In this context farmers need to be aware that the next time they ask their bank to extend their overdraft or to take out a new loan, the answer may be “no”.
Thus, farmers who think they may need to borrow more money should examine their finances carefully to ensure their business plan stands up to scrutiny because it is better to approach the bank with a considered plan rather than just to assume that if more money is required it will be forthcoming.
There will of course be some cases where the bank will simply not support any more borrowing and in these circumstances farmers may need to seek professional advice to see whether the borrowing can be re-structured or assets sold to bring the borrowing down to acceptable levels without impacting too severely on the ongoing business. However in some circumstances the only answer may be to sell up altogether, taking advantage of the high value of agricultural land. This is obviously the last thing most farmers want to do but I fear this may become an increasingly common situation as profits are squeezed thereby leaving the more vulnerable businesses in a precarious position.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
