It seems almost incredible after the wet year we have just experienced to be calling for rain, but that is in fact what is needed. After last year’s wet weather many farmers were simply unable to access land to plant autumn crops and so they were desperate for the rain to stop. Therefore, farmers were pleased to find conditions became drier in March and April which enabled many to plant spring crops.
However, the dry weather has been accompanied by strong, drying winds which were initially also bitterly cold and although recently it has warmed up a little the wind in particular has dried the surface of the soil too much which is making it difficult for crops to thrive. The rain we have had in the last week or so will be welcome but the return to low temperatures and strong winds will not be helpful.
Many readers will probably say that farmers are always complaining about the weather, but in the last few years I think they have had ample reason to do so and I just can’t help wondering whether we are beginning to experience the first real evidence of climate change. The unpredictable and extreme conditions, going from drought to flood and hot to cold as we have seen in recent years is exactly what climate scientists have been predicting would happen.
I suspect the problem is that it will only be in hindsight that we will be able to say for certain whether what we are experiencing now is the start of climate change. However, what is for certain is that the unpredictable and extreme weather patterns we have experienced in recent years pose a real challenge for farmers to produce food. This is of concern to farmers here in mid-Somerset whose profitability will undoubtedly be affected but it is also of concern at a global level which is one of the reasons why reducing carbon dioxide emissions is on the political agenda.
As a consequence we are now seeing solar parks springing up around the countryside as the government drives policies forward to subsidise renewable energy projects. Yet we also here talk of the potential of fracking here in Mendip where natural gas may be extracted from the rocks beneath our local landscape which if burned will presumably contribute further to climate change.
It seems to me that a comprehensive energy and food policy is required. For example it would be ironic in the extreme to find renewable energy projects on the surface, removing good agricultural land from production and at the same time find gas being extracted from the rocks beneath which will ultimately release more carbon dioxide in to the atmosphere. This just does not seem to make sense – but then when government gets involved with subsidising farming, renewable energy projects or conservation measures this very often seems to result in contradictory policies and unintended consequences.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
The misery which bovine tuberculosis (BTB) brings to the British farming industry continues unabated and latest figures released indicate that the disease problem is getting worse rather than better despite increased bio-security measures which have been introduced in an attempt to control the disease.
Last week Defra released the most up to date figures which showed that 3,215 cattle were slaughtered in January alone, which was a 24.2% increase on the number slaughtered in the previous January. Indeed in total 186,664 cattle have been slaughtered in the Great Britain since 1st January 2008 of which 37,754 were slaughtered in 2012 as compared to 34,245 in 2011.
At a local level matters are also getting worse. This has been brought home to me in recent weeks in particular as I have visited a number of dairy farms in mid-Somerset who are suffering serious problems as a result of the disease.
Some farms may only have experienced a low number of reactors and so although they may have only had one or two cattle lost to the disease, the consequential losses in terms of restriction on the movement and sale of cattle can be very serious. This is a particular problem for dairy farmers where many may have relied on selling calves at a young age but find themselves having to hold on to these animals, in many cases being forced to house and rear them for 2 years or more.
This obviously puts a huge strain on resources, whether it is labour needed to help rear the extra cattle, buildings in which to house the cattle or simply cash required to pay for the above and the extra feed and bedding which may also be required.
These problems are compounded when a significant number of cattle are taken from a herd and again it is dairy farmers who face the most difficult challenges. This is because although farmers are compensated for the animal which is lost, there is no compensation available for the consequential losses. Thus if a dairy cow is lost, although compensation will be received for the cow, this will not be enough to purchase a similar replacement animal and nor will there be compensation for the loss in milk production until the cow can be replaced.
It is estimated the cost to a farmer of an average BTB breakdown is around £12,000 and where a significant number of cows are lost this will be considerably more. So it is no wonder farmers are so desperate to see action taken to reduce the incidence of this devastating disease and although it is appreciated that culling badgers will not be a panacea it is seen as one of the weapons which will have to be introduced if this disease is to be brought under control.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
Last Wednesday saw over 100 farmers flock to the Bath and West Showground on a cold and wet evening to attend a seminar presented by Old Mill Accountants, Barclays Bank and Carter Jonas.
Oliver McEntyre of Barclays Bank spoke about the cost of funding, why banking margins have changed, how banks look at a funding proposals and the importance of producing a business plan and budgets when applying for extra funding from any bank.
I then presented a round up on farmland prices and recent trends in agricultural rents while my colleague Thomas Ireland gave a presentation on current planning issues. In this context he highlighted one or two very important recent developments, including the announcement earlier this year by central government that it is intended permitted development rights are to be relaxed in certain circumstances. Most notably this may give farmers the opportunity to change the use of an office building to a house without the need to make a formal planning application.
Anne Gardner Thorpe of Old Mill then spoke on the importance of tax planning in the context of Capital Taxes and Mike Butler, Old Mill’s Senior Partner, spoke about other tax issues including the advantages of a company structure as opposed to a partnership where income tax is concerned.
He went on to highlight that following the budget, which had taken place earlier in the day, the advantages of a company structure had become even more obvious as the government had signalled their intention to reduce Corporation Tax to 20% for all companies. However he also noted there were one or two less helpful announcements.
In particular, he explained there is an anti-avoidance provision which was announced that could significantly increase farmers’ exposure to an Inheritance Tax (IHT) charge. Mike warned, “Most agricultural or business assets qualify for Inheritance Tax relief to protect against the break-up of farms upon death. For many years it has been sensible to secure borrowing against assets that don’t qualify for this relief, which effectively reduces their value on death, and hence lowers the IHT burden.”
However, from July, it appears that this will no longer be possible, as borrowings will first be offset against assets that do qualify for Agricultural or Business Property Relief, potentially leading to huge increases in IHT.
To take everyone’s mind off such unpleasant thoughts, the evening then ended with a wholesome supper of cottage pie which was enjoyed by all before the attendees left, hopefully with food for thought as well as food in their bellies.
James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells
T: 01749 683381
E: james.stephen@carterjonas.co.uk
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
