Farmers facing ruin as incomes fall sharply

LARGE numbers of farmers could be facing financial ruin as they pay the price of rising costs, disease and persistent poor weather, experts have warned.

Sheep in the snow in County Durham
Sheep in the snow in County Durham

LARGE numbers of farmers could be facing financial ruin as they pay the price of rising costs, disease and persistent poor weather, experts have warned.

The average upland grazing farm earned only £14,000 in the past year, half what it would have brought in a year ago, according to the latest government figures.

Pig farming, which would have earned an average income of £83,000 three years ago, now pays only £19,000.

Farm incomes have fallen sharply over the past year, according to the Farm Business Survey published by the Department for the Environment, Food and Rural Affairs (Defra).

Dairy farmers lost around 40% of their revenue last year, amid conflict with processors and supermarkets over milk prices.

The single payment for 2012/13 was on average 10% lower than the previous year due to the pound strengthening against the euro.

Analysts say that low food and drink prices, the rising cost of animal feed and the resurgence of Schmallenberg disease could threaten hundreds of farmers with bankruptcy.

Phil Bicknell, chief economist of the National Farmers Union (NFU), said he estimated that the weather had cost British farming £1.3bn.

He also underlined the importance of the Common Agricultural Policy (CAP) to the farming industry.

“The figures make sobering reading but will be no surprise for many in the industry,” he said. “Wheat yield and quality were hit by the weather, while it’s been well documented that rising costs outstripped farmgate price changes for dairy and pork producers at times over the last year. More recently, we can add the plummeting lamb price to the list of challenges.

“The weather caused chaos across the board and has laid bare the importance of CAP payments. With profits squeezed, a larger number of farmers will again be forced to rely on CAP’s direct payments to underpin their business in the year ahead.

“Falling farm income data shatters the myth that high commodity prices would mean high profits. Farmers cannot produce at little or no profit indefinitely; they need to turn a profit and they need to re-invest.

“These figures should be a wake-up call for us all. Managing risk and volatility are key and that must be recognised by both the government in its CAP negotiations and in pricing decisions taken by the food chain.”

Livestock producers are among the hardest hit, with a double whammy of higher feed costs and an increased feed use hitting margins.

Another concern is disease. The Schmallenberg virus, which causes still-births and deformities in sheep and cattle and was first found in Britain last January, has infected more than a thousand farms .

A Defra spokesperson said: “The extremely wet weather in 2012 has been a severe blow to British farmers.

“Where possible, the Government relaxed some restrictions on farmers and we’re also supporting farmers in a number of ways to help them become as resilient and profitable as possible.

“This includes cutting unnecessary red tape, opening up new food export markets, spending more than £400m on agricultural science and fighting for reform of the Common Agricultural Policy to put farming on a firm footing.”


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