The Banks got too big to fail, and government is too bloated to diet

Each political party says public expenditure must be reduced, but nobody knows how or where to start. 

 Government is the biggest business in the UK. It employs more than half the workforce. Add in sub-contractors, businesses and organisations dependent on grants, subsidies and other public funds, and you have a huge part of the economy. None have any desire to be down-sized. The situation has gone way past the tipping point for serious government downsizing to happen. There are too many people 'on benefits'. Government is self-protective, and more interested in self preservation and enlargement than efficiency.
      Take agriculture -  government administration today is a significant proportion of the total expense needed to do the job of growing crops and raising livestock. We have a few front line staff driving tractors and combines being inspected, administered, measured, monitored by an army of people - not so different to the Health Service. Each of these inspectors is there for a good reason, and have been added piecemeal in response to legislation.
      The interesting question is - is this the fate other large organisations? Do supermarkets have an increasing army of back office staff - people checking that the people doing the work are doing it correctly? An army to supervise the suppliers, to deal with compliance in all its guises? 

Why a 1p / litre price reduction can cause real hardship to milk producers

A penny a litre doesn't seem like too much to make a fuss of, but in milk production today every penny counts. The cost of keeping cows rises, as tractor fuel gets more expensive, wages improve, rules and regulations get tougher.

For more than a decade farmers have been earning nothing from milking their cows. They have been living off the farmhouse B B they run, the mobile phone mast  on their land, the 4x4 circuit or paintball activities they've developed, the shooting rights or caravan site and off-farm earnings driving a lorry, or their wife, son and daughter going out to work. Plus their Single Farm Payment entitlement.

Cows are a habit, and a tradition which is hard to change. It's a long term, a life-time job for many in the business. It's very easy to become so absorbed with the job, which as everyone knows starts at around 5.00am every morning of the year, that the income is secondary to getting the bulk tank filled, cooled and ready for collection. Giving up the cows is life-changing - it's as hard as marriage break down. Selling up is a public admission of defeat, not a rational business decision. So farmers will keep plodding on, with hope in their heart that things will improve.

And, for a while, they did. Two years ago the numbers of dairymen throwing in the towel was becoming a worry to the people whose job it is to have milk on the shelves - the supermarkets. So some buyers decided it would be valuable to have specific contracts with individual farmers. If the supply got tight these farmers would allow the shelves to be stocked.

ASDA has been supplied by a dairy business called Arla (Arla Foods Milk Partnership) who collect, process and bottle ASDA milk throughout the country. The company is in some ways unusual in having a single supplier. Sainsbury, for example, uses both Robert Wiseman and Dairy Crest, and it is their flirtation with Arla which may have caused the present upset. While welcoming Arla as a supplier, Sainsbury reduced the business they did with Dairy Crest, who then are on the warpath for more contracts, and it is just possible they have got a foot in the door at ASDA at a price the supermarket could not refuse.

It's all fair in love and war, but the poor chap at the end of the chain, the man who is married to his cows and gets up at 5.00 every morning, is, as always, the loser.

What can be done? Milk contracts are fabulously skewed towards the buyer, despite the new regulations   www.farmideas.co.uk/newsdetailed.php?id=62  The free market might provide consumers with low cost milk at present, but only as long as farmers are prepared to do the job for nothing.

Maybe farmers should all be planning to create super dairy farms, like the 8,000 cow farm factory planned in Lincs.  There's little evidence to suggest that herds of this size really have the economies of scale to produce milk at much lower a cost than the smaller herds we have at present. Dairy farming in the UK is pretty efficient, by any standards. The one advantage the mega-farm has is in transport costs, which are out of the farmers control, but there some useful ways of improving this.

Let's hope we'll continue to see cows grazing the fields in the summer months, and have milk from British meadows on the shelves, rather than milk from Poland, Latvia and other countries.

Farm income comes from Brussels SFP payment

The new UK farming income figures have been released which shows the industry ticking over nicely at £4.07bn, or a satisfactory £21,000 a farmer. Macro figures like this matter, as global planners of economic policy in London, Brussels, Davos or New York can only grasp the headlines without rooting too deeply into the details. Which seems, from their news release, to be how DEFRA would like it to be. 

The TIFF (Total Income From Farming) figure has been broadened over the years to include any income that finds its way into a farmhouse, including B+B, industrial lets, mobile phone masts, and more - 'anything which cannot be separated from the agricultural business'. 

Take a fractionally deeper look at the £4bn and you'll see it includes a Single Farm Payment (SFP) payment of £3.6bn which comes from Brussels. Strip this payment, which is not seen or considered as a subsidy, but a reward for managing the glorious British countryside, and the income from actually producing crops and livestock looks meagre indeed. With less than half a million coming from actual farming, it's clear that many farmers are operating at a loss and would have been better off not farming but simply taking the SFP. The reasons for not simply packing up, selling the cows and doing as little as is compatible with getting the Farm Payments are not so complex. There's the omni-present optimism that the next year is the one where corners are turned and profits made. There's a lack of trust in politicians, who are the people sustaining the valuable payment, and a suspicion that it may be drastically reduced. There's also the long term nature of the business, which means that starting back in either livestock or even crops is something that takes not months, but often years.  

The official farm income figures contrast with the up-beat message from Defra ministers and indeed the farming unions themselves who have all subscribed to the call for increased production in order to feed the burgeoning world population which, as we all know, is due to reach 9 billion in a decades time. But would increasing production, getting more intensive, add to existing losses?

Slicing into costs can be a sustainable way of righting the profit-loss see-saw. Remembering that machinery makes up a high proportion of fixed costs, any efforts to reduce these can be financially very useful. So reducing the replacement of machinery and running older kit, modifying existing fixed equipment, adapting used and maybe redundant machinery are useful ways to reduce capital spending. Cutting inputs such as fertiliser, feed and others will generally have greater consequences on output. 

Review the latest cost cutting ideas here:  http://bit.ly/bYLHQD

Is the new supermarket code of practice whitewash?

The Supermarket Code of Practice comes in force today

Peter Kendall's performance on this morning's Today on Radio 4  was politically correct - but did he get to the real issue?  Farmers have become used to the measured tone of their President, but I'm not sure he cuts much ice with the public. This morning he totally left me, and I think, many others when talked about a "rotten time before Christmas, the frost has made life very difficult for us, we've lost money, we need you to help us make up the shortfall...". It was only on the third replay I realised that he was quoting the excuses buyers were making to reduce the price they were paying producers. People are used to hear farmers moaning about frost and losing money - not supermarkets! 
Applauding the new Code, Kendall said "We've moved back to proper commercial practices...". We need to wait and see. He failed to mention that many farmers and growers deal with co-ops, packers, and wholesalers. They are the ones who negotiate.  Are these small businesses really in a position to take their complaints to arbitration? It's very doubtful. They can't jeopardise a major customer, but the supermarket is quite able to cut them out of their plans.  If their Tesco buyer says the March price for potatoes will be down 10%, there's a 99% liklihood they simply pass the pain on the the man in the field. It's in nobody's interests to do otherrwise.

Representing the supermarkets, Andrew Opie was in complete denial about the need for the Code or any changes to the present system which he saw as completely satisfactory. He welcomed the new Code. "The really important thing about today, a really significant day, is that it will actually dispel lots of these myths and allegations that we hear around the supply chain. This is a really key moment, as it was drawn up by the Competition Commission after their own investigation into the grocery chain..."
Why should he be so bullish? Is he saying 'we're happy because we know the Code is going to have very limited effects, but will provide a valuable and effective smokescreen for the major buyers to continue much as before. Does he see the Code putting a lid on the issue of buyers' practices for the next decade?
There's a huge gap between the way supermarkets work and how the rest of us behave. I've reported it in some detail in Practical Farm Ideas (Vol 18, issue 4).
The article is headed 'Supermarket trading practices are 'big boys game' '.  It shows that buyers can be like the dealer who wants to buy your tractor. You ask £7,000. He takes a cursory look and says he'll take it for £5,500, lets you argue the toss, and you reluctantly agree £6,250. But he's not going to pay you this amount, (he never pays cash on the nail). He'll find undisclosed faults, either before but preferably after delivery, he'll tell you the value has dropped so will be revising his offer, he'll ask for money on account. The game for this buyer is to get the tractor for nothing, not pay you a fair price, a market price or even a trade price. The tractor dealer works from instinct, supermarket buyers are trained. The Practical Farm Ideas article is worth reading. It's the only mainstream farming magazine independent of the supply trade (all editorial, it carries no advertising)  from www.farmideas.co.uk
Contact Mike through editor@farmideas.co.uk
Each issue is 48 colour pages, 40 "Made it Myself" cost cutting workshop projects and practical ideas, financial and legal info..  all for £3.45 (UK)  available overseas.

Too many children get hurt

Children on UK farms are being put at needless risk through outdated legislation which prevents them from riding in the tractor cab, under supervision, so forcing parents to let them play, unsupervised, in the farm yard.

In ten years - 1998 - 2008 - 43 children and young people were killed on farms in the UK, and many more suffered injuries including amputations and serious burns, reported the HSE Agriculture expert Bernardine Cooney in 2008.


The problem needs to be addressed

She said "The messages from HSE about how to keep children safe on the farm don't change. While these tragedies are keenly felt by the families involved and throughout their local community, it is a national tragedy that they are still happening." She explains the current regulations are called Prevention of Accidents to Children in Agriculture 1998 (PACAR), and date back to duties to protect children under the Agriculture (Safety, Health and Welfare Provisions) Act 1956.


The Law needs to catch up

Farming practice and farm life have changed out of all recognition since 1956 and in many respects the law has failed to keep up. One of the main issues concerns children riding on tractors. Law makers and enforcers need to view the issue with fresh eyes. The reasons they give are that children can and do fall from cabs through doors that open accidentally, through rear windows and during emergencies. They say that when the driver leaves the cab children can work parking brakes and hydraulic controls, and they are a distraction to the driver at all times.

We believe the Law needs to look at the children who are excluded from the tractor. Having brought up four children on the farm,  I personally know how difficult it is to keep an eye on them and another on the job in hand - and this was some years ago so the tractors I used were smaller and had fewer blind spots. There's a constant worry of where they are playing. Are they close to a wheel, or behind an implement? In the summer, there's the anxiety that children are playing in the field, hiding from their friends or the tractor driver in the hay or straw swath? Ask many farming parent these questions and the answer is "I would prefer them in the cab with me. It's where farm youngsters want to be, and they'll behave because they don't want to be chucked out."


A thorough review needs to take place

Bernardine says: "Many of the deaths happened to younger children at work with their parents. They occurred as a consequence of work activity rather than the child doing the work themselves. The stark reason for this is simple: Children and young people are still being exposed to the same unmanaged hazards and risks."

Since 1994 Practical Farm Ideas has campaigned for a thorough review. We believe some major 'unmanaged hazards and risks' are there as a consequence of the current law. That if the laws were changed hazards and risks would be reduced.

Tragedy at Christmas

The tragic Christmas eve accident in the village of Bethlehem, Carmarthenshire involving 6 year old Dafydd Bowen, who was killed by his father's tractor, is yet another tragedy caused by the outdated safety laws which prohibit children from tractor cabs.  The strictly enforced regulations are as outdated as hand signalling when driving a car. Cars have indicators and for the past 20 years tractors have had safe, enclosed cabs which are impossible to fall off or out of, and many have passenger seats actually fitted as well. A six-year old can be safely and comfortably accommodated in any tractor cab, and is in no greater danger than in a car.

It is in fact these very cabs which create large blind spots around each wheel. These blind areas are of less concern when doing field work, but create major danger areas when the tractor is used in the yard, feeding livestock, moving bales and so on. This is the time when children are much safer in the cab than running around outside, but I believe that they are safer in the cab at almost all times.

For the past 15 years Practical Farm Ideas magazine has been running a lone campaign to get the law changed, so farmers can have children out of danger, in the cab. A proportion risk prosecution and do what they know is sensible, but many more are law abiding and each day take the risk that their youngster will be in the wrong place at the wrong time.

Legislators and safety experts are blind to real farming conditions, and still seem unable to appreciate how different farms are to other industrial units. It's highly likely that many inspectors realise the   The farmhouse and farmyard and buildings are frequently together, unseparated, in one block. Children have a natural inclination to become involved. Work is seven days a week.

Official safety advice has a high negative content. Practical Farm Ideas, being run by a farmer (now retired) who brought up four children, focusses on positive advice, accessed through www.farmideas.co.uk  Download this report


Send your comments, whether supporting or opposing these views, in confidence to me.Email me from here

Send me your pesticide issues

Open Meeting for Government Advisory Committee on Pesticides

I'm going to this 'Open' meeting and am willing to raise concerns and issues from farmers. The meeting is this next Monday, 9 November, in York, (entry by ticket).

My reason is to see if the Committee is aware of CDA, controlled droplet spraying. Readers of Practical Farm Ideas will remember I featured this in the Summer issue "Is Controlled Droplet Spraying Buried Technology?" The savings in chemical, water, and road travel through using this advanced form of droplet generation, perfected by Lely in the late 1970s and early 80s seems of even greater use today than when it was first pioneered.

If anyone wants to submit other issues re pesticides, please do so. Maybe the controls on specific chemicals; regulations regarding use... all would be interesting. It is unclear how much time there will be for discussion, but I am in the workshop session:
• Integrated Pest Management and its contribution to sustainable agriculture.

If you email me directly editor@farmideas.co.uk this would be best/

Why I'd never run a children's farm

With another group of children hit by E Coli, farmers considering the business of entertaining the public using the animals on their farms need to think again


Once again, farming makes the headlines as visiting children get severely ill. Godstone Farm was apparently entertaining up to 2,000 people a day over the school holidays, which at a total spend per child of maybe £8 makes the job a good earner. There are, however, a great many costs over and above those of running an ordinary farm.
Apart from the cost of swings, slides, climbing frames, climb on tractors and trains, mazes, basket swings, zip slides, tobaggon runs there are the necessary huge variety of animals - rare breed (commercials won't do) cows and pigs, poultry and ponies, chipmunks, donkeys, guinea pigs and llamas.
There are tearooms, shops, toilets, kiosks, and dedicated tractors and trailers to take visitors for rides. The whole operation needs supervising and this means minimum wage staff with all the problems of commitment, skills and ability.
On top of this the business costs a fortune to insure, more to market, and transforms a farm into entertainment. People skills, not much needed with cows and crops, reign supreme. Marketing attracts families living in totally sanitised environments, with no experience of dirt and children who have zilch resistance to the kind of disease which our farm kids just shrug off. You'll have 'Worried-Well' parents on the look-out for problems and others out to make a claim.

The big risks of disease
Overlayed on all this is the spectre of disease such as the E.Coli at Godstone farm which has put 10 children 'seriously ill' in hospital, 36 confirmed cases -as of Sept 14- and a comment from the ubiquitous Professor Hugh Pennington (one of Britain's leading microbiologists) that the consequences of the bug can be catastrophic. Yet he declared the cause a puzzle. Distressed parents have gone through hell with very sick children in hospital, and up to 20,000 others, unaffected so far, have had cause to worry.
So what's the children's farm all about? The educational value is entirely limited to 'touchy-feely'. It's partly a substitute for a family pet, which for many families is impossible.
The alternative to animals is providing mechanical adventures, such as roller-coasters and other rides, and Farm IDEAS magazine has described many of these. Machines require maintenance and supervision, but the dangers are contained and calculable. Accidents involve a limited number of people.
Operators of childrens farms have some difficult hurdles ahead. Ideally, they will want to separate visitors from animals, yet this is a major part of their marketing effort:

Here are some excerpts from childrens farm websites: - We offer animal petting / handling - Activities vary according to the season and may include duck, pig or chicken feeding, sheep milking, lamb feeding, animal handing ( where children are encouraged to stroke the cockerel, hen and baby chicks ) - the children (even the youngest) are encouraged to climb in with some of the smaller animals and to hold young chicks and to stroke the baby rabbits.

So you'll never find me having anything to do with a children's farm. I don't think the experience of eyeballing a llama at the age of six has much if anything to do with later life. If life is maximising ooo's an aaahs there are other ways of doing it that don't involve complex micro-biology.


Mike Donovan, editor

Email comments to editor@farmideas.co.uk

Practical Farm Ideas carries farm business articles as well as those concerning innovations. Download, for free, the Children and Farm Safety INDEX

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Letter published in The Times, Aug 13 2009

Dear Sir

Sean Rickard's assertion in Food News (p 17, Tues Aug 11) "We know that larger-scale, high-capitalised farms are far more productive and efficient than small-scale family farms" needs clarification. Some smaller farms are kept as a hobby, where output and efficiency are not goals, others farm within their means, with minimal borrowings. Smaller farms that are managed efficiently have no difficulty in matching their larger neighbours in terms of output or costs per acre, and can do so with lower impact on the environment and neighbourhood. The challenge is to help small family farms embrace low-cost technology which will edge up output and performance, not, I suggest, help large farms become even bigger.

Your faithfully

Mike Donovan

Will the Grocery Ombudsman help lift farm product prices?

Will the new Grocery Ombudsman help farmers?

Call me a pessimist, but I doubt it. The more law the more entrenched the protagonists. Supermarket buyers will make sure their new contracts are worded so they can operate as normal. Will the Ombudsman be busy? I doubt it. How many farmers and small processors will use the service and subsequently risk a future contract?

The commitment is for low inflation and low supermarket prices, and however achieved, these help keep the nation happy. Few people understand the problems of the industry - they have enough difficulties in their own sectors to be concerned about others.

Creating a Grocery Ombudsman tells farmers that the government is concerned, answers the NFU by showing that something is being done to directly address the issue of supermarket power and dominance. The Ombudsman is not there to look at farming viability, or indeed the comparative strengths and weaknesses of players in the food chain.

There are other actions that could improve the terms of trade for farmers. Gwyn Jones, NFU Dairy Director has been working on milk contracts, devising an agreement fair to both sides. The widespread adoption of fair contracts which have at least in part be written by the producer and not simply provided by the buyer, be it in milk, strawberries or fresh beef or lamb, would go a long way to help. If buyers realised they had to go along with such contracts to be certain of supply, and that these contracts were by and large fair to both parties, change could take place.

Public pressure can still be effective. Farmers need to be continually devising ways of letting consumers of their products know they are being supplied at or below cost. The countryside got together over hunting. Maybe the same organisations, which all make good use of farming land for their sport, should be asked to help the farmers, who after all give them the land on which to gallop, the coverts for their non-quarry, and feed for their steeds!

The Grocery Ombudsman is about politics, not livelihood. Once established, consumers will be able to justify in their mind the low prices they see on supermarket shelves - be happy with the two-for-one promotions which are often funded by the suppliers, not the generous retailers, as are so many of the special offers etc, as well as any costs associated with in-store product promotion. Will the Ombudsman be able to change these practices? It's doubtful, but buyers are going to need to be careful to include for them in the supply contracts. The real issue is that they shouldn't be there in the first place.

The new issue of Practical Farm Ideas Vol 18 - 2 is now published. Get the full contents.

After MPs... will farmers be in the frame?

The MPs have done wrong with their expenses and the Daily Telegraph has created a scenario which has caught everyone's imagination, and doubtless enjoyed healthy sales as well. So what happens when the dust settles? Will the nation's population just get on with their financial difficulties? Or will they, and the media look for another sector which benefits from the public purse?

If farmers and landowners were picked on in the same way, how robustly would their stand be? Have they the moral high ground, can they justify the payments they receive? Last week Lib Dem leader Nick Clegg mentioned the Common Agricultural Policy in the same breath as 'structural reform'. Will others take up the same theme? Farmers might well be advised to prepare for a siege - and then a rainy day.

Major cutbacks to present payments would hit the smaller working farmer badly, for many find the income from crops or livestock products such as milk barely cover their outlays. The large estates, which have useful economies of scale, might be better able to cope, but only by shedding labour and cutting costs further. All farmers find much value in their copies of Practical Farm Ideas.

Fertiliser wastage

Fertiliser wastage

Did you know that nine farmers out of ten waste fertiliser by failing to mount the spreader on the tractor accurately? That the waste of fertiliser can be between 5 and 10 per cent. A striped colour happens when some parts of the field get more than the planned amount, and other parts get less - BUT it's only visible when the difference is more than 15%. The farmer may well use the correct quantity, but the spread pattern is wrong... simply because the the machine has been put on inaccurately.

At today's fertiliser prices it racks up a loss few farmers can afford. Improve accuracy and there's an opportunity to reduce the amount applied. Improve accuracy and total yield improves as each plant receives the recommended calculated application.

There's a useful Practical Farm IDEAS on-line report on www.farmideas.co.uk/reports.php which has 15 useful tips to get the job done correctly, without spending money on a new fertiliser spreader.