Facing up to the Challenges

Facing up to the Challenges

Brexit is just one of a number of challenges facing farmers in the next few years. Farmers have the choice of listing future problems, analysing what they may mean, and then planning for the future - what ever that may bring. Or else they plan to go on pretty much as they have been and don’t see the point in planning for an uncertain future. 

Delegates at the winter conference on Nov 15 of Worcester based agricultural accountants Ballards were given a presentation by Practical Farm Ideas editor Mike Donovan who told them that a head in the sand approach is unlikely to work too well over the next few years. The signs of change are just too great.  Mike told the delegates “It is a racing certainty that Brexit will result in changes to the trading relationships in food and agri products with European countries. Of course we don’t know as yet now what these will be, and it may well be many months before anything is decided. But the chances are that farm economics will become tougher for many farmers.” 

The packed hall had farmers, and accountants, fascinated in the detail of methods to improve farm efficiency -  agricultural productivity 

He went on to point out that the Brexit trading relations with the EU are just one part of the uncertainty. Another is the direct payment subsidies which make up half of UK farmers’ income. Once out of the EU the UK farm support will be directed from London and all the signs are for a major reduction. The price of oil, together with interest rates are further major issues which will impact all farmers, whatever their enterprise or efficiency.

Mike was explaining the contents of this slide - all practical ideas which make farm work easier, cheaper, safer

Drill down and there are other additional challenges: farmers will face continuing controls over inputs: products like neonics and glyphosate, recently given a five year reprieve - a subject in itself - are both under a microscope which is being operated by the public and politicians with limited knowledge and others, like antibiotics and other products may well be more closely controlled. Livestock regulations are very likely to change. Housing cattle and access to outside loafing areas, ducks being given access to water for swimming and splashing… it’s a dense and growing minefield which the farmer will have to negotiate. 

What should farmers be doing now, in this time of uncertainty?

Advisors all tell farmers they need to become more efficient. What does this mean in practice?  For decades farmers have been led to think efficiency means investment, new machinery - a new tractor and plough which gets more work done in the hour.  Farmers with ambitions and helpful bankers will go ahead and make sure their farming is bang up to date. Others will resist the lure of efficiency and be happy with the way they are doing things at present.

Mike went on to explain that farmers have improved efficiency without spending a fortune. His slides showed a great many successful adaptations and home made machines and implements. 

* a cheap pick-up fitted with 650mm tyres that run at 9ps. It is a great substitute for the ATV with the slug pelleter and is used for many jobs.  

* an in-field calving box which makes a better job calving a 250 cow suckler herd outside. Making it easier to secure the cow means reduced calf, and cow, losses. 

* cluster flushing done with a system that was home built ten years ago has massively reduced mastitis - one slide shows the herd’s annual NMR summary with zero mastitis cases in a 140 cow herd. It cost £2k to make. 

* using worn-out Astro-Turf for cow tracks.

* installing vent pipes in grain is like putting in pedestals into a full grain store

* converting an old dumper truck to a self propelled hoe for sugar beet - and many other possible applications

* a hitch that fits the front of the Manitou handler

* converting an old grain trailer into a batch crop dryer

* security locks for a Land Rover Defender with Ifor Williams canopy

* the Farm Ideas workshop miracle - using candle wax as a releasing fluid. Heat and apply a candle and the wax finds it’s way between the rusted parts

* making a removable link box for your ATV

* silage is covered by tyre mats made by bolting 6 x 3 rows of tyres together

* how to wash a field water trough. Keep them really clean and give the cattle uncomtaminated water

Farming with biology. 

Soil loss pictures. Cover crops; direct drilling; home built direct drill based on Bomford cultivator; crimper roller

Farm Safety needs a total re-think. 

We now work iin the most dangerous industry there is. 30-40 people killed annually; 15,000 have injuries that require a hospital; Pictures show a  disabled young farmer’s wheelchair ramp to get into tractor; a home designed power step to lift a disabled driver into cab. Positive pictures: a handler for dual wheels that means they get used when they are needed; orange beacon on an ATV; garden designed into a child’s play area; trailer safety brake; front mirror looks down the road; ATV link box stops flip over. 

Today’s interest rates allow farmers with the right set-up access to capital. Last week I met a farmer who that day had fixed a £1.5million loan fixed for 12 years at 2.5%. It sounds like cheap money - yet the interest is going to cost nearly £40k a year, so he’s looking for a return of £75k. That’s not going to come from replacing new kit for old.       

What can Mr Average Farmer do? 

Improving the outcome of tasks - which can often be achieved with some simple adjustments to procedure and machinery. Many advisors fail to recognise this. They front up innovations such as the new mini robots before they have been used commercially, and with no economics and figures attached to them. Professors and others compare them with robotic milking parlours without saying anything about the huge differences. The only thing they share is the word robot. 

The advice is to search out and apply great simple ideas. The funds at risk are incredibly small. Mike mentions the effects of aerating grassland, using the one he built in 1988. A 30% increase in grass production by year 4 from a machine which cost £250 to make (say £1,000 today) and costs no more to tow around than a roller is a no-brainer as they say. Yet very few farmers have taken the initiative and made one for themselves. And that’s the problem - 90 per cent of farmers will only make changes when they see everyone else doing it. The simpler the idea, the longer it takes to get used. 

The presentation went well, and the email in thanks 

Hi Mike

Thank you so much for coming last night. It was great to meet you and the feedback on the talks has been fantastic. I hope you got back safe last night.

I will have a check with the venue regarding the box of cards and let you know.

In the meantime, I would really like to keep in touch and hopefully meet up again.

Thanks once again for a fun and informative talk.

Best Wishes

Steve

Steven Jones BSc (Hons)

Business Development Director

Ballard Dale Syree Watson LLP

Tel:      +44 (0) 1905 794504

Fax:     +44 (0) 1905 795281

————————————

EU Farm Ministers meet in Tallinn

Looks like the EU will play hardball on Brexit

Last week I was in Tallinn, Estonia. The country has been in the news because it now holds the european presidency, a role which each member country has for a 6 month period. It puts the spotlight on the country and ministers gather for informal meetings and some from the international press get the chance to meet and talk with them. 

Having been selected I went, not for the ride but to get an impression of Brexit from other EU countries, and also see something of Estonian farming was a useful experience. Maybe I could pick up a ‘Made it Myself’ idea from a farm visit!

It was clear that some EU member state farm ministers have a real concern about the EU farm budget after Brexit. The Greek minister said "my main concern is that the CAP budget will be deprived of some €12bn a year. It's unlikely this deficit will be made up, the chances are substantial cut-backs in payments to farmers." Like many EU countries, Greece also exports more food products to Britain than it imports, to the tune of €200m/yr. These exports rely on tariff free status, and if an agreement of free trade is not made, would soon be substituted by those from other mediterranean countries, particularly Turkey.  

Modern dairy with 3,500 milkers set up by Finnish business

Abandoned collective farms are numerous

The main concern from Ireland was the declining value of £sterling which was already hitting their farms with lower prices. Commissioner Phil Hogan said UK withdrawal would cost the EU €26bn (this figure is clearly crucial in determining the size of the financial settlement and difficult to calculate, hence the discrepancy with the Greek minister’s figure) and the farm support system would have to change. At present new EU members such as Estonia get far lower payments than others, because farms were getting little or no support when they joined. Support has increased under rural development schemes, but making payments more equal (harmonisation and convergence) is a major goal. 

Hogan and the Commission set store on farm support being concerned with risk management, but he curiously said that pillar 1 direct payments played an important part in this. The EU crisis reserve fund has not been mobilised since 2014.

Marginal sheep farm prospering with EU support

Housing blocks prevail 

The UK is an important EU food market

Nobody, other than Greece, was going to admit it, but the UK is important for the EU. Neither did anyone point out the shortcomings of area payments as a means of farm support. Their aim was to focus on the UK’s refusal, before other trade issues have been agreed, to fix the financial settlement or divorce bill; agree to an Irish border; and also agree to the free movement of people from the EU to the UK.   

Slick answers for the press

Once again the Commission skated over all the difficult issues raised by the international press. The use of illegal insecticides in poultry farms in Holland, Belgium and Germany, and maybe other countries as well was said to be criminal fraud and a case for public health, and not a farming issue. The EU embargo on food exports to Russia - which has a border with Estonia and other post soviet states and so has a considerable effect on their trade - was equally brushed aside with statistics showing Estonian milk production was higher now than at the start of the embargo, and in any case the EU has a ‘unified approach’ so the embargo remains as long as Russia is occupying Crimea.  Slick answers which failed to address the real problem - of poultry farm inspection standards in the countries caught out, and the real damage of the Russian embargo to farming in Estonia and other border countries. 

Phil Hogan spent time talking about milk, and reported that the market had recovered from the 2012 price collapse. EU output was increasing and world demand increasing, and farm gate prices were looking good. The sales to Russia had been replaced by other countries, and Russian agriculture was growing. There was no mention of the dangerous yo-yoing of milk prices and how easily the circumstances for another collapse can be created, other than to say that farm price volatility can be addressed with various EU actions with income stabilisation using tools of income averaging over a 3-4 year period as well as the development of futures markets. 

Journalists and ministers allowed an hour to talk

Ireland's Brendon Gleeson (rt) and his Danish counterpart

Commissioner Phil Hogan takes press questions for 30 mins 

Conclusion

The UK is not the flavour of the month in Europe, and it was not surprising that nobody from Westminster was present. The meetings were, as always, difficult. Half the national farm ministers failed to wear their name tag, despite the strict security controls. The meeting was accompanied by a stand-up buffet, and it was evident that the intention of some delegates was to avoid too much contact with the journalists. UK farming minister George Eustice should have been there to argue the case for the UK’s position. The 27 other farming ministers will have a say on the negotiations and some, perhaps, could be reminded that the UK’s position is understandable and far from unreasonable. 

I was lucky enough to get a question to Phil Hogan, and asked if at the outset of the negotiations there had been any over-arching agreement from both sides to play fair and not damage farmers’ incomes in their neighbouring countries. His response was that the UK needs to address the three issues - the divorce bill; EU travel freedom; the Irish border - before anything can go ahead. A response which sounded to me like “we’re playing hard ball”. 

Addendum:

In an article in yesterday’s  Sunday Times (Sept 10, 2017) headed The EU Wants May’s Total Surrender - I Should Know’ the Greek former finance minister Janis Varoufakis said he believed M Barnier has a mandate to wreck any deal which advantages Britain. Barnier wants the UK to unconditionally promise everything the EU asks for, effectively forcing London to spend time and energy negotiating for the right to negotiate. Meanwhile, says Janis, the media cheerleaders are denigrating UK negotiators and reversing the truth, belittling Mrs May and her team and deploring their ‘lack of preparation’ with their favourite put-down ‘they have not done their homework’. He says this is exactly the methods employed when negotiating with Greece over their deficit, and he is very concerned that Brussels and Berlin might succeed in damaging Britain in the same way they succeeded in inflicting long term damage on Greece. 

Janis Varoufakis thinks it unlikely Britain will get a sensible negotiation with Brussels. It will be total capitulation, bad for Britain and also Europe. He thinks Britain should make the EU an offer it can’t refuse such as an off-the-shelf deal such as they have with Norway for a minimum 7 year period by which time these negotiators, together with the current crop of politicians will have retired. The second option is the unilateral withdrawal from all negotiations which leaves Brussels to come up with a realistic offer over free trade. This could be accompanied by an offer of immediate British citizenship for all EU citizens in the UK, and we can then see how the 27 behave. In the article Janis says he believes the UK should learn from his mistakes. Brussels wore him down until he capitulated, and he says we should not do the same. 

Where’s the NFU pre-election farm campaign?

Where’s the NFU pre-election farm campaign?

Last week Theresa May did a major U-Turn. Her plans for elderly care, while clearly sensible in the eyes of many, including elderly home owners were going badly wrong and had been dubbed the ‘dementia tax’. The objectors won the day and so the PM, renowned for her tenacity, changed her policy. It was not worth the time and effort to tough out. The run up to polling day is a politically sensitive time when sectors dependent on government funding become vocal. There can, for example, be few hustings where health is not raised. Education, national security and care for the elderly are similar. If the promise is not in the manifesto the next best is to have one extracted on the Today programme.

Like health, the far sector relies on government funding, yet has remained strangely mute. It is also a sector that’s hugely affected by Brexit.  Half farm income comes from the EU. Sales of UK farm goods to the EU are protected. Brexit puts all these at risk.

Why has the NFU side-stepped the opportunity to force statements and decisions? Is their silence a reflection of their traditional loyalty to the Tories? Are they cowed by the fact that so many farmers voted to leave the EU? Farmers need to know the honest truth - is their £3.5 billion subsidy going to be reallocated elsewhere? 

Looking at the nfuonline.com website you wouldn’t know there was a general election going on. 

The main Press Centre page - designed to provide journos searching for a farming story - carries the headline is ’NFU disappointment at another cut for dairy producers’; ‘NFU applauds Co-op’s move to back British farming’; ‘Farm income figures highlight volatility’. The only issue which farmers are urged to engage with their politicians is neonicotinoids and how a ban would affect their farm. Under ‘Campaigns’, their lead is Back British Farming, described as the NFU’s public facing campaign designed to build support and a “call to arms for the food and farming industry and government”. 

No mention of a General Election. Or that farming is the industry sector which is likely to see the greatest change post Brexit. Or to tell members the period before an election is the crucial time when political candidates are forced to listen, and respond. Days before polling cannot be wasted by lobbyists as well as candidates. Here is a time when farmers can seize the chance to get the conservative party to open up and provide some insight into their thinking about agriculture. The fact that farmers have remained largely mute allows politicians to interpret their silence as an admission they are happy with what has been said. Yet as we know, nothing has been said for farming post 2020. The PM remains tight lipped and there seems little progress in negotiations since the election was announced. 

There are not too many days to go. Farmers might have expected their representatives to have been less passive over this past month. Is there time for them to partly rectify this and make some demands as to the future of their industry?

There’s still time for farmers to make themselves vocal at election hustings. 

“What is the Tory/Labour/Lib Dem/Ukip farming policy?”  “Are you going to a member of the party which will hang farmers out to dry?”  “What’s your personal view of farm subsidy?” “farmers need answers that go beyond 2020 and have been given nothing by any of the parties contesting this election.” 

Please use 'comment' to say whether you agree or otherwise. 

Please forward to friends and colleagues

  Pre-election farming politics

Have you heard one Conservative politician promise long term money for farmers? Or any Labour or Lib-Dem one come to that? There’s an ominous silence. The NFU president Meurig Raymond promises members he will “ensure that all parties fully understand and engage with the food and farming community on the issues facing the sector, both now and post-Brexit,” and once more repeats the point that “for every £1 invested, farming delivers £7.40 back to this country, and they must back British farming.”

      I have my ears pricked to what Defra minister Andrea Leadsom is saying about Brexit in this 2017 election campaign, and the answer is “not much”. 

Andrea Leadsom (left) learns about cover crops from Mr Goodwin 

who farms in her constituency of South Northants. 

She’s keen to tell farmers they will be getting rid of the ‘red tape’ which has been a major complaint over recent years. Application forms will be simpler, and she says "By cutting the red tape that comes out of Brussels, we will free our farmers to grow more, sell more and export more great British food."  She focusses on the wrangles about what constitutes a tree; the density needed when planting hedges; the three crop rule which she calls ridiculous, as of course do many NFU farming leaders. These are promises which she can deliver on. 

      When it comes to the money, her promise is to maintain payments up to 2020, and this has been repeated by the Prime Minister. It means that between 2014 and 2020 the UK will receive a total €25.1bn in Pillar 1 and €2.6bn in Pillar 2 funding. 

      It’s what happens in the years after 2020 that is increasingly important. The next parliament may well run till 2022 and decisions about farm policy will need taking well before 2020. What is the likely scenario for discussion and decision over the next few highly important years.

The political timetable for farming

It looks like farming will be brushed under the carpet in the run up to election day on Thurs June 8. There’s no time or political need for farming promises, which in any event has a much reduced importance in terms of votes, partly the result of farm expansion and amalgamation. It is very unlikely that much further will be said about farming subsidies until the new government is formed.  

      After the election the farming debate will focus on the Brexit deal, where access to markets; cross-border trade; food regulations; tariffs will be the discussion. We are already aware that EU farm subsidies to UK farmers will end the day we leave. With the election safely behind there’s no need for Mrs Leadsom to seriously and definitively discuss these future arrangements until the treaty is concluded - she won’t know what the Brexit deal is, which will probably be late 2018. 

      It is at this point the bargaining over payments begins. Because farmers receive the lion’s share of EU funding to Britain, the industry can expect to be at the centre of the debate as to how much is needed for the sector to perform. If we take Owen Paterson’s claim that the UK will be better off by £9bn post Brexit (Oxford Conference Jan 2016) and that farming will get more than the £3.5bn it now receives, farmers will indeed be happy. But it is just as likely that the £9bn is an exaggeration. And equally likely that other sectors, such as health, education and defence, all which are close to crisis point, will be awarded the bulk of these EU savings. 

      The bleak picture is not helped by the Defra, under Paterson, saying in the last round of reform negotiations that farm payments "provide little value for money for the taxpayer”. Andrea Leadsom’s past views on farm subsidies have been no more positive. She has said there will be a "domestic successor" to Cap and a system "fit for the 21st century". Like the Cap critics of the past, she is extremely interested in productivity. She is also one of the founders of Fresh Start, a group of Conservatives demanding EU reforms which, in 2013, included in its manifesto a demand to "phase out" Pillar 1 direct payments to farmers.

      What solution did Fresh Start suggest to help farmers struggling with less financial subsidies? Well, that would be a "parallel reduction in red tape and regulation" - just like the one she has announced.

Are you going to wait for it to unravel?

Writing in Management Today Dr Andrew White of the Said Business School, University of Oxford, says a ‘wait and see’ Brexit strategy is not an option for business. ‘First, we must be honest about the status quo. Many may not have wished the UK to leave the European Union, but that does not mean that life within it was perfect. Business had arguably become complacent. Many business leaders have been too content with things as they are and we have lost some of the entrepreneurial drive that creates jobs and spots new opportunities. With Brexit looming, businesses need to rediscover this drive if they are to succeed.’

      Much of his comments to business apply equally to agriculture. He says good leadership stops businesses becoming passive ‘victims’ of external forces but organisations looking for better markets, products, and production methods. Being pro-active means taking action earlier rather than later, and not waiting passively until the election is passed and the deal with Europe decided. 

Using Practical Farm Ideas

Farm management is going to face challenges. Good, independent information and advice is an important part of the armoury. For decades farmers have been provided with free information, funded by agri suppliers and government and the EU. Free information is sponsored information, put out to encourage the receiver to do something the sponsor wants, whoever they are. 

      Practical Farm Ideas has no commercial, professional or government people funding it.  Readers provide the finance, through their subscription of £16.50 for the year. 

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Brexit: Farming faces an uncertain future

Agriculture Minister George Eustice was in the spotlight for two hours yesterday, (March 8, 2017) being ‘grilled’ by people from both Houses of Parliament on the future for farming after Brexit. 

This Blog covers:

Useful pointers to the post Brexit direction provided by the Minister in answer to questions from Neil Parish, Kate Hoey and others. 

• Our headings:  
• The issue of Ireland
• Opportunities for farmers post-Brexit
• How the new policy will be constructed - decided after negotiation or a load of Ready-Mix?
• Will the Treasury dominate the decisions?
• How will The Great Repeal Act work? 
• A General Election is likely in 2020. Farm policy needs to be sorted before the campaign starts.
• The supply of foreign workforce.
•       A 19th century parallel:
• The repeal of the Corn Laws took away farmers’ and landowners’ huge trading benefits. 
• Lessons for today. 
• The contribution of Practical Farm Ideas magazine. 

Introduction

Readers will be more than familiar with the farming issues raised at this Parliamentary Committee. The post-Brexit access for UK farmers to their EU markets; import controls from non-EU countries such as NZ; the continuation of subsidies including Basic Payment; the future supply of foreign workers; the environment and others are all a serious worry to farmers at the present time. 

Many readers will themselves have spent time discussing these with their local NFU, neighbours, MPs and others. In addition there have been numerous conferences on these issues, and will be more. The Brexit coals can be raked over endlessly and I believe there’s a danger the topic will become all consuming taking the farmer’s focus away from the business. Uncertainty can easily lead to inaction while the industry waits for government decisions to be made. 

Yet businesses need effective and progressive management irrespective of what happens in Whitehall. This means looking for useful cost-cutting, looking also for areas of risk which can be reduced. In this article I review the Minister’s contribution to the House of Lords meeting, and compare the likely changes with those of a previous time in agricultural history. 

Some useful pointers to the post Brexit direction. 

We have been told that nothing can really start until the EU Article 50 to leave the EU is triggered, so it was hardly surprising that Minister Eustice was unable to provide anything too concrete. Nonetheless the meeting identified the areas of greatest concern, the measures which can be taken, and the direction of ministerial and hence government thinking. Two issues stood out: his thoughts on area payments (Basic Payment) and the second on environmental schemes. Farmer, MP and Defra chairman Neil Parrish had a major role to play in the meeting. The following is a selection of topics raised. 

Neil Parish (NP): Ireland needs special attention. At present agriculture works as a single entity with farm produce and goods crossing the border continually. It presents a major problem. Borders will need to remain open even when the industry in North and South is working under rules.

George Eustice (GE): Let’s see what happens when we get there. Negotiations about Ireland, and indeed the channel crossings will be a priority.

Kate Hoey: What opportunities are there for UK farmers post Brexit?  

GE: South America and Asia are big markets, and UK farming is internationally competitive. The USA market for organic is large and expanding. EU food producers in Spain, France, Poland and Italy have been lobbying hard for continued access to the UK - which calls for reciprocation. 

NP:  How are you going to put a new farm policy together? is the process to be given a budget and then fit an ag policy around it, or is it the other way round - a policy which needs funding? NP is concerned that there will be detailed stakeholder discussions and consultations and then the policy will be presented “like a load of Ready-Mix”.

GE: Neither at present, and certainly no budget. The opportunity is to devise a program which works for farmers and consumers.

NP: Experience shows that the Treasury always has the whip hand in Cabinet. Given the promise that £350m/week will be available for the NHS, farm payments will cover 10 weeks - something which the Treasury might be happy to get their hands on.

GE: The great benefit of Cabinet government is that these decisions are made collectively, with checks and balances.

NP: Will The Great Repeal Bill work by transferring EU legislation in one block and approving it so it continues to be law, and then unravelling parts over time. Will agric policies be repealed? 

GE: Yes, but there will be pressure to amend the legislation. 

NP: There is likely to be a General Election in 2020 and the government will want a farm programme in place before the campaign is under way. Which means decisions in 2019 or before, not leaving much time.

GE: That’s true, and there will be reform. I am not a fan of area payments, which might appeal to theoretical economists but Single Farm Payment and Basic Payment present many problems. A decoupled payment system has the potential of delivering greater benefit. 

NP: A farmer recently said “It’s not leaving the EU that’s of concern, it’s what we do with our new-found freedom”. Fears the Treasury will strip the industry of much of its public finance. 

Question: Concerned about UK farm foreign workforce which is already being recruited for 2018. What happens in 2019/20? 

GE: Well there’s no change in rules for this and next year, and may well continue for 2018/19. The situation is fully appreciated and Cabinet will make its collective decision. 

Question: The future of environmental schemes are of concern. Will they remain the same?

GE: Mindful of making changes to increase simplicity. The EU regulations on woodland are a good example of complexity. First it needs defining, and we say that a group of 100+ trees constitute a wood. What about saplings? So we define the size of a tree that complies. But then some grow faster and larger than others. What about Christmas trees? Likes the Wildlife Enhancement Schemes of the 1980s and 90s. Working with partners such as Woodland Trusts, and others. Wanting schemes which work well and are simple, less bureaucracy. 

The influence of politicians - the Repeal of Milk Quotas 2015

The first version of this article read:  'exiting the EU posed the greatest event in farming since the Agriculture Act 1947'. Luckily it took me only a few moments to realise the basic mistake - the ’47 Act protected farmers while Brexit is going to reduce the public funding of the industry. 1947 introduced a price guarantee and was followed by the farm price protection through the EU Common Agriculture Policy.  

Brexit is likely to do the reverse. In fact the current fear is that concessions will be made on imports of food so UK exports of cars and other manufacturers will not be interrupted. 

Government actions play a crucial part in farm incomes. There was comparative stability after 1947, even though farmers’ leaders were keen to complain. The CAP has supported farming through a wide range of measures, even if they have involved hours of form filling. 

A recent step back from this occurred when milk quotas (1985 - 2015) were removed. The NFU was broadly supportive of the change and claimed there was no risk of over-production as in the past as the guaranteed price “now merely serves as a safety net”. They went on to say “Volatility is a normal characteristic of agricultural markets.” And they were right. Farm gate milk prices have diverged hugely depending on contracts - from 18 to 30+ p/l. The abolition of milk quotas caused major disruption to those in the sector, and resulted in prices dropping from around 30p to less than 20p in a matter of 18 months. Not at all what the NFU forecast or wanted for its members. The consequence was real difficulty for a those producers on highly volatile contracts while others were sitting reasonably comfortably. The Milk Quota issue showed farmers that the business side of farm management is of equal importance to the efficiency of production. Under the MMB all farmers worked to the same contract while today their sale contract is the most important factor for profitability.   

A 19th century parallel?  The Repeal of the Corn Laws

We need look further back in time to 1846 when the highly protective and lucrative Corn Laws, enacted in 1815, were revoked. And here’s what actually happened:

In 1813, a House of Commons Committee recommended excluding foreign-grown corn until the price of domestically grown corn was 80 shillings a quarter (a Winchester quarter equals 8 bushels or 291 litres* making 5 quarters to the ton) or 4 x 5 = £20/ton in their money or around £1,500/t today. The corn price never reached 80/-, but it did trade at 70/- a quarter for some of the time the Laws were enacted. The Laws halted corn imports, and created a shortage. Those unable to buy went hungry. Whole family budgets went on buying food, and a high proportion of this was corn. With no money for clothes, demand for cloth dropped and mill workers were laid off. Similarly for shoes, candles, anything which could be economised on. Meanwhile farmers and landowners were making considerable, huge, profits. They built themselves large farmhouses and farm buildings, and bought land which went up significantly in value. As landowners the Church, colleges and institutions also benefitted. The effect of the Corn Laws on the UK economy (which then included the whole of Ireland) was huge and made worse with the Irish Famine (1844-8). The political controversy became fierce as the effects on the wider economy became more severe. Liberals under Charles Villiers proposed motions for Corn Law repeal every year from 1837 to 1845, and it was the great Irish famine which finally forced their repeal. 

On January 27, 1846, Peel gave a three-hour speech saying that the Corn Laws would be abolished on February 1, 1849, after three years of gradual reductions of the tariff, leaving only a 1 shilling duty per quarter. The price of corn dropped to average 52/- per quarter between 1850 - 1870 and in 1886 was 31/-. Imports counted for 2% in the 1830s, 24% in the 1860s and 65% in the 1880s. By 1885 the cereal acreage was reduced by a million acres (the total today is 7.7million acres) and the number of farmworkers dropped 92,250 between 1871 - 1881. 

Farmers survived this turmoil by changing the way they managed their businesses. Practical changes to the way they farmed, ending enterprises that became unprofitable. Those who clung to what they did in when corn was 70/- found themselves making heavy losses when the price was in the 40/-s. Yields at the time were 20-30 bushels/ac (1/2 - 3/4 ton/ac).

Lessons for today

Today's uncertain future concerns both imports and subsidies, and both are very much part of the Brexit negotiations. Nobody is making the parallel with the Corn Law Repeal, but farmers need to be prepared for a considerable change.   

The farmer's focus must be on his business, and the huge changes that the British public has voted for need to be looked at through the prism of the farm, it assets and liabilities, it's management.

The wider EU issue is in danger of becoming a huge distraction for farmers. There are a multiplicity of conferences and events all hinged around Brexit, and all well attended. No wonder. The issue is the biggest shake-up in the industry but let us hope not the huge effect which the Corn Law repeal had those years ago. 

The contribution of Practical Farm Ideas magazine

Focussing on soil condition has been a longstanding subject area and in Summer 2013 (issue 22-2) we created a new major section which joined the “Made it Myself”, “FarmWorld”, “Financial Focus” and other sections. The “Soil+ Cover Cropping International” section has now totalled nearly 100 pages of editorial. No-till, zero-till, conservation agriculture, call it what you like, represents the most effective way to reduce costs of cereal growing while improving soil condition and fertility at the same time. 

Adding value to conventional farm products have been another regular feature. From the man who nets £1,000 from an acre of sweet corn which he sells during the season from a roadside table and honesty box to the livestock man who sells at retail prices all the meat produced on 400 acres - we have reviewed and continue to explore business ideas for regular farmers. 

Managing farm finances are never easy, especially when practical work on the farm dominates the working week. The regular family farmer not only is pushed for time, but has less understanding both of the importance and techniques of finance. Financial Focus makes the complex topic understandable.

* There's confusion about 'quarters' which reader John Raven has kindly pointed out in an email. Google it and you'll find many saying a quarter is half a hundredweight, 28 lbs. But it seems that grain was priced by the Winchester quarter which makes much more sense. John also says "As an aside, just to show how profitable farming must have been in the 19th century, we bought a farm in 1970 for £247/acre. That farm was sold in 1870 for £300/acre. No allowance for then and now values , just the price of the day." 

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