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2nd May 2008
A Farmers View
 News broke last week that UK milk production
is now at its lowest level for 37 years. This comes as no
surprise to me, being a dairy farmer who was forced out of
the industry less than 2 years ago as a result of farm gate
prices that failed to cover the cost of production. So many
dairy farmers were forced out that a collapse in production
was inevitable.
As a firm believer in market forces, I can
have no complaints about the decision I was forced to make
in difficult circumstances but the people who really need to
learn the lesson of the last ten years are as much the
retailers as the primary producers.
Those who buy the products that come off our
farms don’t want to pay any more than is necessary to secure
supplies, and nor should they. Its their duty, after all,
to keep prices low so that the ordinary man or woman in the
street can get good food at minimum cost. This system
however, is open to short-term abuse and many of our biggest
food retailers have been found guilty.
As a dairy farmer I found myself making
investment decisions that were dependant on a cycle of
anything up to 5 years to secure a return. Loosing money in
a particular year was simply an occupational hazard and
losses could be made up in more buoyant times. The
supermarkets on the other hand, seemed only interested in
the lowest possible price on any given day.
This conflict between long and short term
planning has been compounded for most of the last decade by
a strong pound and a weak euro making imports cheap and
capping domestic prices to that level, often below the cost
of production. Ten years is a long time, long enough for
even the healthiest business to bleed to death if the flow
is not stemmed.
And so, it would appear, as suddenly as
farming fell into this depression ten years ago, we are
emerging from it. Food prices in the shops are rising so
quickly that it is even beginning to de-stabilise the
government. The euro is strong and the pound is much weaker
and increasingly farmers are able to name their price. The
supermarkets, having made their billions in profit at
farmers expense, will now realise the folly in their short
term exploitation of a UK farming industry which is now more
business like than it has ever been in the past.
The market place is beginning to deliver for
the farming industry. Cattle and sheep prices are buoyant.
Grain producers are enjoying high prices and good demand but
while the dairy and pig producers have seen their prices
rise, they are still being crippled by high input costs.
Their prices need to go up still further.
So times have changed, but farmers must be
on their guard. They will find no sympathy with this
government and we have a powerful retail industry whose
profits are being squeezed. This situation has all the
characteristics of times in the past, which have led to
government imposed price control. When the government and
the supermarket start to hurt, absolutely anything will be
possible.
The farming industry has suffered its
longest depression in living memory with farm gate prices
dropping at one point to barely half of what they were in
1996. Having suffered at the hands of a perversely
distorted market, farmers owe the retailers nothing; the
pendulum must now be allowed to swing the other way.
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