VARIOUS IMPACTS OF CHANGE
“It is highly likely that it will not be economically viable to grow wheat on low grade 2 land or lower in the UK within the next five years.”
Whether you agree or disagree with this the point it makes is that changes are often imposed on farmers, but there is often a period like Belshazzar’s feast where the writing is on the wall.
This is rather a bleak outlook, and many will disagree as they herald E10 biofuel and the current relative global highs in wheat prices. But these two factors of price and the biofuel market only look at one side of the equation, that is sales and the income generated by sales. It is the expenses that also need to be looked at.
First of all, the history of bioethanol production in the UK on a commercial scale has been very stop-start with almost half of the UK production capacity of biofuels being underutilised. This is not a sign of a healthy industry. It is also a market that has fluctuated greatly with Covid 19 being one of many market disruptors so far this century. The current global highs in wheat prices are largely due to the world market drawing much of its stores over the last two years and now replacing that stock. As ever, the one certainty is that future prices will fall and rise.
What is more certain is the direction of travel for the cost inputs of wheat. There is great pressure on a polluter pays policy which will see pressure on farmers to reduce nitrates and other inputs and also pay for any pollution that is a by-product of farming. We are already seeing a nitrate credit system being applied in the areas that drain into Poole harbour. Reducing nitrates will reduce yield. On top of this we see the withdrawal of some chemicals, slug pellets being an obvious example, on grounds of water quality. Now bare in mind that the Eastern counties are a rain shadow area and relatively dry, water is a limited resource and the ability to extract water is likely to become more expensive. This does not bode well for light land. There is another factor that UK farmers are well aware of – the weather. It is a simple fact that climatic conditions in North America, Central Europe and Canada make the growing of wheat at a much lower level of inputs with less pesticides and fungicides than is required in the UK. Without single farm payment, lower grade land growing wheat becomes unviable in a global market.
We have already seen this in a different way with rape. In 2007 I was having a discussion with a group of farmers where I argued that rape was a high input, high risk crop, with a potential high return akin to potatoes. Nearly every farmer disagreed with me except one, a land agent who also had a family farm, the room fell silent when he said, “Actually I believe Andrew is right and we stopped growing rape on our family farm last year because of its risk and return profile.” Note, I was not saying that rape should not be grown, but the issue is that if you are growing it on borrowed money you need to be able to replace the working capital if it fails, and towards the end of growing it is very easy for the crop to be wiped out by weather even with Pod-Stik or a similar product. Like all higher risk crops if you grow it you have got to do it well with your eyes wide open to the financial risk.
Then neonicotinoids were banned in 2018.
I normally like to say farmers are very good at adapting, but despite predicted problems I saw too many farmers choosing to grow rape despite the neonicotinoid ban, experiencing crop failure, then either resowing the same year or even growing rape again the following year. It was a predictable problem but too many chose not to read the runes and instead accept the risk, not once, but two or three times. This does not bode well if my warning about wheat on lower grade land is not heeded. I do, however, hope my view is proven wrong, but if you look at some of the best farming businesses they are already beginning to accept this and adjust their farming accordingly.
The Brexit Referendum in 2016 meant the UK left the EU on 31st January 2020 with a transition period ending 31st December 2020. Political failure meant that UK farmers were starved of o ready supply of cheap European labour with no effective alternative set up from other sources.
With Brexit we saw a predictable event with a three year plus lead in time thanks to a series of government incompetence. In these circumstances I draw upon Stephen’s book of the Farm 1907 edition: “The question of labour must likewise be considered by the farmer in arranging his course of cropping from time to time. When labour is scarce and dear, it will at once be seen that the best course for the farmer to adopt is to grow crops which require the least amount of labour.” Now the arable farmer, the flower grower and fruit farmer are at a distinct disadvantage over the mixed farmer in that reverting to grass is not an option available to them. So I do have sympathy with their position. But, the whole industry had relied upon cheap European labour since the late 1990’s and especially from 2004 at the exclusion of labour from other countries outside the European Union especially Africa and India. It also changed its recruitment methods from managing it themselves or with known regular UK seasonal gangs to reliance on agencies. There is always a risk that economic conditions in Eastern Europe would improve at a future point making their labour more valued in their home country. Now some smart businesses have anticipated this problem for some time and sought to mitigate this with varying measures such as recruiting direct themselves; using well managed web sites of their own to appeal to employees; establishing good working relationships with existing UK gangs. Of course Covid, an unpredictable situation, drove a coach and horses through any steps that farmers and growers had taken to try and mitigate loss of labour from Europe, but at the same time too many sought the same methods of recruiting labour without any adaptation or consideration to changing tact. Also, those that invested in their employees and labour had lessor problems, although no-one had a free ride.
It does have to be recognised that with some crops, for example potatoes and vegetables, and sugar beet, or even flowers, where the equipment and processing can be more specialised or the labour requirement is seasonal and specific it is very hard for a farmer to adjust as the capital investment is greater. It is especially hard for fruit growers, or a high value seasonal crop like asparagus where the plants and associated infrastructure are a commitment over several years.
Automation does offer some solution going forward, but it is hard to warrant the investment, although a few have mitigated labour issues with innovative automation. Anybody that has worked on a potato grader (that includes me) will soon understand that automation is not a practical solution and the economies of scale that would make it possible are very rare. I have seen carrot processing and bagging in Cambridgeshire done with minimum labour, but this is specialist and requires longer term commitments from buyers and supermarkets before such investment is practical.
The other issue is that markets are developed over a long time and to change the whole method of growing, supply route, keep the supermarkets happy and remain commercially viable in a short period is at best hard and at worst impossible.
The change in TB status and the increasing risk profile of TB in Lincolnshire is another significant change that is imposed on farmers. Over my years of dealing with beef and dairy farmers throughout the country I have seen two distinct views taken on TB. The first, that TB is inevitable and there is nothing a farmer can do to mitigate or prevent it affecting his livestock especially if it is in the environment. The second view is that TB is an awful threat, but the farmer will take action to reduce the risk to him by: raising water troughs out of badgers reach; making feed areas wildlife secure; examining the origin and TB history of where cattle come from before buying; deer fencing pasture.
It is with despair several years ago that I visited a prize winning dairy herd with rosettes emblazoning the walls only for me to ask, “What has been digging into the shed over there?” To be told it was badgers that came into the shed every night to eat cattle food and they watched them on the CCTV. In this case they were lucky in that the surrounding road system provided a significant barrier to prevent wildlife from outside of the area crossing into their farm, but considering the high value of the cows I would not consider such disregard to biosecurity as wise.
Farming is changing to a polluter pays environment, with nitrates at the top of the list. This has already happened in the areas draining into Poole harbour. The concern with this is that government and private agencies may be steering change more than farmers and political and educational involvement is a must to prevent being caught out. If you farm how are you preparing for this?
Water, especially in the rain shadow Eastern counties where arable farming dominates is a significant issue. Farmers of all sizes need to engage, prepare and adapt to a changing political and environmental landscape that risks them being at the bottom of the pile for water needs, or losing out on opportunities to benefit from water capture, storage and management on their farms.
Carbon credit schemes provide excellent opportunities for farmers to trade the benefits of what is grown on their land and receive payment for appropriate projects. But, it requires a clear understanding about what your base line is. Do you know your farming business’s carbon footprint? Do you know what carbon is already captured in your soil? Do you understand where to start? Are you aware that the Carbon Credit market is totally unregulated without any obvious controls, checks or redress?
My intention is not to castigate or criticise a hard pressed industry and its key people, but to try and open eyes to the need to engage and where possible take command of changes.
The changes I have looked at and mentioned: the economic viability of wheat; neonicotinoids ban; loss of labour due to Brexit; TB in livestock; polluter paying regimes; water management changes; carbon credits: are all imposed predictable or forecastable changes that farmers are challenged with. It would not be too difficult to find many, many more. The key to this is understanding how you view changes and then planning and taking proactive actions.
In my next post I will encourage you to explore how you deal with change.