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Mike Thompson
Director Perth, Office
Looking forward is always difficult but twelve
months ago who could have foreseen such a
turnaround. Arable farmers had tightened their
belts to keep going on restricted margins, dairy
farmers were so tight on the buckle that they
were blue in the face. Sheep and beef were still
trying to get over foot-and-mouth as part of a
decade of at best, mediocrity. The big farmers
had continued to get bigger and many had
diversified into fruit, vegetables and other
intensive production to try to achieve a margin.
In terms of commodity price uplift, we could
hardly have anticipated the drought suppressed
yields in certain key producing areas of the
world, nor could we have expected the bio-fuel
demand for crops, particularly in America. Add
to this the seemingly insatiable demand from an
ever changing China and the main ingredients
were in the mixing bowl. So where do we go from
here and what effect will this changing demand
have on the Eurocrats’ vision for British
agriculture and British farmers in particular.
We have gone through a transition in support
mechanisms with much emphasis on environmental
improvements and payments for such works and
whilst this will remain important in livestock
areas, with wheat at £180 per tonne and other
arable crop prices equally as strong then
‘production’ must surely return to be the key
word. Much marginal land that has been returning
to grass from arable cropping is likely to see
the plough once again. Demand will be the key
and environmental incentives at their current
levels will be much less appealing to many.
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It seems that we have gone full circle in a very
short space of time. In ongoing terms it is the
viability of ‘livestock’ land that appears most
fragile. This affects much of Scotland and with
beef and particularly returns from sheep farming
looking particularly precarious in the short /
medium term we must fear for their future in
terms of financial returns. We will be faced
with an over subsidised arable sector based on
their SFP entitlements (Single Farm Payment) who
are now able to compete on their own terms at
world prices. A livestock sector unable to
compete whilst operating from within our most
environmentally sensitive and precious lands,
without the direct support that it formerly
enjoyed. It is likely to be exposed to
significant price fluctuations as both supply
and demand changes. A headache for the decision
makers indeed and one which will no doubt take
several years to resolve by which time the
damage will be done.
So where do we go? Arable and dairy farmers
appear set fair for a period of advantageous
returns after a decade of suppressed prices.
Will the quality of Scottish beef make a
sufficient difference to improve returns in
spite of greatly increased concentrate prices
whether bought or home grown? This remains to be
seen. I have my doubts as to any short/medium
term boom. The national sheep flock has been
decreasing year on year for some time now and
with little or indeed any hope on the horizon
that the decline will not continue we are likely
to lose ‘farming’ in some of our most fragile
areas
When farming goes, then management often goes
with it and in landscape as well as wildlife
diversity we live in a ‘managed’ environment.
Without it we are all the poorer
In terms of ‘Estate’ management we have seen
returns in agricultural rents virtually stagnate
for over a decade therefore in real terms there
has been a significant decline. Fortunately the
housing boom has had the spin-off of forcing
residential rents up quite markedly which has
helped. Landlords of dairy and arable farms now
have the option of considering a review of rent
but beef, sheep and even mixed farms have little
or no margin for uplift if rents are already at
a full level.
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