If only politicians would wake up and realise that small farms could be the best option for the future and for global warming: Richard Bruce

“Where are the men of vision these days? They all seem to follow each other, afraid to rock the boat.”

This question is posed by Richard Bruce, a former farm manager. He continues:

If only politicians would wake up and realise that small farms could be the best option for the future and for global warming.

With the large farms, prairie-like fields and massive oil guzzling machines controlled by satellites, it is harder to get the skilled operators they need to work long hours.

The various soil types within the fields can’t be farmed optimally and under larger-scale, so-called industrial farming, there is no way to stop the depletion of the soil, its structure and its fertility.

The bigger the farm the less secure it is against anomalies of weather and disease and without the earlier system of base prices for the goods farms produce. Before the UK entered the European Union, there were guaranteed prices for most farm products and deficiency payments which made up the difference between the guaranteed price and the market price, paid by the exchequer and set annually by negotiation between the government (MAFF) and the National Farmers Union (UK/EU Agricultural Policy History).

This was destroyed when Common Market subsidies replaced those designed for British conditions before membership and the whole system has become a commodities gamble with large sums of money at stake.

In addition, supermarket control of supply and prices is making the whole supply chain very unstable.

https://www.studysmarter.co.uk/explanations/microeconomics/microeconomics-examples/uk-supermarket-oligopoly/

Asset stripping small farms, buying them up and converting the buildings leaves a trail of disaster in his wake. There are now three new big barns built in the fields that I managed as the original 7 smaller barns are now dwellings which just lead to more flooding and sewage pollution – already the council has had to spend a small fortune altering the drains to reduce the floods.

Flooded land cannot absorb any water and so it runs downstream to flood. With global warming there will soon be serious mosquito problems – which is why the land was drained in the first place!

One thing is certain: we can’t eat trees, or houses, or roads, or railways and golf courses and with all the millions of acres of farmland used for industry and energy producing crops we are becoming over-dependent on imported food, which may not always be available.

All this as our population rises out of control. The future does not look good.#

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Prices below cost of production: farmers need to come together

Bruce Udale and daughter Isabel Moseley check the moisture content of the wheat at their farm at Eyton, Telford

The price currently being paid for wheat has fallen from more than £200 per tonne two years ago to closer to £120 today, and Bruce Udale said that was the main drawback for farmers:

“The price is awful. At £160 or £170 it was too high, but it has gone to the other extreme now.”

The Shropshire Star then noted that there will be a good apple crop this year; will growers get a fair price?

David Handley of Farmers for Action writes:

Grain, dairy, beef, pigs – all are suffering low prices. Farmers need to come together and stop this rot once and for all. We must all act now to protect our livelihoods, nobody else will do it for us!

He noted grain market reports: Low moisture – good bushel weights – but no premiums being paid!

Grain merchants need to explain themselves!

Handley asks “Why is this happening? Grain farmers have worked hard in 2014 to achieve what the market requires at great cost, but their ‘reward’ is prices below cost of production. This is not sustainable.

“Yet all others in the supply chain maintain their margins”.

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DairyCo, the BBC, important questions, a potential solution and tribute to Ian Potter

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Belatedly, due to a week’s absence from esystem due to a hub with ‘corrupted settings’, we send Kathleen Calvert’s comments.

These were made in response to Ian Potter’s request that “Farmers must play their part in this process and let DairyCo know their thoughts or indeed email us”...She writes:

“Over the last few years I have had lots of contact with DairyCo and have bent the ear of many others who would appear to be barriers to our progress. I have also sought out those who may be able to offer any kind of support or opinion, however slight, and I have taken matters further through various avenues wherever time or wherewithal has allowed.

“While they have potential, DairyCo have been in need of the good kick up the a–e that Ian has given them and now they really do need to move forward by taking a good look at themselves, their responsibilities to levy payers and by providing more efficient and imaginative use of valuable resource for the common good to help get us all back on track.

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“Possibly a factor of dairy farmer inactivity is a fear of the consequences of being thrown out of the safety of their paymaster’s system, or lack of the relevant communication skills.

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“I also suspect many farmers take no action as they still hold out hope that the NFU or some other large and financially well endowed organisation will work for them, not realising that the NFU is part of the establishment that collectively keeps us all financially, bureaucratically or politically controlled.

“We will remain superglued to the treadmill if there is no change to accepted establishment practices where for example other than the early morning Radio 4 programme, Countryfile, the BBC’s adult version of Blue Peter, is all that the BBC offer. This depicts chocolate box images of the countryside in a programme devoted to creating popular celebrities more intent on the self promoting hype where purposely promoted celebrities and “having a go” boosts viewing figures and so is considered more important than also delivering the less popular yet vital good quality impartial reporting that informs consumers and the public in general.

 

Four important questions

 

• “When we have our own proportionately large population to feed, why must we be forced to consider sending our precious good quality food across the world to feed the wealthy who will not eat the food produced in their own country that their own poor are expected to eat?
• “Why are we importing so much dairy produce that could be produced in our own country,
• “why is there a shortage of milk, when the price does not go up to reflect our own market
• “and why does Dairyco fail to address/ tackle this market failure that is pivotal to their role on behalf of levy payers.

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A potential solution

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“As a potential solution worth consideration, farmers could be adequately rewarded by their processor for supplying better quality levels – set at across the board levels; all retailers or other suppliers of dairy produce would be voluntarily required to inform consumers of the quality of the milk and dairy produce at the point of sale and samples of milk would be tested at random, passing on concerns to the relevant authorities who would undertake further testing and monitoring at the point of sale and, if necessary, work to uncover the source of any weakness in the supply chain system and investigate potential manipulation or fraud.

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A tribute

 

“I can not tell you how much I appreciate completely the massive effort that independent Ian has put into tackling just one of a multitude of barriers that are put in front of we British Dairy Farmers. Looking at the quality of the report below, I would say Ian is truly the Miss Marple of the Dairy Industry —- Ha ha —- sorry Ian but that is a compliment. You are a star. Just mind you don’t catch your heels on the hem of your skirt!

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“Onward and Upward!”

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Nick Holt-Martyn: it would be “criminal” for retailers not to return more of their gross margin down the supply chain to farmers

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In the Farmers Weekly, Gemma Wainwright reports that dairy processors need to pay at least 35p/litre to secure milk supplies. Although UK farmgate milk prices have recently risen on the back of improved global commodity markets, further increases are needed to offset higher production costs, which have now reach an average of 34p/litre.

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At 10p/litre, purchased feed price was 25% higher in January this year than in 2012 for the average 197-cow herd costed

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Nick Holt-Martyn, senior consultant of The Dairy Group, notes that in the past three weeks, European dairy markets had increased by 7-8%, while southern hemisphere prices were up 30%:

“Globally there is a shortage of milk, and there is a commodity boom taking place in the southern hemisphere.

“If the price goes up in one part of the world, it has to go up in another part of the world”..

Unethical?

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He added that milk prices don’t rise in response to [production] costs, but to market pressures.

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We agree with Mr Holt-Martyn’s statement that it would be “criminal” for retailers not to return more of their gross margin down the supply chain to farmers.

 

A levy-paying dairy farmer has concerns about DairyCo activities

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A broadside in the covering letter

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In the light of the present extreme financial difficulties faced by a great number of levy paying farmers please would you let me know the reasons for the choice of location and venue for your annual Outlook conference yet again at One Great George Street in London?

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These premises are described as Westminster’s best kept secret… a remarkable venue serving perfect food with genuinely good service, a central London award-winning destination set in a magnificent four-domed, Edwardian building, a venue like no other, offering flawless service in unique surroundings where guests are looked after as individuals, with the genuine care and unobtrusive attention that makes all the difference.

Would you also let me know how you can consider this to be a suitable and efficient use of levy payers funds?

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Attachment:

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My main concerns about AHDB and DairyCo activities are regarding:

 

• the lack of clarity over the justification for competitiveness (ie: to what extent and between who? farmers, aligned and non aligned producers, other countries etc);
• lack of consideration or promotion of the wider benefits and real value of dairy farming to the wider rural economy;
• retail power over the entire dairy chain gained by the continual promotion of direct retail contracts being seen as the solution to, rather than the cause of, the imbalance of power in the chain (ie siezing on ability to manipulate and distort the market to effectively cap prices paid to non aligned suppliers who are then subject to market forces whenever the market is down)
• acceptance of the fact that retailers are using the very few direct contracts to keep a ceiling on the entire market and certain large corporate retailers could be considered as operating as oligopolies;
• the trend towards developing a one-size-fits-all corporate approach to dairy farming, to accommodate the retailer demands to drive down unit costs and satisfy their PR requirements while enhancing their growth and profits;
• financially restricting the dairy farmers’ freedom to run their own and very individual businesses as they choose, by adopting this one-size-fits-all approach, thus preventing them from having the power to create value within their local communities and the local and wider economies;
• and passing power into the wrong hands by allowing current levy funded activities to be funded by non-independent sources, including others in the supply chain, (which strongly suggests retailers) and placing too much reliance on consultancy companies with conflicting interests who can walk away with a pay off or act as fall guy if things go wrong.

 

Conclusion: certain large corporate concerns and their agents are being given carte blanche to stealthily entrench themselves in every aspect of the dairy producers’ domain, making it even more difficult to achieve a balance of power within the supply chain.

 

A doorstep deliverer who buys direct from the farm and pays a fair price writes to this website:

 

I really do not know what the future holds, but in my opinion the supermarkets have far too much control over the supply chain.

 

Milk like all commodities becomes cheaper the more you purchase. This always gives the biggest suppliers the greatest competitive advantage, but that’s capitalism!

We are at the bottom end of this scale so do not benefit from bulk discounts. We buy direct from the farm and pay a “fair” price. Historically we pegged our 2litre price against the supermarket 4pt price. People got a bit less milk for the same money, but had it delivered to their door and were given interest free credit. When the supermarkets decreased their prices they simply put up the price of other items to cover the loss in margin. We really only sold milk so could not follow the pack without risking the future of the business and the 15 jobs it supports. We overnight became uncompetitive just at the moment the nation was tightening its belt. We have held our own, but only just. Many of our competitors are suffering dramatic and probably terminal declines in their business. The only national company left is closing rounds and depots at unprecedented and unsustainable rate.

The farm gate price of milk is currently just under 30p per litre. There are variations on this depending on who the farm sells to, the length of the contract and when it was negotiated. For the sake of easy maths, 30p per litre. The processing, packaging and transport costs are about 10p per litre. This makes the cost of 2 litres of milk 80p and 91p for 4 pints.

Many smaller shops and cheap multiples including Iceland and Farmfoods are selling 2litres of milk for £1. Out of the 20p margin the processor, wholesaler and retailer have to make a profit. Supermarkets have their own contract with the processors so no wholesaler. All the big supermarkets are selling 4 pints for £1.18, but this is quite often further discounted. This leaves a gross margin for the processor and the retailer of 27 pence.

A few years ago the supermarket price of milk was £1.54. When they reduced all the discount retailers and small shops also reduced the wholesalers and processors were squeezed and therefore the farmers got squeezed too. There has been a continual downward pressure on the retail milk price for the last few years. During this period the consumers price perception has dropped. People see milk as a cheap discounted product which further compounds the problem.

 

The figures I have used are approximate and the reasoning over simplified, but the point I believe is valid. The supermarkets must increase their prices back to where they once were. This will allow all of the supply chain to follow, making it worthwhile for the farmers, processors, wholesalers and retailers alike.

 

 

A fair deal in a sustainable supply chain sought by potato growers

 

In September, potato markets dropped sharply, with the GB weekly average price falling by £16.78/t to £184.77/t and the free-market average down by £14.06/t to £252.44/t.

 

Price fluctuations prevent food producers from planning and investing for the future

 

In October David Walker, chairman of the Fresh Potato Suppliers’ Association (FPSA), reported that extreme weather conditions during planting, production and harvesting period, combined with a three-year period of low market pricing, to threaten the fresh potato supply this season. Growers are lifting potatoes with three times as much soil as usual so they are having to double grade. It can cost about £200 a tonne, but they are lucky, if they are in a contract, to get £150 a tonne. Growers need to get £250 a tonne on a regular basis.

But by the end of November, the weekly average price was £218.68/t and the free-buy average was £303.93/t.

 

One speculator is rethinking

 

The Financial Times reports that Barclays’ new chief executive Antony Jenkins is considering moving away from agricultural commodities (crop) trading.

At a session of the Parliamentary Commission on Banking Standards Barclays’ CE Rich Ricci, said that “trading soft agricultural products doesn’t sit socially well with the large constituent of our customers.”

 

Some politicians and NGOs have pointed to market speculation’s role in creating sharp price rises for intermediaries in the wake of droughts, rapidly rising demand from China and the impact of climate change.

 

NFU makes supply-chain relationships top priority

The National Farmers Union has outlined its top priorities for the fresh produce sector with building stronger supply chain relationships and progressing the establishment of a supply-chain adjudicator at the top of the list

NFU horticulture and potatoes board chairman Sarah Dawson – Sarah Pettitt surely? – said: “There is a lot of work to do, but I’m confident that the board – which is made up of specialists from all sectors of horticulture and potatoes – will be able to make significant progress on these important issues for our members during 2012.

Following a disappointing financial performance for many growers last year, we want to create the right environment for our members to run profitable businesses – through reducing and tackling regulatory challenges, or encouraging more responsible supply-chain behaviour.”

The board has scheduled a visit to Brussels in the spring to meet with several European Commission officials responsible for crop protection, the fruit and vegetable aid regime, Producer Organisation audits and CAP reform.

“If we want to turn around our declining self-sufficiency in fruit and vegetable production and continue to provide consumers with the high quality, home-grown fruit and vegetables that they demand it’s vital that growers are given the right signals to encourage them to invest for the future,” said Dawson (or Pettitt).

An exclusive preview of the NFU’s report into supply chain behaviour and relationships in the fresh produce sector will be unveiled at the NFU’s Horticulture and Potatoes AGM breakout session on February 21.

 

Sources: http://www.nfuonline.com/Your-sector/Horticulture/News/Horticulture-sector-looks-to-a-promising-2012,-says-NFU-board/

http://www.freshinfo.com/index.php?ei=h&fiemt=10012012020772463110&s=n&ss=nd&sid=54988

 

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