Age of the small British farmer ends in exodus from land

Traditional British farming will soon be replaced by international investors and creation of mega farms to feed China
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David Handley has tended to his herd of dairy cows on the rolling lush green hills of Monmouthshire in South Wales for almost 30 years.
He is one of thousands of British small tenant farmers who for centuries have formed that backbone of the nation’s agricultural industry that has shaped the land.
Mr Handley warns that the days of traditional British farming are now coming to an end with potentially catastrophic consequences for both Britain’s countryside and food security. Farmers like Mr Handley have been caught between two tectonic global forces now pummelling agriculture as global oversupply of food and softening demand from Asia make small-scale farming increasingly unprofitable.
“If you look at the exodus now from the industry the small British tenant farmer is under threat,” said Mr Handley, who also heads the lobby group Farmers for Action. “Tennant dairy farmers like ourselves are being crucified at the moment.”
He warns that Britain’s countryside could soon be transformed by the collapse of traditional small-scale farming in the UK, which will be replaced by just a few mega-farms such as those found in North America and Australia that are owned by international investors and food conglomerates.
Farming in the UK, which contributes something in the region of £8bn to the economy, is in decline. According to a report last month by the National Farmers Union only 53pc of British food will be produced by domestic farmers by 2040 with profound implications for the economy, jobs and security.
Mr Handley’s herd of 140 pedigree Jersey cows produce 30,000 litres of milk per month but recent declines in prices paid by his buyer County Milk mean that he is currently sitting on heavy losses, which could push him out of farming entirely.
Prices he can get for his milk have fallen to 22p per litre, down from around 32p per litre at the same time last year. International milk prices as measured by the GlobalDairyTrade index fell by 48pc and the market has shown little sign of recovery since.

“It’s grim, that’s the only word to use really, we’ve seen a collapse in the dairy price,” he told the Telegraph in an interview. “People are facing bankruptcy and we’re just going to be left with American-style farming with just a few producers providing all the milk.”
The main drivers for this collapse in milk prices are a dramatic slowdown in demand from China and the impact of Russia banning imports of dairy. Some estimates have suggested that China’s imports of dry whole milk powder, which have underpinned the international market over the last decade could actually decline by up to 12pc in 2015.
This reversal has been caused mainly by Chinese economic growth moderating back to single-digit figures and domestic producers expanding after recovering from a series of food scares, which had driven consumers in the world’s largest economy towards imported dairy produce.
Unlike the UK, which benefits from lush pastures with the potential for higher yields, China has only a limited scope to grow its domestic production due to the availability of forage and fresh water. However, China’s milk herd is vast, with 14m cows producing 36bn litres of the white stuff annually.

“Volume growth in China over the last 18 months has been around zero and this is what is tripping up the global milk and dairy market,” said Jais Valeur, executive vice president of Denmark’s Arla, which is the largest dairy producer in the UK. “It is having a knock on effect in the UK and across Europe.”
Arla has been on a major recruitment drive in the UK to sign up 1,300 more dairy farmers as it strives to maintain its position as the largest milk co-operative in Europe. The company now processes about 25pc of all the milk that is produced in the UK.
The impact of a slowdown in China’s demand for milk has been amplified by Vladimir Putin’s decision to ban Russian imports of European dairy products along with meat and fish in response to economic sanctions imposed on Moscow by the West. Russia had accounted for 13pc of the European Union’s total milk equivalent exports prior to the ban.
“Russian imports stopped last August and that has helped to create a kind of perfect storm with the two big importers of milk falling out of the market,” said Mr Valeur, who was speaking to the Telegraph from Shanghai.
Mr Valeur said that the loss of Russian imports has partly been offset by the strength of the US dollar reducing the volume of American dairy coming into Europe. “No one saw all of this coming but the situation has improved slightly since the New Year.”
A further potential blow to UK dairy farmers came into force this month with thescrapping of the European milk quota. Introduced in 1984 to prevent overproduction and partly safeguard smaller farming communities, the quota had a shattering affect on UK herds when it was first introduced.
However, British farmers have been producing under the country’s quota now for many years and some pastoralists are concerned that the abolition of the system could trigger an outbreak of “milk wars” across Europe as large producers and co-operatives rush to grab a larger share of the market.
According to Arla’s Mr Valeur, the end of the quota system could actually benefit dairy farmers in Northern Europe and the UK because the climatic conditions are ideal for boosting milk yields. The danger is that this will simply add to the problem of global oversupply.
“If dairy farmers act with restraint and produce the milk that is needed for the size of the market then we’ll be fine,” said Mr Handley. But if the ending of the quota triggers a production war then he says “we are going to be in the shit”.
Global food prices at five-year lows
Many of the structural issues affecting British dairy farmers are also affecting cereal and meat producers. Farmgate food prices have fallen to the lowest level recorded in the last five years according to the United Nations (UN). The Food and Agriculture Organisation (FAO) of the UN price index, which tracks a basket of farm produce, fell in March to 173.8 points, the lowest seen since the beginning of 2010.
British beef prices fell by 15pc last year, while the country remains a net importer of the meat.
The FAO has blamed the strengthening US dollar and global oversupply across the entire agricultural supply chain for causing the slump in prices. The accumulation of excess mountains of dairy, cereal and meet increased in
During the boom in agricultural commodities which started in 2010 farmers globally re-invest profits to cultivate more land, expand their holdings of livestock or purchase more fertilisers to boost yields in the expectation that surging demand from Asia would continue unabated.
Experts such as HSBC Bank’s head of agriculture Allan Wilkinson now predict that farm incomes in the UK will actually fall in 2015. A further drag on farmers’ revenue this year will be the introduction of the new digital system for EU Common Agricultural Policy (CAP) payments.
The system will require farmers to apply for their current subsidies online, which could cause delays in remote rural areas where internet access is limited. Other changes mean that farms in certain lowland areas of the UK could receive lower payments.
According to HSBC’s Mr Wilkinson the payments are crucial with many British farmers depending on the scheme and other subsidies to provide all of their operating profit.
“The interest in British food and farming is as strong as ever but even some of the best run farms in the country are now finding it very difficult in the current market,” said Mr Wilkinson.
Aware of the current global headwinds facing farmer, the Chancellor George Osborne offered the industry a package of support in his final Budget of the current Government last month.
The measures partly designed to appeal for rural votes ahead of the General Election included allowing farmers to average their profits for tax purposes over five years, up from the current two years, to counter volatile commodity markets. But the measure has received a mixed reception from many farmers such as Mr Handley who believe more should be done to help rural communities.
“If you’re not making any profit what’s the point in changing it to five years,” said Mr Handley.
He also argues that Westminster’s political classes on both sides of the House of Commons have grown detached from the needs of British farmers. “They think food comes from anywhere,” he said.
World needs to increase food production by 70pc
Despite the anxiety of many farmers such as Mr Handley about the future, the long-term outlook for agriculture remains bright. Farmers will also receive some respite to rising costs by the decline in oil prices by more than 50pc over the last six months.
Based on current projections for world population growth every spare plot of land available will have to be cultivated in order to avoid catastrophic famines and food shortages in the second half of the current century.
According to research on the impact of food security on the global economy by Bank of America Merrill Lynch over 805m people in the world remain under-nourished reducing global gross domestic product by $2 trillion (£1.34 trillion).
It estimates that by 2050, the world will need to produce 70pc more food than it does today in order to feed 9.6bn people.
“In our view, all potential food security solutions should be considered given that we may have already arrived at peak production for many food categories,” the bank said in the research note.

In the UK, these fundamental drivers underpinning the long-term investment case for farming have been reflected in land prices. At the end of last year the average price of British farmland reached a record of £8,000 per acre, according to the Knight Frank Farmland Index. The last decade has seen a boom in the value of farmland, with values increasing by 110pc over the period.
“The agricultural land market remains very strong although we see a very big range in prices,” said Clive Hopkins, head of farms and estates at Knight Frank.
For arable land in Britain that range can fluctuate between £6,000 per acre and £18,000 per acre depending on the location and yield. A major driver for the escalation in the price of farmland has been an influx of institutional and foreign investors buying British farms, which has coincided with the gradual demise of traditional small British tenant farms.
“We see more than a steady increase in large investors buying large packets of land in the UK. That trend is growing in momentum all the time and this will only push up values further,” said Mr Hopkins.
But for tenant farmers like Mr Handley and many of the other members of his Farmers for Action group it is just a question of hanging on for as long as possible until food prices recover.
“I used to enjoy the job but now all we get is doom and gloom,” he said.
 
Source: Telegraph
 

Mirá También

Así lo expresó Domingo Possetto, secretario de la seccional Rafaela, quien además, afirmó que a los productores «habitualmente los ignoran los gobiernos». Además, reconoció la labor de los empresarios de las firmas locales y aseguró que están «esperanzados» con la negociación entre SanCor y Adecoagro.

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