“The last twelve months will go down as a year to forget for most trying to make a living on the land in this corner of the country. What started with promise with a March of ‘short sleeves’ weather, ideal for those sowing spring crops and early lambing. However the tides turned very quickly resulting in six months of unrelenting cold, wet weather”.
Ewan Harris of Sale & Partners explains the repercussions of a sordid year for farmers and landowners, highlighting opportunities for a more positive 2013.
Autumn has shown some relent but only just with plenty of straw still lying in the swath and winter crops remaining unsown. Recovery will be slow and arduous with arable farmers coping with losses of more than 50% of the average annual income. Thankfully for arable farmers at least their counterparts in the Americas and Europe who have suffered their own poor harvests and shortages have meant that the feed wheat price is up 30% on last year. As things stand, the future price for wheat next November is £200 per tonne.
For livestock farmers, the declining national herd is just one contributing factor to beef prices being over 15% higher this autumn than last. However, the increased feed prices will have eroded much of this margin leaving farmers in no better position.
As for sheep famers, they are having a tough time with prices having dipped since last year. The pound while strengthening against the euro is cause for concern, as is reduced UK lamb consumption. However, world demand continues to increase and the quality of UK product is recognised, particularly in Europe.
Happily egg prices have increased substantially over the past year as cages were phased out albeit, like the rest of the livestock sector the high feed prices have likely knocked some of the shine off of the increased farm gate income.
It appears that any reforms to the CAP will not take effect until 2015, which will mean the current Single Payment Scheme running for an extra year. This could cause problems for those with Environmental Schemes ending in 2014 as there will be no successor scheme in place by then.
Farm rents for arable units are at an all time high with new farm tenancies and high demand on both sides of the Tweed. Time will tell if rents of over £200 per acre are sustainable, but where fixed costs are being spread and commodity prices remaining high, demand will no doubt remain strong.
The high prices being fetched for the sale of farm land have been well publicised, particularly so for good quality arable land in the Berwickshire Merse and eastern Northumberland. Again, high commodity prices have an affect but just as important; scarcity is a key factor. The majority of demand comes from farmers whether they be neighbouring barley barons or upsizing small-holders from the crowded south.
It is time to look forward, and hope that 2013 will be lucky for some if not all. We should see CAP Reform take shape, world demand for produce continue to grow and it can’t possibly be as wet as 2012.
For more information about Sale & Partners contact their Wooler office on 01668 281 611.
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