Category Archives: Farmgate prices

‘Bright Blue’ Conservative proposal: damaging to British food producers but profitable to the hospitality industry, commodity speculators and Exim traders

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The proposal by a Conservative think tank opens with a people-pleasing injunction: end the payment of vast subsidies to wealthy landowners after Brexit.

However, those who read and remember more than the headline will begin to see that profits are simply to be redirected.

“The EU system of paying farmers according to how much land they own should be replaced by payments for environmental benefits plus a ‘means-tested livelihood support’ for the poorest”, the report by Bright Blue says. It accepts that the system could reduce food production and make Britain more reliant on imports, which account for 40% of consumption. However, it says that the loss of self-sufficiency is a price worth paying for protecting wildlife and natural beauty.

After a lyrical paragraph about the environment, Bright Blue sheds sentiment and proposes three income sources for food producers (in order of preference?):

  1. A market-based commissioning scheme;
  2. means-tested livelihood support – aka government dole
  3. and/or income from agricultural produce or other monetisable services sold at market prices without any production subsidies.

Yet another nightmare administrative system?

Chapter Three of the report explains, “We envisage ‘suppliers’ bidding together or individually to supply ecosystem services to paying ‘beneficiaries’ in specific catchments on online market-places. Suppliers would include farmers, land owners, and land managers”. 

Voices of sanityTimes readers’ comment:

David Illsley 

How to do the right thing for all the wrong reasons! Lower subsidies for empty fields, yes! but don’t pay farmers to stop producing food only to pay them for planting flowers! This country needs to be self-sufficient in basic foods, milk, grain, meat, food, water, and as much as possible energy. 

Tony Perryman 

So right, when the Chancellor might be announcing a relaxation of greenbelt rules this week. Land and the production of food for the nation is more important; our trading deficit will become a concern post Brexit. 

Keith William Hendry 

Scotland is self-sufficient in fish, meat, dairy products, vegetables & we have copious amounts of water. Our whisky is the biggest net export cash raiser for the exchequer.

Jane Cooper says it all:

“One problem is that UK farmers, farming to support and enhance our environment and with high animal welfare standards, will be competing on a world market with overseas companies that produce food cheaply by trashing their environments, abusing animals and paying slave-labour wages to employees.  That’s not a fair ‘market’ for UK farmers to be competing in.  

“If you can find a way to have farmers fairly paid what it actually costs to produce food in the UK to the environmental and welfare standards expected by most people in UK, then I agree subsidies wouldn’t be needed”.

 

 

 

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The World Must Detoxify Its Toxic Farmlands: Devinder Sharma

Plenary address at the 19th Organic World Congress, New Delhi, Nov 19-11, 2017

“Any harm we inflict on nature will eventually return to haunt us… this is a reality we have to face.”  Xi Jinping, President of China

The evidence is all there. With soil fertility declining to almost zero in intensively farmed regions; excessive mining of groundwater sucking aquifers dry; and chemical inputs, including pesticides, becoming extremely pervasive in environment, the entire food chain has been contaminated. Further, as soils become sick, forests are logged for expanding industrial farming, erosion takes a heavy toll[1] leading to more desertification. With crop productivity stagnating thereby resulting in more chemicals being pumped to produce the same harvest, the farmlands have turned toxic. Modern agriculture has become a major contributor to Greenhouse Gas Emissions (GHGs) leading to climate aberrations.

Read on here: https://foodvitalpublicservice.wordpress.com/world-must-detoxify-its-toxic-farmlands-devinder-sharma/

 

 

 

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In the dark? Could there be a ‘bespoke’ agricultural policy after Brexit

MP for Stroud, David Drew, Shadow Farming and Rural Affairs Minister, retweeted a link to a Farmers Weekly article,Devolved regions left in dark about plans to take farming out of transition agreement’.

Scottish Office Minister Ian Duncan has suggested that the UK will have its own agricultural policy in March 2019. He said: “We believe taking UK farming out of the CAP during transition is the right thing to do. As farmers you will be better off”.

Professor Dieter Helm, chair of the Natural Capital Committee, is advising the Department lor Environment Food and Rural Affairs (DEFRA) on British agricultural policy (BAP) post-Brexit. He says the EU’s principle of paying farmers for the area of land they farm under the basic payment scheme (BPS) should go and asserts that the BPS does not actually affect food production.

But UK farmers subsidise the low (and unjust) prices received for the food they produce with the BPS payments, which average about £25,000 a year per farm according to an article in the Private Eye, issue 1456, which refers to figures from DEFRA’s Farm Business Income Survey :

For 2016-17, the average cereal farm is forecast to make a profit of £38,000 and the average lowland livestock farm £19,000, though the survey also noted that over 20% of cereal, dairy, lowland grazing livestock, mixed and poultry farms failed to make a profit in 2016/17. Without the BPS, most farms would have traded at a loss.

But the DEFRA survey’s figures were said to include BPS receipts and exclude farmers’ wages or personal drawings.

A 2016 LEI study for the NFU concluded that all UK regions would show, on average, a decline in farm incomes if the UK government fully abolished the direct payments. The UK trade liberalisation scenario would show the most significant changes; farm incomes would decline in all regions, except for the East of England where half of the UK horticultural farms are located, as they do not receive single farm payments (now superseded by BPS since Jan 2015) for fruit, vegetables and table potatoes.

How will UK farmers be protected from subsidised food exports from EU farmers who still enjoy BPS payments?

The column in Private Eye (1443) pointed out that given targetted production subsidies Brexit presents a real opportunity to introduce a bespoke British agricultural policy. A British agricultural policy (BAP) could:

  • encourage more mixed patterns of farming,
  • discourage industrial livestock production and
  • reverse the increasing imbalance in Britain’s trade in food.

To this end, DEFRA is urged to seek advice from other quarters – Professor Tim Lang comes first to mind.

 

 

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Saluting the French President – the first head of state to seek fair food legislation?

Macron: “We should allow farmers not to rely on subsidies anymore and therefore ensure than they be paid a fair amount for their work.”

Reuters reports that President Emmanuel Macron – during a meeting at Rungis international food market in Rungis, near Paris – has called for changes to France’s food chain on Wednesday to ensure that farmers, who have been hit by squeezed margins and a retail price war, are paid fairly.

Macron said that he supported a new type of contract, based on farmers’ production costs

In common with Farmers for Action (NI) which has joined a producer organization (Farm Groups) he is proposing a change in legislation – ‘a new type of contract, based on farmers’ production costs, which would require stronger producer organizations and a change in legislation’.

Prices are currently defined by buyers tempted to pressure prices, leaving many farmers unable to cover their costs.

The changes are part of a wide field-to-fork review promised by Macron during his presidential campaign as a third of farmers, an important constituency in French politics, earned a third of the net minimum wage.

Macron endorsed a proposal from the workshops to create a reversed contract starting from farmers, to food processors and to retailers. This would ensure a better spread of added value along the chain.

Just Food adds: “He promised to shake up the current “balance of power” between producers, food processing firms and retailers. A tougher line would be taken on low prices and discounting and a higher loss-leader threshold for retailers established, Macron underlined . . .

“Legislation will be prepared early next year reversing the current system of food pricing. In future, prices will be calculated on the basis of production costs instead of being imposed by retailers”.

First published here: https://politicalcleanup.wordpress.com/2017/10/19/saluting-the-french-president-the-first-head-of-state-to-seek-fair-food-legislation/

 

 

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Butter price rise: falling milk production, rising demand, adverse weather, liberalisation – low prices are still the elephant in the room

As salaried workers in the commercial media, futures markets and organisations including the NFU, AHDB, DEFRA, DairyUK and RABDF pontificate about the situation, it is good to see that the ignored elephant in the room is slipping in to the columns of the Financial Times.

Emiko Terazono, commodities correspondent, reports that many dairy farms in Europe and Brazil have endured years of ‘sluggish’ (aka low) dairy prices and quotes Kevin Bellamy (Rabobank): “Many dairy farms in Europe and Brazil are suffering from a shortage of young cows to bring into the herd after the years of sluggish dairy prices. Because of the period of prolonged low prices the young stock aren’t there”.

She refers to the EU’s move to liberalise its dairy market in 2015, lifting restrictions on production and exports, which caused prices for fall by more than half between 2014 and 2015, with many dairy farmers around the world going out of business or struggling under increased debts. The EU then responded by introducing voluntary output cuts and compensated farmers for not producing milk. World milk supplies from leading five producer regions slipped 0.4% in 2016.

January protests outside the EU Council building covered here. Above, see the European Milk Board’s Faironika, the artificial cow canvassing for fair payment for dairy farmers and explaining the nutritional value of milk, the role of farmers and their value to the rural economy

During the protests in January, Sieta van Keimpema, dairy farmer and vice-president of the European Milk Board, the lobby group representing the region’s producers, “Milk producers all over Europe are still in the throes of the crisis . . . and although the milk price has rebounded from last year’s lows, it is still lower than the cost of production”.

 

 

 

No fair trade here: cream and butter prices rise but farm-gate prices for milk don’t

The Financial Times reports that a reduction in the milk supply, due to a cold spring and dairy farmers leaving, has led to prices of butter and cream rising 18.7% in the year, according to data from the Office for National Statistics. But despite “record prices” for wholesale cream and butter in recent weeks, the National Farmers Union point out farm-gate prices for milk have continued to fail to keep in step.

BBC online reports that Arla’s CEO Peter Tuborgh said producers “put the brakes on” in 2016, in the wake of previous overproduction of milk and consequently lower prices and Michael Oakes, chairman of the National Farmers Union dairy board, added that UK supply had fallen partly because so many farmers “decided enough was enough during that downturn”. Many farmers have often had to sell milk for less than the cost of producing it and so – understandably – the number of UK dairy producers has fallen.

The National Farmers’ Union said the “constant boom-and-bust dairy market cycle” helped “no-one, most of all farmers” and expressed concern about the lack of strong upward movement in the farm-gate milk price.

Milk buyers are worried about milk volumes falling but, the NFU spokesperson added, “Confidence within dairy farming is at an all-time low [due to] mistrust in the market dynamics and suspicion about how milk buyers are treating their supply base, coupled with the lack of direction on the impact of Brexit on the dairy sector.”

Post-Brexit, will the UK government ensure that ‘ordinary’ farmers receive a fairer proportion of the agricultural payments and turn away from the practice of subsidising offshore companies and rich individuals?

And will the Groceries Code Adjudicator, who places great emphasis on scrutinising supermarkets give more time to food producers and address the issue of unjust farmgate prices?

 

 

 

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The Royal Association of British Dairy Farmers: 2003 and 2017

In August 2003 the Farmers Guardian reported that a series of industry-wide meetings, called by the Royal Association of British Dairy Farmers (RABDF), were held for a year to discuss the true costs of milk production.

Members of RABDF, with independent research consultancies and dairy farmers, produced a report showing that the cost of milk production is much higher than current estimates state. The true cost of milk production was found to be between 20 and 23p a litre, rather than the 18p currently being paid. Dairy farmers were working an average 70-hour week with only a few days holiday each year and low milk prices have left them earning just £2.90 an hour.

The chairman, Tim Brigstocke, said that problem areas were fixed costs, farm overheads, farmer remuneration, family labour costs, pensions and staff development had not been included in current assessments.

The new guidelines proposed by the RABDF included gross costs such as feed, forage, bedding, and vet’s bills; operational costs like labour (£10 an hour deemed a reasonable figure to factor into the equation, given the level of skills required in dairying), machinery, depreciation, property-related, unpaid family labour and resource costs: rent, quota leasing and finance costs. Mr Brigstocke urged producers to adopt these guidelines to arrive at a realistic picture of how much their businesses were costing them.

A Lancashire dairy farmer contacted this site to voice concern about the very differently focussed RABDF of 2017 and its ‘elitist style’.

RABDF, now described as the ‘the new secretariat to the Trehane Trust’, is advertising its October conference in Birdcage Walk London for ‘leading farmers’ who are to be granted the opportunity to ‘rub shoulders’ with policy makers and supply chain leaders. The conference will be held in conjunction with the Trehane Trust which funds research into all aspects of the dairy supply chain, from production to new product development and consumer trends in the dairy sector – but the crucial subject of farmgate prices is not listed.

One of the invited speakers at this most opulent venue (above) is from Arla – a downward trend-setter, announcing a price reduction for the April payment – the first milk price drop in 2017 by a major UK milk buyer. A further online search will reveal that this company has closed several processing plants making hundreds of workers unemployed, though the net profit of the Arla Group last year was €356 million.

The key findings of Trehane Fellowship recipient Mike Houghton of Andersons will be included. He has been researching future options and opportunities for the sector at home and abroad, using his contacts in Canada and the USA to find out more about their support systems, in particular crop insurance schemes and futures markets and consulting key people within the legal profession and the insurance industry to obtain a different perspective on the topic. 

Tim Brigstocke is now RABDF’s policy director

When this ‘Business and Policy Conference’ has taken place, will he help the RABDF to come down to earth in the interests of the average dairy farmer – arguably an endangered species?

In the interests of food security, will the RABDF present the facts about rising costs but low and fluctuating farmgate prices to the complicit policy makers and supply chain leaders, with whom wealthy farmers are being invited to rub shoulders?

Or will they continue their failed policies as the dairy sector continues to decline and foreign importers take over?

 

 

 

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