Hill-farm economics in 2018-19

In 2017 I wrote a piece about the 2016/17 Farm Business Income figures and how they related to farming on Dartmoor. Two years on, the 2018/19 figures have been published and they make for grim reading.

As a result of the cold late spring in 2018 followed by the very hot, dry summer hill-farmers faced increased feed costs. Additionally they received lower prices for store cattle, ewes and ewe hoggs at market. This resulted in a doubling of agricultural losses and a halving of their incomes despite subsidy levels remaining the same compared to 2016/17.

Upland hill-farming is categorised as ‘Grazing livestock (LFA)’

Here are the 2016/17 and 2018/19 figures for comparison.

In 2016/17 the agricultural elements of the hill-farming businesses made on average a loss of -£9400, by 2018/19 this had increased by £12100 to -£21,500. Farm incomes dropped by £11,800 from £27,000 to £15,500.

The final column in the above table shows that in 2016/17 without an subsidy the average hill-farm in England would have lost -£7000, by 2018/19 this had risen to -£18,800.

We are about to enter the third phase of agricultural policy since World War 2: ‘public money for public goods’, following on after the productivist era driven by the 1947 Agricultural Act and the era of ‘environmentalism’ underpinned by the agri-environmental schemes.

The new Public Money for Public Goods policy will see the Basic Payment Scheme and the agri-environment payments phased out and replaced by a new Environmental Land Management Scheme.

Even if all upland hill-farms received on average £34,300 (i.e. the subsidy level paid in 2018/19) for providing ‘public goods’ (carbon storage, water supply, wildlife, archaeology, access and landscape) we will be expecting hill-farmers to live on £15,500 per annum and that’s unsustainable surely?

I’m not sure our policy makers understand this …… but perhaps they do ….. and I won’t even mention the B word and possibility of a ‘no-trade deal’.

 

Michael Gove returns to the uplands

Michael Gove has just delivered his keynote speech to the NFU Conference in Birmingham – you can read the full speech here. I have selected the passages which refer to the uplands.

“Rural communities depend on profitable agricultural businesses to thrive. The landscapes which draw tourists, from the Lake District to Dartmoor, the Northumberland coast to Pembrokeshire, depend on farmers for their maintenance and upkeep.”

“As does the work of organisations like the Prince’s Countryside Fund which support smaller farms, especially those in more challenging areas. I firmly believe that supporting those farmers who help keep rural life, and economies, healthy is a public good.”

“I am acutely conscious that the changes which are coming to farming leave some sectors more worried than others. And I am particularly aware that many smaller farmers, such as dairy farmers in areas like Devon or upland sheep farmers in Cumbria and Northumberland, fear that the future is particularly challenging for them. Margins are tight. Milk and lamb prices are far from generous. The risks to profitability of Bovine TB or other forces beyond the farmers’ control add to stress. And the prospect of public support diminishing or disappearing makes many wonder how they can go on. I believe we have to ensure future methods of agricultural support recognise how critical it is to value the culture in agriculture – Devon and Somerset would not be as they are – with the countryside as beautiful as it is and communities as resilient as they are – without dairy farmers. Cumbria and Northumberland, Yorkshire’s Dales and Pennine Lancashire would not be as they are – both as breathtakingly beautiful and as resilient – without upland farmers.”

“And yes, I am romantic about it. You cannot read James Rebanks’ A Shepherd’s Life, with its descriptions of life sheep farming in the Lake District, without realising how precious and valuable a link with all our pasts the continuation of farming in communities such as James’ provides. Men and women are hefted in those hills just as much as the sheep they care for. And preserving profitable farm businesses in those communities is just as much a public good as investment in anything I know.”

The specific mention of uplands and hill-farmers as ‘public goods’ therefore entitled to ‘public money’ will be seen as a big relief to many as the 25 year Environment Plan made no mention of the uplands at all and led to consternation in some quarters. e.g.

Gove did mention the uplands in his Age of Acceleration speech at the Oxford Farming Conference in January:-

On hill-farmers
So that does mean …. asking how we can support those farmers, for example upland sheep farmers, whose profit margins are more likely to be small but whose contribution to rural life and the maintenance of iconic landscapes is immense.

Rural resilience as a public good
Finally there is rural resilience. There are any number of smaller farm and rural businesses which help keep communities coherent and ensure the culture in agriculture is kept healthy. Whether it’s upland farmers in Wales or Cumbria, crofters in Scotland or small livestock farmers in Northern Ireland, we need to ensure support is there for those who keep rural life vital. The work of the Prince’s Countryside Fund has been invaluable here and the kind of enterprises that it supports are, I believe, worthy of public support.

but it was curious to say the least that they didn’t get a mention in the 25 year Environment Plan.

So Michael Gove has responded to the ‘feedback’ he has received and made specific mention. The Devil though is still in the detail which we have yet to see. This should begin to emerge once the Consultation Paper on the future of agriculture is published in a month or so.

The key questions to answer in the Consultation Paper with regards to the uplands are

will sufficient public money be made available for the uplands
and
will hill-farmers be prepared to earn it by the providing the public goods?