Conventional (ie non-organic) farms have been seriously affected by very low prices and most are losing money, or simply just surviving (at the expense of foregoing the proper capital investment in their business that can only be delayed for a short time). The situation on organic farms was not so severe initially, but now we are embroiled in many of the same issues. Imports are being favoured where they can advantageously influence domestic prices. Consumers never see this impact in the shops. When conventional produce prices fall, inevitably this impacts on the differential between those prices and that of organic farm produce.

The price we receive for calves has fallen for some breeds and particularly for females. These take longer to grow and normally have a lower market value than bull calves. Prices are now pitifully low, often under £5. The cost of selling the calf, ear-tagging it, and obtaining its 'passport' come to to more than £5!

The value of cows whose productive life has ended has also crashed and this has been a major blow.

In both cases this is exaggerated by the Holstein breeding which gives an animal ideal for milk production, but much less fleshy than those required by beef farmers.

We see four main reasons for collapsing prices:

  • The high value of UK currency relative to others in Europe and the world with whom we trade.
  • Political (UK and European policies) particularly in relation to other global trading nations, and specifically the United States.
  • The impact of the retail sector upon agriculture

Food is too cheap, in historical terms. This refers to basic foods rather than the many 'meal solutions' and other added value items that are available. It is too cheap in relation to its nutritional value, its historical cost, and the return to the producer (who is doing all they can to deliver the best and safest food to our citizens).

People have developed an expectation that the essential of life (food) should be cheap so that the luxuries of life (electrical gadgets, driving twice as far as 12 years ago, holidays etc) can be bought with the 'saved' money.

There are lots of knock-on effects of the disastrous returns for farm produce, including the following:

  • Farmers stop spending money. This means that businesses dependent on farmers lose trade and may be forced to close. Examples are machinery dealers and veterinary practices.
  • Many highly skilled people lose their jobs, in areas such as manufacturing, machinery repair and livestock haulage. Farmers will make some staff redundant. These people are also highly skilled and motivated. They are dedicated to a job that few people are prepared to consider doing, partly because of the anti-social hours, and partly because it involves working in wet as well as sunny weather. When incomes rise again the need for such labour will increase. Unfortunately those people will have found other jobs and their skills will have been lost.
  • Farmers will become hard-nosed and only able to spend money on essential items directly related to crop production or keeping animals. They will curtail most expenditure on non-productive (in the short term) projects such as environmental work that produces little that is saleable, even though it is pleasing to the eye and heart.
  • The infrastructure - the web of activity that has us all dependent on each other for our community and survival - will be severely damaged. Key links will break. Facilities, such as shops and associated traders, will be lost. Morale will be low. People will despair, becoming disbelieving that anyone cares about the problems.

Farmers could even become as bad as some other industries and start operating as a purely short-term business. This would mean exploiting every opportunity with little consideration for the impact it will have on others or for the longer term security of the business. Naturally, within farming, the business means the land, and the land is often perceived as part of the nation's heritage. Yet the nation is not doing very much to alleviate the problems that will lead to a downgrading and desecration of a significant area of that heritage.

Recovery from this position is harder the longer it is allowed to continue. Infrastructure is easy to lose, very hard to reinstate without reinvestment on a scale that will require a massive increase in business confidence, both on the part of farmers and the banks who lend money to them.

Oliver Dowding
September 2002