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Speed of Change

In this edition of Farming North, I am going to focus on life for farmers after Brexit.  Even though there isn’t any deal passed by Westminster at the time of writing, I am sure that somehow the political log-jam will have broken somehow and we can look “forward” to life in the brave new world without the very close ties that EU membership has given us.

So, lets ignore the shape of “the deal” and take a quick look at what has actually happened since we joined and where that might lead us next.

We joined the EU, or the EEC as it was, in 1973 and looking back, some surprising facts emerged about UK farming in those early days:

After a price adjustment for inflation – UK farmers received £500 a tonne for wheat and 60 pence a litre for milk and that’s compared to today’s £160 for wheat and 27.5 pence for milk.

Dairy cow numbers have fallen to nearly half from 3.5 million to 1.85 million and yet total milk production is up by 10%!

Numbers of farmers have more than halved from 294,000 to 141,000 and the total workforce of agricultural employees has dropped from 300,000to less than 180,000.

However, the figure which jumps out at me is what households actually spend on food. In 1973, the average percentage of income spent on food was 24% … a figure which has nearly halved to 12.7% today.

So, what does all this mean and where are we actually headed?

On the face of it, things were really not too bad for UK farming back in the early 1970’s as those big prices for milk and wheat would suggest. Yes, there was definitely less pressure to squeeze every last drop of milk out of cows and get every last grain of wheat from each acre and when the EEC came along with payments to farmers which were supposed to make living standards in the countryside equivalent to the cities … then those living in the countryside welcomed the opportunities.

However, things turned sour with 17% inflation and 19% interest rates in the 1980’s and then milk quotas and grain mountains just added to farmer’s headaches, and since then things have never really got any better.

So, looking to the future, it seems that consumers are used to low food prices and won’t be happy if that percentage of weekly income spent in supermarkets goes back upwards!

Therefore, any suggestion that farmers will have to get used to life without support payments is simply a non-starter. If consumers want cheap food, then support payments are here to stay… or the alternative, as certain politicians from the far right suggest, is that we import cheap chlorinated chicken and hormone fed beef from the USA. To them I would simply say…

That is short sighted policy which gives no food security in the event of world shortages, extreme weather events and political crisis!

I am convinced that whatever happens after Brexit, the better performing, larger farmers will continue to improve and simply swallow up the smaller, average performers who will give up the struggle for survival and sadly, be pushed out by economics.

The other food producers who I haven’t mentioned are the small-scale and specialist producers who grow and retail through farm shops and the like. They will survive and probably do well, as they know who their customers are and will be relatively immune to the forces of world markets. Therefore, the way forward for some food producers will be to get closer to their customers and I am convinced that we will see even more farm shops and small co-ops of farmers working together to get produce to market.

The bigger and more efficient producers will get even bigger and more efficient and use increasing technology with robots, drones, GPS and the like as they compete on a world stage and the smaller farmers will develop their own markets away from all of the above.

So, what this all means as we look to a future outside of the EU is pretty much what would have happened if we had stayed on the inside, but it’s the time scale of change which will alter.

In the long run, yes we face a brave new world away from the EU, but the speed of transition will be governed by how Hard or Soft our Brexit actually becomes in practice.

The closer the UK stays linked to the EU, then the slower the speed of change as UK farmers will be partly helped by the umbrella of things like a customs union or even a single market.

However, if the break between UK and the EU is swift and bitter, then the speed of change for farming will likewise be fast and not so sweet.          Most of the farmers I come across want a compromise and solution to give some certainty of where we are going, which leads me to think there’s a massive disconnect between people and parliament …

Maybe for Deal or No Deal we should read People or Politicians?

The stakes for farming have never been higher and already we are playing in extra time with no clue when the EU will blow the whistle on full time.