THE VULNERABILITY of Welsh agriculture has been highlighted today with the latest Welsh Government Farm Income forecasts predicting a decline in the profitability of farming across all sectors.
The figures, based on Farm Business Survey results for 2013- 2014, show that average farm business income across ‘All Farm Types’ is forecast to decrease from £29,000 in 2013-2014 to £22,200 in 2014-2015 – a decline of around 24%.
For dairy farms, average farm business income is forecast to decrease by around 23%; cattle and sheep (LFA) farms are forecast to decrease by 22% to £15,000 while farm business incomes on cattle and sheep (lowland) farms are expected to decline from £28,600 to £23,100.
NFU Cymru President Stephen James said: “The industry saw falling farm-gate prices across all commodities during 2014. These figures provide the first official indication of the financial impact on Welsh farm businesses and highlight the cash-flow challenges that farmers are likely to face in the coming months. These are challenging times across all sectors – market volatility, a strong pound and significant cuts in direct payments as a result of the pillar transfer decision have taken a heavy toll on the industry over the past 12 months. The support of Government, banks and the supply chain is crucial to help us come through these difficult times.”
Mr James continued: “The GVA (Gross Value Added) figures from agriculture show increases of around 15% from £325.2m in 2013 to £374.3m in 2014. NFU Cymru believes this provides strong evidence of the positive contribution that agriculture makes to the economy of Wales. The opportunities for Welsh farming are clear – in the longer term global and domestic demand for food is set to increase. But for Welsh farmers and the economy of Wales to benefit, we need Welsh Government to establish the right conditions through its policy and regulatory framework. The Rural Development Plan 2014-2020 provides an immediate opportunity to put in place a suite of measures that support on-farm investment and enhance the competitiveness of agriculture and we look forward to the implementation of the schemes over the coming months.”
FUW President Emyr Jones said: “The combined impact of reduced farmgate prices, the Welsh Government’s 15% Pillar Transfer, a reduced CAP budget and a Single Payment exchange rate of £0.7773/€1 has had a catastrophic impact on farm incomes. The fact that sterling is continuing to strengthen against the Euro means there is ongoing pressure on prices, with the situation in relation to Greece not helping.”
Mr Jones said that the Union’s vociferous objection to the reduction of direct farm payments by 15% (the ‘15% pillar transfer’) was well publicised, but the decision could not now be overturned.
“We cannot control the exchange rate, and despite our fierce lobbying against it, the decision to transfer 15% has been made. The only area where there is flexibility to act is in terms of ensuring Rural Development funds are directed at bringing farm incomes back up, and not squandered.”
Mr Jones said that further changes to direct payment rates which would be decided upon over the coming months would also add to uncertainty and disruption for the industry, and would inevitably put further downwards pressure on many farm incomes.
“The figures announced today should come as a wake-up call to all those within Welsh Government who have not yet recognised the need for an RDP which is totally focussed on boosting the efficiency and profitability of farms.”
Plaid Cymru Parliamentary Leader, Elfyn Llwyd MP, told a meeting of the NFU in Birmingham: “We have just celebrated the anniversary of Magna Carta and have been reminded of the barons or the ‘over-mighty subjects’. Today’s ‘over-mighty subjects’ are the major supermarkets who seem to get away with undermining agriculture at every turn. I don’t know why the political establishment does not take them on and the need to do so has never been so urgent. The Groceries Code Adjudicator appears to me to be toothless. It needs to be beefed up to ensure that it encompasses milk production but also all primary producers so that they are not consistently undermined in the way that is happening.”
Urging action to support milk producers and secure a sustainable future for farming, he added: “We need to also consider a form of intervention to ensure adequate pricing of milk because for the first time in generations, the number of milk producers has fallen below 10,000 and continues to fall. We also need to ensure that rural development programme funding is used as effectively as possible, particularly targeting on-farm investment to improve skills, strengthen infrastructure and assist diversification where relevant. Farming remains a hugely important industry which holds together the fabric of rural society. We must ensure its future development and expansion for the good of everyone.”
Farming faces zero carbon challenge
AN AMBITIOUS new target to reduce greenhouse gas emissions to zero by 2050 will lead to significant changes in farming practices over the coming decades, according to a leading agri-environment specialist.
Professor Iain Donnison, Head of the Institute of Biological, Environmental & Rural Sciences (IBERS) at Aberystwyth University, was responding to the publication of ‘Net Zero: The UK’s contribution to stopping global warming’ published by the UK Government Committee on Climate Change.
Professor Donnison is an expert on agriculture and land use, which feature in the report in terms of targets for one-fifth of agricultural land to be used for forestry, bioenergy crops and peatland restoration.
According to Professor Donnison, such a reduction is very ambitious but achievable in Wales and the wider UK. “Land use can positively contribute towards achieving the net zero targets, but there are challenges in relation to emissions from agriculture especially associated with red meat and dairy,” said Professor Donnison.
“In IBERS we are already working on how to make livestock agriculture less carbon intensive and developing new diversification options for the farming of carbon. For example, net zero targets could provide significant diversification opportunities for both farmers and industries that make use of biomass and wood for the production of energy, materials including in construction and for wider environmental benefits.”
Professor Donnison added: “The report gives a clear message regarding the importance of the task and the role that the UK can play to compensate for past emissions and to help play a leadership role in creating a greener future.
“The report says it seeks to be based on current technologies that can be deployed and achievable targets. One-fifth of agricultural land is a very ambitious target but I believe that through the approaches proposed it is achievable (e.g. for bioenergy crops it fits in with published targets for the UK). This is based on the knowledge and technologies we have now regarding how to do this, and because right now in the UK we are developing a new agricultural policy that looks beyond the common agriculture policy (CAP). For example, the 25-year Environment plan published by Defra envisages payment for public goods which could provide a policy mechanism to help ensure that the appropriate approaches are implemented in the appropriate places.
“The scale of the change, however, should not be underestimated, although agriculture is a sector that has previously successfully responded to challenges such as for increased food production. The additional challenge will be to ensure that we deliver all the benefits we wish to see from land: food, carbon and greenhouse gas (GHG) management and wider environmental benefits, whilst managing the challenge of the impacts of climate change.
“The link is made between healthy diets with less red meat consumption and future reductions in greenhouse gas emissions from agriculture. This reflects that agriculture will likely go through significant change over the coming decades as a result of changes in consumer diets.
“Net Zero targets, however, could provide significant diversification opportunities for both farmers and industries that make use of biomass and wood for the production of energy, materials including in construction and for wider environmental benefits.”
HSE fees up 20%
A FEE imposed on farm businesses found to be in breach of health and safety legislation has gone up nearly 20% to £154/hr.
Since October 2012 the Health and Safety Executive has operated a cost recovery regime, which means that businesses are charged for the costs of an investigation from the point a material breach has been identified through to the point when a decision is made on enforcement action.
If you are found to be in material breach of health and safety law, you will have to pay for the time it takes the HSE to identify the breach and help you put things right. This includes investigating and taking enforcement action. This charging scheme is known as a Fee for Intervention (FFI).
Robert Gazely, farm consultant and health and safety specialist for Strutt & Parker said: “A material breach is something which an inspector considers serious enough that they need to formally write to the business requiring action to be taken. Once an inspector gives a farmer this written notification of contravention (NoC), the farmer will be expected to pay a fee.
“From 6 April 2019, the hourly charge has been increased from £129 to £154. The final bill will be based on the total amount of time it takes the HSE inspector to identify the breach and their work to help put things right.
“Of course, the primary reason for farms to be proactive in their approach to health and safety should be to protect themselves, their families and any employees.
“The number of people who are killed and injured each year on farms remains stubbornly high and the human cost of these incidents can be incalculable to those affected.
“But taking a safety-first approach should also help farm businesses to avoid a financial hit, as the HSE fees can mount up in the event of an investigation.”
Red meat gives ‘Taste of Wales’
WELSH Lamb and Welsh Beef were among the finest of Welsh foods at Wales’ largest and most prestigious food and drink trade event, Taste Wales last month.
The remarkable display of products, all under one roof, brought together a large contingent of UK and overseas buyers, including importers with a specific interest in Welsh red meat. These included a major foodservice and retail importer and distributor from Scandinavia that imports 6,000 million tonnes of meat annually from all over the world. The company is recognised for bringing tasty food experiences to Nordic dining tables.
They were invited to the event by Hybu Cig Cymru – Meat Promotion Wales (HCC) who also arranged site visits to some of Wales’ major red meat processing plants. The main aim was to impress the importers with the industry’s high ethical and environmental standards.
The visit, led by HCC’s market representatives in Scandinavia, was a platform for many productive and promising discussions.
One representative, Anette Stenebrandt said at Taste Wales: “We have a company from Sweden and Finland with us, trying to do some new business in the Nordic-speaking countries. This is really a fantastic fair and we have enjoyed it a lot.”
Her colleague Jakob True added: “This is our first time here at this amazing event, it’s a great opportunity to meet a lot of Welsh producers, particularly Welsh Lamb which is world-class, we know. We’ll go back to Scandinavia with a lot of good new leads and hopefully bring a lot of business to Wales.”
HCC’s Market Development Manager, Rhys Llywelyn said: “Many of the buyers we met at Taste Wales, including the Scandinavians, showed a significant interest in Welsh Lamb and were impressed by the whole package – from the story of producing Welsh Lamb to the processing techniques, the taste and texture.
“Others also expressed a keen interest in forging deals with the industry, including a Japanese department store, a major buyer from Hong Kong and a representative from Qatar. This bodes well for the future, especially as Brexit uncertainty is set to continue in light of the extension on Article 50.”
In recent months, HCC has undertaken a strategic GB marketing drive to encourage growth and recognition of our quality produce on British soil.
HCC’s UK Market Development Executive, Emily Davies said: “Our presence at Taste Wales also included concentrating our efforts on promoting Welsh Lamb in the domestic market. We met a number of foodservice companies, retailers and executive chefs and discussed Welsh red meat opportunities with meal-kit companies and online retailers. We also launched a new tool-kit for retailers which highlights the ways in which we can work with them to promote Welsh Lamb and Beef.”
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