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Farming

Confidence drops as markets stay volatile

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British farming has faced massive challenges in 2015: Meurig Raymond

British farming has faced massive challenges in 2015: Meurig Raymond

INCREASED volatility and falling commodity prices across the sectors have seen farmers’ confidence drop to lower levels than last year, a new survey by the NFU has revealed. Confidence, specifically in the arable and dairy sectors, has declined significantly from 12 months ago, but farmers across the industry have told NFU that the three-year forecast is much more positive. As part of our sixth annual confidence survey, members told the NFU that they expected negative impacts on their businesses in the coming year relating to regulation and legislation (69%); CAP reform (51%); output prices (56%) and input prices (46%). Output prices are the second most important factor affecting confidence, as members have seen their margins squeezed as a result of the fall in farmgate prices greater than the reduction in their costs of production.
The survey also shows that in the last two years twice as many farmers have seen their profits declining, with 49% of respondents now reporting declining profits (42% last year). Some 7% think their business may not survive – the highest figure in any year so far. Those figures were even more worrying in the dairy sector, where almost 20% of dairy respondents declared that their business may not survive, a rise from 3% in 2014. NFU President Meurig Raymond said: “This year has seen British farming face massive challenges, not least of all falling farmgate prices, particularly within the dairy and arable sectors. “Given the levels of volatility we have seen across the industry it is no surprise that we have seen farmer confidence in the negative.
It shows very clearly that we are absolutely correct to urge Defra and RPA to make every effort to speed delivery of BPS payments and that we press processors and retailers for a fairer return for the highquality food that farmers supply. “Regulation remains the key blocker for our members’ confidence. This gives a clear message that government must to do all that it can to ease regulatory pressure. Confidence is critical because it influences investment and production intentions. If we want our farms to compete in an increasingly global market place and make the most of emerging export opportunities, we need government action rather than rhetoric when it comes to reducing red tape. This is why NFU is calling for action in 2016 to reduce the frequency of farm inspections and improve their coordination.
“Our research has shown that looking forward, farmers have a generally optimistic outlook on their medium-term prospects. The government has a golden opportunity, in its 25-year Food and Farming Strategy, to map the course for a more confident and profitable industry. The NFU urges government, retailers and the public to back British farming to ensure this optimism is not misplaced.” More farmers said they want to invest in diversification, training and energy efficiency in the three years to come. Those intentions are backed by the higher levels of borrowing in agriculture registered for the first nine months of the year.
The volatility of markets was a key part of evidence given by the NFU to House of Lords committee on December 16. The NFU has given evidence to a group of Peers on how agricultural price volatility impacts farm businesses. Head of food and farming Phil Bicknell appeared before the House of Lords Energy and Environment Sub- Committee as part of its enquiry into market prices and wider resilience among farmers. It follows a similar enquiry being held by MPs on the House of Commons Efra Select Committee into farmgate prices.
With volatility characterising most agricultural markets, and the associated pressures on cash flow, profitability and long term business planning, the committee heard about the challenges of price volatility faced by NFU members. Mr Bicknell emphasised that sustained price volatility risks the viability of farm businesses, leads to reduced investment levels, and is a challenge for the whole food supply chain rather than just a farming issue.
He said: “Volatility is an ever increasing characteristic of agricultural markets, particularly as we’ve seen farm policy back away from market management and control to less marketdistorting policy tools. “Farming is a very resilient industry. Our industry is made up of farmers who are past masters at dealing with anything that’s thrown at them – whether that’s periods of low prices or the recent devastating floods that hit farming communities in Northern England. “But it’s important that we’re an industry that thrives rather than just survives and is geared up for future food production. A boom and bust cycle of prices benefits can be damaging in the long run.”

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Farming

Caution over CAP replacement funding

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THE LIBERAL DEMOCRATS in Wales have criticised the UK Conservative Government following its announcement showing Welsh farmers will receive less financial support than they currently get from the EU.


At present farming subsidies from the EU, mostly distributed under the Common Agricultural Policy (CAP), amount to around £350million a year for Welsh farmers. This represents more than 80% of average farm incomes in Wales.


The Government’s new announcement outlined a £2.85billion funding package to replace EU funding, in which £231million is allocated to Wales.


Jane Dodds, Leader of the Welsh Liberal Democrats said: “Brexit is already threatening the livelihoods of our farmers, especially given the threat of no deal at the end of 2020. They need certainty and security, not less support and additional barriers to trade.


“This is a far cry from the grand promises that were made to Welsh farmers and is just another case of Conservatives saying one thing at an election and then doing another afterwards.


“The Welsh Liberal Democrats demand better for our farmers. The Conservatives must honour their commitment to guarantee existing funding in full and stop playing political games with our farmers’ futures.”


The Welsh Government’s response was not as condemnatory as Ms Dodds, but also noted the limited nature of the funding guarantee.


The Welsh Government also confirmed that it will be holding back the maximum amount of funding permitted to fund its pet projects in 2021/22 and keeping it out of farmers’ hands.


Among those projects are a commitment to reduce farming by planting woodland on agricultural land and a range of the environmental schemes favoured by those who find agriculture an impediment to their enjoyment of the countryside after they move to Wales.


Lesley Griffiths said: “Wales has benefitted from many years of European investment, including in agriculture and rural development.

This is of vital importance to Welsh farmers and rural communities.


“We welcome the announcement from the Treasury; but let us be clear, this is only making good on commitments already made.


“I would call on the UK Government to provide guarantees of funding for agriculture and to replace other current EU funds for future years.

This will allow us to plan important future work to support agriculture, develop the economy, tackle climate change and protect our environment.”


NFU Cymru President, Mr John Davies said: “I am pleased to have confirmation from the UK Government that current levels of support will be maintained for 2020.

This helps provide some stability and continuity as we prepare to leave the European Union and establish new trading relationships with the EU27 and much of the rest of the world.

Farming is, of course, a long term business with lengthy and complex production cycles, and farmers need as much certainty as possible around levels of future support payments to be able to plan for the future.”


Mr Davies continued: “This announcement is very welcome, but to help secure the future of Welsh agriculture I would very much like to see the government act to ensure that Wales’ farmers are not unfairly undermined by imports produced to environmental and animal welfare standards which would be illegal here. I very much want 2020 to be the year in which the UK Government signals its commitment to upholding high standards of production, by setting up a council on trade and standards which can advise Ministers on future trade policy, and help ensure our high standards are upheld, not undermined in any future trade deals.”


Andrew RT Davies, the Conservatives’ Senedd spokesperson on agriculture who claimed Welsh farmers would not lose a single of penny of funding throughout 2016’s referendum campaign, said: “This commitment is a down payment on the Welsh Conservatives’ Westminster manifesto pledge to guarantee funding for the farming community during the lifetime of this UK Parliament (2024).”


Mr Davies continued: “It’s now high time that the tired Welsh Labour Government in Cardiff Bay raised its game and started to deliver for the rural economy of Wales, something they have spectacularly failed to do for 20 years of devolution.”


Plaid Cymru has accused the Tory Westminster Government of “a cynical rehash” in response to the UK Chancellor once again announcing that the same level of funding for the Basic Payment Scheme will continue for 2020.
But while the allocation for farming subsidy is similar to that of 2019, the UK Government has not committed to providing the extra 15% of funding which the Welsh Government has been transferring to its Rural Development fund.


Responding to the announcement, Plaid Cymru’s Westminster Group Leader, Liz Saville Roberts MP said: “This announcement is a cynical rehash of funding promised to Wales last year by the Tories.


“It does not make up for the years of uncertainty Welsh farmers have had to face due to Brexit, and it does not take the disastrous prospect of ‘no deal’ off the table.


“These payments are a lifeline for Wales’s agricultural sector and they must be protected by all means if the industry is to survive.


Llyr Gruffydd AM, Plaid Cymru’s Rural Affairs spokesperson in the Senedd added: “The Chancellor needs to urgently clarify that the £45million shortfall will be made up in full.”

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Farming

Reminder for sheep & goat farmers

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SHEEP and goat keepers in Wales are being reminded to submit their annual inventory form by Thursday 30 January, to avoid potential penalties.
The form can be submitted by either logging onto the EID Cymru website (www.eidcymru.org), or by returning the paper form in the pre-paid envelope.


FUW Pembrokeshire County Executive Officer Rebecca Voyle said: “The annual inventory of sheep and goats is a legal requirement and it is vital that you recorded all the sheep and goats of which you are the registered keeper, by CPH location on 1 January 2020.


“The number of sheep/goats you declare must include breeding sheep, rams, ram lambs, store and finished lambs, cull ewes/rams, goats and any other sheep.


“It is important that you do this to avoid a potential cross-compliance penalty and an increased likelihood of an inspection.”


If you require assistance, contact the EIDCymru service helpline 01970 636959 or email contact@eidcymru.org.

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Farming

NFU Cymru President’s New Year’s Message

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AS WE close the book on what has been an eventful year, I’d like to survey the events of 2019 and look ahead to see what is on the horizon in 2020.
We’ve just emerged from the third UK General Election in four years, following what has been a period of extraordinary political instability. The result of December’s election gives the Prime Minister the majority he has been seeking to take forward his Brexit plans. Although in legal terms we cease to be an EU Member State at the end of January, there is much work ahead to secure the access we need to our nearest and most valuable export market.


Although uncertainty persists, I am ambitious for our sector. Wales’ farmers have the skills, natural resource base and ambition from which to rise to future challenges and opportunities which lie ahead. These opportunities include increasing our self-sufficiency by producing more high-quality food, securing new export markers and becoming producers of the most climate-friendly food in the world by becoming zero net emitters of greenhouse gases by 2040.


Leaving the EU at the end of January based on the current withdrawal agreement means that we enter a transition period, during which time we continue to enjoy access to the EU’s single market. We must ensure that when that transition ends, we can access that market on the most favourable terms possible, with tariff and non-tariff barriers eliminated wherever possible. The UK’s government must also avoid a situation whereby the transition period elapses without having reached an agreement on a future trading relationship with the EU, culminating in us trading with the EU on WTO terms.


Trade talks with third countries will begin soon and one point I have been making consistently, and for some time now, is that we must not allow our own high environmental and animal welfare standards to be undermined in any future trade agreements that the UK may enter into. I, therefore, want 2020 to be the year in which the new government moves ahead with the creating of a Trade and Standards Commission, which will be tasked with ensuring our high standards are upheld and respected in any future trade agreements with third countries.


2019 also saw the second stage of the Welsh Government’s consultation on the future of agricultural policy in Wales. The ‘Sustainable Farming and our Land’ consultation followed its 2018 predecessor, ‘Brexit and our Land’, and we were pleased to see these revised proposals including future support around the principle of sustainability. The union remains concerned, however, that the proposals suggest the continued supply of vital economic, social and cultural benefits provided by Welsh farming currently can be secured through what is, essentially, an agri-environment scheme. I’d like to once again thank all farmers and those living in our rural communities who responded to the consultation. We now wait for the Welsh Government to analyse the responses and bring forward the next stage of the process in 2020.


Sadly, as we welcome in the New Year, around 650 cattle farmers in Wales are affected by bovine TB restrictions and this, of course, has a significant knock-on effect on their business and family. NFU Cymru continues to lobby the Welsh Government to review its bovine TB eradication strategy and deliver a more holistic policy that tackles this disease across all its vectors. A peer-reviewed scientific report examining the effectiveness of badger culling in reducing outbreaks of TB in cattle has shown positive results in Gloucestershire and Somerset and we now look to Welsh Government to listen to the science and use all of the tools at its disposal to control the reservoir of disease in wildlife – not just through cattle controls. We also need the Welsh Government to look at the support for chronic herds in Wales and the massive impact long term breakdowns are having on these businesses.


On the dairy side, we look forward to a long-awaited consultation on statutory milk contracts. There are examples of good practice out there but what other industry would allow six weeks of payments in arrears and for processors to adjust prices at a whim? Of course, we want processors to have successful profitable businesses, but we need the same for our milk producers. After all, these are the people taking the price risk when product prices fall. This has to change as evidenced by the latest Welsh Government farm statistics when dairy farm income fell by a massive 43% in the year ending March 2019 compared to the previous 12 months. Statutory contracts will help bring back some stability which the sector needs right now.


Against the backdrop of Brexit uncertainty and low market returns, the threat of regulation continues to weigh heavily on farmers’ minds. Back in November 2018, the Welsh Government announced regulatory measures covering the whole of Wales to protect water quality from agricultural pollution coming into force in January 2020. From information provided by the Welsh Government in early 2019, it is clear the proposed new regulations are whole territory Nitrate Vulnerable Zones (NVZ) with the NVZ Action Programme requirements applied across the whole of Wales.
The Minister, in December 2019, confirmed that she will be considering advice from officials in January on the introduction of agricultural regulations following further engagement. NFU Cymru categorically rejects any proposals which include the introduction of the Nitrates Directive and Nitrate Vulnerable Zones (NVZ) across the whole of Wales. This is based on the evidence which shows an all-Wales approach simply cannot be justified; that the existing NVZs in Wales have had limited effectiveness. The great harm an all-Wales NVZ will do to farm businesses and our rural communities, which greatly outweigh any benefits to water quality, cannot be justified. We are clear, an all-Wales NVZ approach is not evidence-based, proportionate or targeted and we continue to work tirelessly to emphasise to Welsh Government the devastating impacts that an all-Wales NVZ approach will have. We urge the Minister to recognise that poor regulation serves no one – not government, not society, not the farming industry or the environment – and work with us to develop the framework to support farmers to take action to improve water quality where this is needed.
2019 has also been a year when the glare of the media on Welsh and British farming has not been as balanced as we would expect. I have long said that, as an industry, we are not immune from critique and we relish the opportunity to stand up and promote our values and leading standards. What we do not and will not accept, however, is unbalanced reporting and false news pedalled by those with an agenda against farming. This year NFU Cymru has shown we tackle such behaviour through robust complaints and other means. Please be assured that we are prepared to escalate our actions accordingly if required.


There will no doubt be huge challenges facing our industry in 2020 and beyond. As an industry, we should all be very proud of the role we play and we must remain steadfast in our ambitions to continue to deliver for the people and communities of Wales. As an organisation, NFU Cymru is ambitious for Welsh food and farming. Politicians in both Cardiff and Westminster must commit to working with us to deliver our ambition for a productive, progressive and profitable farming sector that delivers for the whole of Wales

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