New farm policy 'crucial' after 2012 weather problems

NFU President Peter Kendall has called for 'fresh thinking' from government on farm policy as farmers enter 2013 'reeling from the consequences of extreme weather'.

"We know drought in the key production regions across the globe is the main driver for rocketing animal feed costs while in stark contrast at home, a wash-out summer further compounded by a sodden autumn and winter has hammered production" said Kendall.

"Climate change scientists have long predicted that agriculture will face major challenges from global warming. However 2012 has starkly demonstrated the cost that extreme weather events can wreak on farmers and the food supply chain."

According to a report, confidence in the agricultural sector is 'significantly down' at the start of the year with CLA President Harry Cotterell also blaming adverse weather conditions.

This, combined with a relatively lethargic world economy and rising feed bills has weighed on prices across the globe.

Some 42 per cent of farmers told the NFU that their farm businesses were in for a tougher year, up from 30 per cent in 2011.

"The drop in short term confidence is repeated across the sectors" said the NFU chief economist Phil Bicknell.

"For arable and horticulture, declines in crop output and quality, alongside difficult autumn planting conditions, have undoubtedly shaped farmer attitudes. The lowest levels of confidence, however, are seen in the livestock sector."

But the latest results from the CLA/Smiths Gore Rural Economy Index (REI) show that sales, profits, investment and employment in non-agricultural rural businesses are expected to rise in 2013.

"The outlook from the latest REI is positive for non-agricultural businesses" said CLA President Harry Cotterell.

However, 55 percent of rural businesses that use lending, report that borrowing rates have worsened, which could slow their economic recovery.

"In contrast, confidence and sales in the agricultural sector are significantly down on the start of this year due to adverse weather conditions" he said.

Rupert Clark of Smiths Gore said: "There has been a shift in the market with a fall in sales and profitability for many farming businesses because dreadful weather during 2012 affected the harvest and caused difficulties for next year’s crops."

"If the weather in 2013 improves, we expect to see an increase in agricultural confidence as the underlying market fundamentals, of price and demand, are strong."

Kendall estimated the weather of 2012 had led to a "financial black hole on Britain’s farms amounting to a staggering £1.3 billion and as we enter 2013 many farmers are in areas under water or facing a double-whammy of huge feed bills for their livestock."

"Better relationships and sharing of risk in the supply chain will help farmers plan in these volatile and uncertain times."

Powers to fine retailers who unfairly treat their suppliers will be given to the new supermarket adjudicator, the government announced in early December.

The adjudicator will be responsible for monitoring and enforcing the Groceries Code.

"The appointment of the Grocery Supply Code of Practice Adjudicator in early 2013 will be a really positive move, helping to root out bad practice in the supply chain" Kendall said.

"And we’re seeing evidence of positive moves by retailers to create meaningful long-term relationships with farmers. Both will help provide much greater security of supply to consumers."

2013 is likely to see the conclusion to the protracted negotiations for both the EU budget and a reform of the Common Agricultural Policy.

Campaigners have called for an even reduction in payments across the single market.

"Recently, we have heard Government representatives refer to these support payments as ‘worthless’, arguing that payments should only go to environmental goals" Kendall said.

"With the possible exception of Sweden, the UK government is the only one out of 27 member state countries in the EU arguing in this way."

"I firmly believe the only likely outcome of this strategy is further discrimination against English farmers. What is more, this ideologically-driven approach is outdated given the increasing volatility in global prices and the challenging global climate."