Action needed to boost farmgate prices in period of 'extreme uncertainty', farm groups warn

There is a 'desperate need' to improve farmgate returns given low incomes and the uncertainty facing the industry over the coming years, the Farmers' Union of Wales has warned.

Speaking in response to falling cattle prices, FUW livestock, wool and marts committee chairman Dafydd Roberts, said: “Last year saw prices fall by 15 percent between January and July, and current prices have fallen to around five percent below what they were this time last year. If prices follow last year’s trend it will have a severe impact on the sector.”

Mr Roberts said all sectors were facing major challenges, highlighting a fall in farm business incomes of around 40 percent over the past five years, with a 20 to 25 percent fall over the past year alone.

“On top of this we now face a period of extreme uncertainty due to the changes to the payment regime and the likelihood of delayed payments over the next twelve months,” he added.

Mr Roberts said supermarkets and other key players in the supply chain needed to demonstrate awareness of the challenges facing agricultural and the risks of failing to ensure fair farmgate returns.

“Despite consumer support for British agriculture, poor profitability has hit cattle numbers in particular, with numbers down 20 percent in Wales compared with a decade ago.

“Action needs to be taken to show solid commitment to Welsh and British agriculture in order to protect supplies. Otherwise unacceptably low farm incomes and the financial uncertainties facing us over the next twelve months will have an impact on the supply chain as a whole, with a major knock-on effect for rural economies,” added Mr Roberts.

Defra’s latest Farm Business Income forecasts predict a decline in the profitability of farming across the majority of farming sectors and serve as a warning as to how much agriculture is susceptible to increased volatility.

The figures show a 13 per cent fall in incomes for dairy farmers. Similarly, the livestock sectors have suffered, with incomes on pig farms forecast to be down by 23 per cent and on poultry farms by 12 per cent. Forecasts indicate that grazing livestock farms are showing signs of recovery.

However, even with increases in income across the beef and sheep sector, profitability still remains at a very low level, with farm income in this sector projected to sit around £16,000. A marginal increase in incomes is also expected in cereal farm income.

NFU president Meurig Raymond said: “2014 has been a year where, across commodities, the industry has seen falling farmgate prices and these figures are the first official ones to indicate the financial impact on farmers.

“This challenging situation is particularly true for the dairy industry, where some farmers have seen dramatic cuts in the price they receive for their milk and where the difficult market conditions could force many out of the industry.

“However, volatility is not entirely unique to the dairy sector. The price received by farmers for pig meat, wheat, potatoes, and oilseeds also plummeted in 2014. With the extent of those price shifts, alongside a stronger pound, it’s not surprising that farm incomes are down and at the same we see the confidence of farmers falling.

“Ultimately, having a financially viable business gives farmers the confidence to invest in the future and build resilience. With less than 100 days to the General Election, it’s clear that there is a vital role for the future government to work with farmers to support growth and send the right business signals to invest. The NFU has outlined a number of policy asks which are laid out in our Election manifesto.

“The opportunities for UK farming are clear – in the longer term global and domestic demand will increase. But for British farmers to benefit, we need the right policy and fiscal environment across government which encourages the sector to increase efficiency, develop and embrace technological advances, and take a long-term balanced view to investment.”