November 06, 2003

 

 

Study Shows Possible Massive Decline of UK's Dairy Producers By 35%
 

A massive decline in the numbers of British cereal growers and dairy producers, down by 30% and 35% respectively is on the cards following the implementation of the Fischler reforms.

 

A new study by farm business consultants Andersons and the National Farm Research Unit (NFRU) speculated on this declining phenomenon, as the economics of farming without production-linked subsidies hits home.

 

Likening the reforms to the meteorite that wiped out the dinosaurs 65 million years ago, David Bolton of Andersons said many farmers had not woken up to the full scale of the changes that lay ahead of them.

 

Farmers would receive the new single farm payment regardless of whether they produced anything.

 

Therefore, this makes the decision to plant crops or milked cows dependant on whether there is economic sense to do so.

 

Figures from the NFRU's database showed that a typical combinable crop farm, with wheat, oilseed rape and set-aside, would be making a net return of 75 sterling pound/acre before the reforms.

 

But after the reforms, and with the single farm payment of 90 sterling pound/acre put to one side, the same farm would see its net return drop to -15 sterling pound/acre. "This farm would be better off producing nothing at all," said Mr Bolton.

 

The overall impact would be a 25% reduction in the area of combinable crops and a 30% fall in the number of growers.

 

In the dairy sector, Andersons consultant Greg Beeton suggested milk prices would pan out at about 17p/litre.

 

At this level, only 25% of producers would be making any money before counting in the single farm payment of 2.48p/litre.

 

The bottom 25% would be losing money, even allowing for the single farm payment.

 

These producers would quit the industry, together with another 10% who would struggle to make a profit with the single farm payment included.

 

But Mr Beeton suggested the structural changes may take longer to work though the system that the analysis had suggested.

 

Cultural and social issues such as family history, pride and age would all work as a buffer against change.