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Farm crisis worsening

Written by Business Weekly

Thursday, 06 April 2000

A £188m aid package from the Government will not be enough to save many farm businesses from bankruptcy, a leading agricultural specialist has warned. A £188m aid package from the Government will not be enough to save many farm businesses from bankruptcy, a leading agricultural specialist has warned. Jim Ward, head of agricultural research at FPDSavills, said the cash was welcome but would not halt the accelerating process of business restructuring in the industry. To put the quantum of this aid in perspective, it is equivalent to around 8% of the £2.4bn total income from farming in the UK last year, compared to the £5.3bn earned from farming in 1995. It falls well short of the £450m of agrimonetary aid that farming unions had been claiming and the £600m of aid claimed by the pig industry. MAFF’s latest figures on the range of farm business performance reveal a difference of some £40-£50,000 net farm income between the top 25% and bottom 25% in the cereal and dairy sectors, says Ward. Profits have deteriorated since 1998-99 to a level where the average cereal and dairy producers were merely breaking even after paying a rent, but before paying finance charges and taking personal drawings. There are overwhelmingly strong forces for restructuring and transfer of production from the bottom 25% to the top 25% of farmers, who tend to be larger producers, said Ward. In this context, the Government’s aid package is not to enough to halt the trend. As debts mount within the industry, more of this restructuring will be via land sales, in contrast to recent activity. For many of those in the middle 50%, non-agricultural income will be an essential component of staying in farming. Some will be able to diversify, but for most this means more off-farm employment and less time spend farming. Our research suggests that by 2004 there will be more part-time farmers than full time ones in Great Britain.

 

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