August Professional Ponderings

Added on August 6, 2018 in Recent News

August Professional Ponderings

For one reason or another, I have not written the Ponderings since we attended Cereals at Duxford in early June; thanks to Verity for her efforts last month. Except for the occasional shower, we have scarcely had any rain to speak of, and whilst the arable farmers appear on top of things and seem strangely relaxed, the livestock farmers are having a difficult time with an obvious lack of grass, increased straw prices etc; fortunately, I’ve seen plenty of straw baled this year, so hopefully there will be plentiful supply during the winter months, which will inevitably be wet.

Continuing on the theme of Cereals, I thought I would share with you the contents of a talk I attended by the current president of the CLA, Tim Breitmeyer, which took place after a Breakfast Seminar at Cereals jointly hosted by the CLA and Burges Salmon. The talk focused on the future of agriculture post BREXIT, and here are some of the key points:

1. In recent years, there has been much discussion about what DEFRA consider most important in respect of the agricultural industry. When I speak to farmers, they often comment that food should be our number one priority – the current drought like weather certainly supports that view – however in Mr Breitmeyer’s view, DEFRA’s priority is soil. Apparently, the estimated cost of cleaning pollutants from drinking water is estimated to be £1.5bn. Therefore, it is likely that any subsequent support scheme, replacing BPS, CSS etc, will major on the protection of resources, such as soil. So, we may need to get used to the fact that DEFRA do not see food security as important as say, resource protection.

2. Mr Breitmeyer believes that the “man on the street”, or the typical MP in Parliament, is only concerned about cheap food, and I took that as meaning that in order to compete, the industry must be able to produce food cheaply. Clients often take the view that cheap food is not necessarily good food and they believe that we should aim for a higher quality product, which is probably true, albeit many of those reading this article (including myself) have the relative comfort of being able to choose, whereas a significant proportion of the population probably do not have that choice. To them, they perhaps can only afford the cheapest food. All too often, I see social media posts/rants critical of those people for not supporting local food, or for buying cheap food; for them, there is no choice. We should not forget this.

3. Mr Breitmeyer touched on the Government’s desire to trade globally, and not necessarily just with our immediate European neighbours. We must therefore consider how we can compete on the global stage. I have always taken the view that, due to labour costs, and our current red tape culture, we will not be able to compete on cost, as developing countries have an abundance of cheap labour and resources. Therefore, how do we compete on the global stage? Perhaps by producing a better-quality product, which coming back to the previous point, limits our audience. If we are producing a higher value product, then a significant proportion of the population will not be sufficiently wealthy enough to purchase that product and therefore we are aiming at the affluent market. With that said, of the 20% that we export, apparently approximately 80% of this goes to Europe. Therefore, surely it would be economic madness not to have some sort of trade deal with our European neighbours. You only need to look at the number of German cars on the road in the UK to appreciate how much business we do with them.

4. Finally, Mr Breitmeyer believes that HM Treasury are resolute and obviously eager to keep their money and therefore there is absolutely no doubt that farm subsidies will substantially reduce in the next 5-7 years; this is a view which is supported by many. Therefore, as an industry, we must consider whether we can cope without subsidies, and if we cannot, then changes are needed. Those changes may be collaboration with adjoining farmers, and I gather this is something that many industry commentators are suggesting as a potential way forward. There is no doubt that machinery pooling would lead to reduced running costs and maximise usage of over-capacity machines. However, how do we as advisers convince you to give up exclusive control of those important items, such as sprayers, combines etc? Is it an issue of profit protection or something else? If it is the former, then this could surely be dealt with by pooling income to share the risk.

Enough of my ramblings, but I hope you find this month’s Ponderings provides some food for thought. By all means, feel free to contact me, if you are thinking about future proofing your business.

Wishing you all a successful and safe harvest or what’s left of it.

Chris Templar – Rural Surveyor

 

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