Farmers make hay thanks to food crisis


Profits for Britain's 30,000 grain farmers will increase by 40 per cent this year because of global food shortages, agricultural analysts said yesterday.

The wheat harvest, which will begin over the next fortnight, is likely to be the biggest since 2000, according to the Home Grown Cereals Authority, and is expected to come in at around 16.5 million tonnes. This compares with an average of 14 to 14.5 million tonnes in recent years, and a low point last year when torrential rains cut the crop to 13.2 million.

But this year, the ending of the EU's set-aside schemes and the attraction of higher global grain prices have led to a surge in planting, with the total cereals area across Britain up by an astonishing 13 per cent in just 12 months and wheat alone up by 14 per cent. Whereas two or three years ago wheat was selling at about £70 per tonne, following the dramatic price rises that began across the world last summer, the figure now is more like £120-£140, depending on quality. The peak was more than £160 per tonne earlier this year.

The sort of difference this makes to incomes is illustrated in the computer model of a cereal farm run by the agricultural business consultants Andersons. Andersons' model (which grows virtual wheat, oilseed rape and beans), made £148 per hectare in 2006, but only when EU and other subsidies of £230 per hectare had been taken into account – and thus it failed to break even. But last year it made £346 per hectare, and this year it is predicted to make £430 – its best year ever.

It may mean the best summer for arable farmers in a decade – provided the rain holds off over the next couple of weeks. Heavy August rain means that much of the wheat is of poorer quality and can only be sold for animal feed, at substantially lower prices than milling wheat – the high-quality grain which used to make bread and biscuits.

The optimistic outlook has led to a surge in agricultural land prices, which have risen by 50 to 60 per cent over the past 12 months. However, even if the rain stays away and this year truly is a bonanza, the Andersons' farm model predicts that in 2009, its profits will fall sharply back to £243 per hectare, as steeply rising input costs begin to bite.

This year's high profits should therefore be used for investment in farm infrastructure and machinery for which there has been no cash in recent years, according to Rob Hughes, partner in another farm business consultancy, Brown & Co. "There's a million farming businesses out there that have been living off depreciation for a long time, and haven't been able to reinvest," Mr Hughes said. "This is the year to bank profits against the future, restructure debt or reinvest in machinery and infrastructure."

British grain farmers will do well this year because they bought their inputs for the 2007 harvest, such as fertiliser and diesel for tractors, at last year's prices – which have now shot up. Carmen Suarez, chief economist of the National Farmers' Union, said that between summer 2006 and now, the price of ammonium nitrate, a principal fertiliser, had increased by more than 120 per cent, while some other fertilisers had increased by more than 200 per cent. "This is now having a massive impact," she said. Fertiliser prices are closely linked to energy prices, which have risen steeply. The cost of diesel has also soared.

But while grain farmers are doing well, livestock farmers are not – partly because the increase in the wheat price means a rise in the cost of feed. Although cereal farms are expected to see profits boosted by 38 per cent, the average pig farmer is expected to make a loss of more than £4,000, while poultry farmers have seen profits cut by 90 per cent.

A farmer's story

Richard Hirst, Carr Farm, Ormesby

Richard Hirst owns a farm on the edge of the Norfolk Broads. He grows milling wheat and malting barley on half of his 800 acres and says his profits will be "about 40 per cent" up on last year. "But last year we didn't make anything," he says. "We just about broke even."

Next year, he says, profits are likely to fall back to the level of the past couple of years because of the heavy rise in costs. "Fertiliser? £147 a tonne last year. Now it's £350- plus. And diesel has more than doubled." But he does accept that for now, "from an arable point of view, yes, things are better."

Latest stories from i100
Have you tried new the Independent Digital Edition apps?
iJobs Job Widget
iJobs General

Recruitment Genius: Area Sales Manager

£25000 per annum: Recruitment Genius: This is an exciting opportunity to join ...

Recruitment Genius: Freight Forward Senior Operator

£22000 - £26000 per annum: Recruitment Genius: This logistics firm are looking...

Recruitment Genius: Lead Marketing Specialist

£34500 per annum: Recruitment Genius: A lead marketing specialist is required ...

Recruitment Genius: IT Support Technician - 2nd / 3rd Line

£26000 - £32000 per annum: Recruitment Genius: An IT Support Technician is req...

Day In a Page

Seifeddine Rezgui: What motivated a shy student to kill 38 holidaymakers in Tunisia?

Making of a killer

What motivated a shy student to kill 38 holidaymakers in Tunisia?
UK Heatwave: Temperatures on the tube are going to exceed the legal limit for transporting cattle

Just when you thought your commute couldn't get any worse...

Heatwave will see temperatures on the Tube exceed legal limit for transporting cattle
Exclusive - The Real Stories of Migrant Britain: Swapping Bucharest for London

The Real Stories of Migrant Britain

Meet the man who swapped Romania for the UK in a bid to provide for his family, only to discover that the home he left behind wasn't quite what it seemed
Cheaper energy on the way, but it's not all sunshine and rainbows

Cheaper energy on the way, but it's not all sunshine and rainbows

Solar power will help bring down electricity prices over the next five years, according to a new report. But it’s cheap imports of ‘dirty power’ that will lower them the most
Katy Perry prevented from buying California convent for $14.5m after nuns sell to local businesswoman instead

No grace of God for Katy Perry as sisters act to stop her buying convent

Archdiocese sues nuns who turned down star’s $14.5m because they don’t approve of her
Ajmer: The ancient Indian metropolis chosen to be a 'smart city' where residents would just be happy to have power and running water

Residents just want water and power in a city chosen to be a ‘smart’ metropolis

The Indian Government has launched an ambitious plan to transform 100 of its crumbling cities
Michael Fassbender in 'Macbeth': The Scottish play on film, from Welles to Cheggers

Something wicked?

Films of Macbeth don’t always end well - just ask Orson Welles... and Keith Chegwin
10 best sun creams for body

10 best sun creams for body

Make sure you’re protected from head to toe in the heatwave
Wimbledon 2015: Nick Bollettieri - Milos Raonic has ability to get to the top but he must learn to handle pressure in big games

Nick Bollettieri's Wimbledon files

Milos Raonic has ability to get to the top but he must learn to handle pressure in big games
Women's World Cup 2015: How England's semi-final success could do wonders for both sexes

There is more than a shiny trophy to be won by England’s World Cup women

The success of the decidedly non-famous females wearing the Three Lions could do wonders for a ‘man’s game’ riddled with cynicism and greed
How to stop an asteroid hitting Earth: Would people co-operate to face down a global peril?

How to stop an asteroid hitting Earth

Would people cooperate to face a global peril?
Just one day to find €1.6bn: Greece edges nearer euro exit

One day to find €1.6bn

Greece is edging inexorably towards an exit from the euro
New 'Iron Man' augmented reality technology could help surgeons and firefighters, say scientists

'Iron Man' augmented reality technology could become reality

Holographic projections would provide extra information on objects in a person's visual field in real time
Sugary drinks 'are killing 184,000 adults around the world every year'

Sugary drinks are killing 184,000 adults around the world every year

The drinks that should be eliminated from people's diets
Pride of Place: Historians map out untold LGBT histories of locations throughout UK

Historians map out untold LGBT histories

Public are being asked to help improve the map