Cereal farmers hit jackpot in land price boom

Common Agricultural Policy: Reform of EU market rules has allowed UK wheat-growers to strike it rich at taxpayers' expense
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The Independent Online

Environment Correspondent

While the housing market remains moribund, farmland prices have risen by 20 per cent or more in the past year.

Rental payments for agricultural land have doubled under new tenancy laws, which the Government has just implemented, says the Royal Institution of Chartered Surveyors.

Meanwhile, many British farmers - and the majority of cereal growers - have seen their incomes soar over the past three years as agriculture has boomed following more than a decade of painful decline.

When the Ministry of Agriculture's latest income statistics are published in January they are expected to show another handsome increase of several times the rate of inflation.

Few are boasting of their good fortune. One who does is Oliver Walston, who has condemned the huge taxpayer and consumer support for Europe's farmers under the Common Agricultural Policy. Other farmers have sent him hate mail.

''It's a crazy system,'' he said this weekend. ''The cheque I will soon receive just for having planted the crop will be 25 per cent bigger this year, while the wheat I sell is fetching a 20 per cent higher price. Whoopee - I've hit the jackpot.''

Mr Walston is at pains to point out that not all farmers are enjoying such prosperity. Hill farmers and the pig and poultry sector have suffered of late.

The CAP was reformed three years ago to bring Europe's cereal prices, grossly inflated by tariff barriers and guaranteed minimum prices, in line with world prices. The guaranteed floor price is being steadily cut over a six-year period, but to cushion the blow farmers are paid a fixed yearly sum for each acre - irrespective of how much they produce.

There is one condition attached to this largesse; Europe's medium to large farmers (which covers virtually all of Britain's) have to take some of their arable land out of production in order to curb the notorious crop surpluses. Initially this was 15 per cent, but it has been cut to 10 per cent.

But since this great reform, world grain prices have risen dramatically and now stand at around pounds 130 a tonne.

Meanwhile, Europe's farmers continue to receive their fixed acreage payments while winning a higher and higher price for their harvests. Britain's have fared particularly well because of the big devaluation of the pound which accompanied Britain's exit from the European Exchange Rate Mechanism.

Mr Walston's view, shared by the Ministry of Agriculture and environmental groups, is that farmers should sell their crops at prevailing world market prices while compensation payments should end.

Instead, support from taxpayers should be strictly linked to farmers doing things that society wants - looking after and improving the rural environment or encouraging wildlife.

The National Farmers' Union agrees that UK farming has become much more profitable but adds that in a highly cyclical business, the present good fortune is unlikely to last.