Sean Rickard: Don't let the foot-and-mouth outbreak stop the march of intensive farming

Knee-jerk reactions as to the cause threaten much greater harm to the industry than the disease
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The Independent Online

Despite the gathering hysteria surrounding the spread of foot-and- mouth disease, it may well be far less damaging and far more quickly controlled than most commentators are prepared to admit. Still less should it cause any great debate, let alone action, to reverse the trend towards global marketing and intensive farming.

Despite the gathering hysteria surrounding the spread of foot-and- mouth disease, it may well be far less damaging and far more quickly controlled than most commentators are prepared to admit. Still less should it cause any great debate, let alone action, to reverse the trend towards global marketing and intensive farming.

Foot-and-mouth has undoubtedly come as a nasty shock to UK livestock farmers, who were witnessing a recovery from three years of depressed incomes. It is all too easy when watching harrowing pictures of animals being destroyed, however, to create another casualty of the outbreak: objectivity. An objective assessment of the consequences suggests that the economic impact of this outbreak may not prevent the industry's income rising this year from its admittedly depressed level in 2000.

Undoubtedly, the disease will hasten the departure of some farms from the industry, though this should be set against the fact that for more than 30 years the number of farms has declined at an average of more than 1,000 per year. We also need to place the scale of the destruction of animals in perspective. Each week in the UK we slaughter more than 600,000 beef, sheep and pigs. In the 1967 foot-and-mouth outbreak, some 400,000 animals, mostly cattle, were destroyed.

I believe the Government's ban on animal movements will have the desired effect and the outbreak will be brought rapidly under control - within weeks. Now, say over this period that the number of animals destroyed is twice the 1967 level. This would amount to about 3 per cent of the total number that will be slaughtered in the UK this year.

The destruction of animals is not the only economic cost, of course. There will be knock-on effects arising from the ban on animal movements and the loss of export markets. For uncontaminated dairy farms there is little impact and it is largely business as usual. In the beef and sheep sector over a period of weeks only a proportion of the marketings expected for the year would be prevented by the ban on movements and the Government is already relaxing the absolute ban. A ban on movements results in a loss of cash flow for the farms concerned, but once the ban is lifted the animals would then be sold at market. In the pig sector, a delay in marketing is more critical and late marketing will result in a loss of value. Individual farms may suffer a loss of income but the sector will rapidly recover. The Government's income figures show that last year's outbreak of swine fever - while resulting in the destruction of 300,000 pigs - did not prevent the sector's income improving rapidly over the year.

A potential, more serious, longer-term cost to the livestock sector is the ban on exports. Once the disease is eradicated, the EU market - where we sell the bulk of our exports of meat - should be quickly opened again, but in non-EU markets it will take a matter of months, if not longer, before consumer confidence is restored.

The ban on exports of meat and dairy products means the loss of approximately £14m each week. Even if - and I believe this is extremely unlikely - we were prevented from selling into these markets for the rest of the year, some or all of the products would be sold on the domestic market.

Over the past few days the debate has widened from the impact on farm incomes to attempts to lay the blame for the "crisis" in agriculture at the door of free trade, intensive large-scale farming and now, courtesy of the Prime Minister, the supermarkets.

Let me be as clear as it is possible to be. The three years of low farm incomes were the product, overwhelmingly, of the strength of the pound against the euro. In the mid-1990s, when the weak pound boosted farm incomes and world commodity prices reached a cyclical peak, I do not recall any complaints from farmers about access to world markets or modern production systems.

Unsupported, knee-jerk reactions as to the underlying cause of this outbreak of foot-and-mouth are not only ignorant of the wider situation, but also, if acted upon, threaten much greater, longer-term harm to the industry - and the economy generally - than the current outbreak.

Farming has to take its place within the overall economy. As productivity rises, so do incomes and living standards. To keep pace, incomes in farming must also rise in line with the rest of the economy and this can only be achieved in one of two ways. Either farming adopts the technology and techniques that replace people with machines and increases the average size of farm, or it has to rely on ever larger handouts from the Government - that is, the taxpayer.

Over the past 25 years UK farming has shed the equivalent of 180,000 full-time jobs. Over the same period living standards for those remaining in farming have risen and consumers have benefited from low prices. In 1970 the average household spent 25 per cent of its income on food; today it is little more than 10 per cent. This is a very real benefit and it is the product of applying intensive technology and modern logistics to the production and marketing and food.

Calls for a locally-based farming industry leave me breathless with incredulity. First, such an initiative could only be achieved behind tariff walls, which would presumably require us to leave the WTO and the EU at enormous cost to other industries. Second, consumers want choice and competition from trade, which not only broadens choice, but also drives greater efficiency. Third, there are many very poor countries in the world that desperately need to be allowed to sell us foodstuffs. To claim, as the Prime Minister did, that the supermarkets are the cause of the farming industry's woes is breathtaking. His government's decision to stay out of EMU has done greater damage to farming, and in my 20 years of experience with the farm industry the supermarkets have done more to raise the standards of quality and hygiene than the government or anybody else.

When the dust settles on this unhappy episode for UK agriculture, calmer analysis will tell us where and how this outbreak started.

Until that time there is little to be gained by arguing that the solution is to turn the clock back to a mythical era of small-farm happiness. For the majority of people working in agriculture life was hard and meagre and outbreaks of disease were more common than today.

The author, a lecturer at Cranfield School of Management, was chief economist to the National Farmers' Union