British farmers suffer too, says official

Press, 2 June 1989, Page 16

British farmers suffer too, says official

A dramatic erosion in prices and a series of bad seasons were causing many British farmers to lose money, says the First Secretary (agriculture and food) at the British High Commission in Wellington, Mr Barry Cawthorn.

The average farm income in 1988 had fallen 25 per cent in a year to its lowest level in real terms since the Second World War, he told North Canterbury Federated Farmers in their annual conference.

The British agricultural industry might appear healthy on the outside because of investments made during the late 1970 s and early 1980 s when prices were good, but the latest statistical reports from the U.K. Ministry of Agriculture revealed that farmers had great cause to be concerned.

As well as the fall in net incomes, the financial pressure during the last five years had led to the loss of 25,000 jobs on

farms and a fall of 40 per cent in the investment in new equipment and buildings. British farmers, like their New Zealand counterparts, were suffering more than most others in Europe because of punitive interest rates. Attitudes within the European Community to high cost production were rapidly changing and British farmers, in particular, realised the writing was on the wall for continuous financial support for food production at any price. The Common Agricultural Policy had served the community well but was now out of touch. The reform of the C.A.P. involved placing constraints on production, such as milk quotas which had been highly successful, and more recently a freeze in the rate of subsidy payments for most commodities and a reduction in others. For cereals, the freeze meant an effective price cut of 25 per cent in real terms since 1984.

“The so-called fat cats of Europe, the cereal growers, are really feeling the pinch,” said Mr Cawthorn.

Some areas, particularly in mainland Europe, were resisting the changes in the C.A.P. on political grounds rather than for economic reasons.

“There are areas of Europe, such as France, Germany and Ireland, where governments are dependent on the farmers’ vote; and there are other areas — southern Europe in particular — where farmers are not so well off and their governments have a duty to defend the status quo and even improve their constituents’ standard of living,” The theory behind cutting returns was to force down the cost of production so only the most efficient were left in business and were able to compete on world markets.

But when many farm costs were beyond producers’ control, the theory

broke down, said Mr Cawthorn.

With profits from normal farm activities almost impossible to achieve and capital being used for living expenses, the present price-cutting policies might soon force many farmers out of business.

Many farmers were looking to change their traditional farming practices and to switch production to more profitable areas. But the climatic conditions in Europe did not allow a wide range of diversification so more emphasis was being put on traditional patterns of production, such as cereal growers turning to sheepmeat.

Mr Cawthorn said in the longer term British agriculture might return to the pattern noticeable before the Second World War — with the drier eastern parts producing cereals, dairy cattle in the Midlands and the West country, and livestock in the hill lands of the Lake District, Wales and the Southwest.