Page last updated at 18:11 GMT, Thursday, 22 May 2008 19:11 UK

Food prices rises are farmers' boon

By Jonty Bloom
BBC News, South Wales

Deep in the Pembrokeshire national park, down long green lanes, Lawrenny Farm lies basking in the sun, amid sleepy fields.

Wheat field
The rise in wheat prices has gladdened farmers' hearts

It is a mixed farm, with 10,000 acres of dairy, beef and arable. Owen Lort-Phillips' family has been farming here for 500 years and it looks and sounds like nothing has changed in half a millennium.

But things are changing at Lawrenny. Owen has turned his mixed farm organic - a long and expensive process, even with massive EU subsidies, but the rewards are obvious.

"The main driver was the price of the organic produce," he says as he calls in the cows.

"We were coming up against lower prices and the obvious choice was to go organic. We have had an improvement in prices, from 150 a tonne for wheat, to over 300 a tonne."

That's a doubling in wheat prices, with milk prices also up by a third. Many farmers are doing well this year, although they will all tell you that it's been a long time coming and their costs are up as well.

Certainly, Perkin Evans, of Crug Glas farm outside St David's, says that is true, but as we walk his arable fields, he outlines how his farm's fortunes have turned round.

Nobody can really complain that their food is expensive now
Owen Lort-Phillips, Lawrenny Farm

"This time last year, we were going into the harvest thinking it was all doom and gloom, but then prices hardened. I think it is because of the droughts we have had in Australia, the floods in the UK, they have put greater demand on crops."

It seems every cloud has a silver lining for someone, and it isn't just farms and farmers that are doing well. Pant Mawr Cheeses, in Rosebush, sits high on a hill looking down on the green coast.

David Jennings and his wife Cynthia started the business on their farm - and it is doing so well that now the farming has been relegated to a hobby.

"It's much stronger than five years ago," says Mr Jennings. "We now concentrate on selling our own products and we deal with our own customers all the time and business has doubled in the last three years."

New-found confidence

Of course, not every farm or farm business is booming, but in South Wales, even selling up can be profitable. At the Whitland livestock market, lamb prices are doing well, but John Nicholas, the local auctioneer and estate agent, says that land prices are doing even better.

"Certainly they are 50% up on last year, we are a little more cash-rich this year," he says.

"There's been an increase in the milk price, stock prices have gone up since the end of foot-and-mouth and with the increase in the cost of fertilisers and feed, people prefer to buy additional land to feed their livestock."

There's little talk of the credit crunch here as farm profits force up farm land prices. Many farmers are now doing better than they have for years - but high prices for them mean higher food bills for the rest of us.

Not that you'd get much sympathy from the average farmer. Back in Lawrenny, Owen Lort-Phillips, obviously believes that consumers have little to complain about.

"For decades, the British public have done pretty well as far as food prices are concerned," he says.

"If you look at wheat prices in the 1970s, in real terms it was higher than it is now, so nobody can really complain that their food is expensive now. In reality, it was just ridiculously cheap beforehand."

Farmers, it seems, are feeling more confident and wealthier than they have for a long time. And with no end in sight to the demand for their products around the world, that may be a long-term change in their prospects.

Jonty Bloom is the Business reporter for The World Tonight broadcast on Radio 4, Monday to Friday at 2200BST.


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