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Thursday, October 14, 1999 Published at 13:13 GMT 14:13 UK


Farming profits halved

By BBC Environment Correspondent Robert Pigott

Farmers' profits were more than halved last year, according to an annual audit.

They are now the lowest since the accountancy firm, Deloitte & Touche, started recording farms' accounts 10 years ago.

Farming in crisis
The 54% drop in profits, during the year ending in June 1999, means that farmers are averaging a profit of £57 a hectare, an area about the size of a football pitch, or £24 an acre.

An average family farm of 300 hectares would have seen profits fall from £37,000 a year to £17,000.

The BBC's Margaret Gilmore: "Industry at its worst crisis for at least half a century"
The report predicts that they will fall further in the future, and that the firm's average client will eventually show a loss of £34 a hectare.

George Atkinson's 1,200 acre farm in East Meon, Hampshire, made a loss last year for the first time in the 90 years it has been in his family.

"If it was a factory, and effectively we are a factory, you would shut it down," said Mr Atkinson. "But of course you can't mothball the countryside".

[ image: Dairy farmers had the hardest time, says the report]
Dairy farmers had the hardest time, says the report
The report blames the fall in profits on a collapse in the market for livestock, lower prices for milk and arable crops, and a strong pound.

Sugar beet and potatoes were about the only crops to make increased profits, with potatoes earning farmers £178 a hectare and beet £60.

The BBC's Robert Pigott: "With no sign of prices rising, more farms are expected to make an outright loss"
But pig producers saw prices plummet to an all-time low by the middle of last year, and the markets for sheep in Russia and the Far East have collapsed.

Sheep prices would now be being affected by lambs held back in 1998, the report added.

Dairy farmers had the most difficult time, with profits of only £15 a hectare, again because the price of milk was so low.

[ image: Pig prices plummeted to an all-time low]
Pig prices plummeted to an all-time low
Beef producers continued to suffer low prices, said the report, with the end of the EU ban only "the start of a long haul to win back overseas markets".

And the end to the calf-processing scheme - a government scheme which culled surplus calves to keep prices up - would "only aggravate this sector's problems".

The report's authors suggest farmers should work more with each other, to negotiate the highest possible prices for their produce.

And it emphasised the need of some farms to merge with neighbouring businesses, to gain economies of scale.

It warned that low incomes are taking a severe psychological toll on farmers, making them feel undervalued and robbing them of their self-esteem.

[ image: One of the few crops to rise in price]
One of the few crops to rise in price
However, some policymakers are starting to suggest that the countryside may have to change radically, to meet fundamental changes in agriculture.

The President of the Adam Smith Institute, Madsen Pirie, said the Atkinsons' farm reminded him of the loss-making textile factories of half a century ago.

"We have utterly transformed British industry", he says, "but we didn't allow farming to exploit market opportunities, or to move their products to where the demand is.

"If that means high quality, with high added-value, instead of mass-produced cheap food, then that is the way they would have gone."

George Atkinson already produces higher-quality meat for a premium price, but he believes demand for it is finite.

"The consumer wants the cheapest food, I am afraid," he says.

"Even if farmers do go to the quality end of the market and produce for the premium prices, the majority of housewives will still want the cheapest food they can pick out of their basket, and much of that will come from abroad."

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