Show is rural economy barometer

By Dave Harvey
BBC West Business Correspondent

Rodney Down said the dairy industry has seen supply and demand see-saw

The marquees are up, the animals have arrived, and later they open the gates at the Royal Bath and West Showground.

The three-day event is something of a business barometer showing who is up and down in Somerset's rural economy.

The fields of Somerset are a long way from the cut and thrust of the London Stock Exchange but stressed traders in braces decide the fate of thousands of British farmers.

The slump of the British pound against the Euro has been a boon for livestock farmers, but a blight for the dairy industry.

Boom and bust

It may seem bizarre that increased milk supply to Guanzhou or Zhengzhou in China could impoverish milk producers like Rodney Down from Wrantage near Taunton - but in many cases it has.

"Last year was a perfect storm - reduced supply worldwide increased demand," he said.

"This year it's the opposite. Now you've got increased supply and reduced demand.

"Our industry has contracted unbelievably. We've still got two dairy farmers a day leaving the industry."

For the last few years, we've actually been selling at probably cost production or below. And now we're just about making a living out of it John Hebditch, farmer

The 11,000 who are left are all producing a globally traded commodity which saw prices rocket last year, only to slump as world supply went into overdrive to meet the market.

"We produce some of the best produce in the world in one of the best regions of the world in the west country," said Mr Down.

According to cheese maker Peter Alvis, who produces Cheddar at his farm near Bristol International Airport, milk produced abroad is so cheap it is more cost efficient to ship dairy products in.

He said: "We can effectively buy cheese imported into the UK and buy that cheaper delivered to site, than we can actually get milk from the farm.

"It's a crazy situation to be in and one that ultimately needs to be rectified on the marketplace."

Exports rise

But while dairy suffers, farmers in other fields are making hay in all but the literal sense.

John Hebditch is starting to sell his suckle lambs, reared on fields near North Curry.

"Trade is good," he said. "I think we're somewhere between 25 to 30% up from where we were last year.

John Hebditch said demand for English lamb was up on last year

"For the last few years, we've actually been selling at probably cost production or below. And now we're just about making a living out of it."

The reason? Good old fashioned supply and demand.

"The French are buying our lamb and it's coming back as more money for us," said Mr Hebditch.

"And they're short of lamb now because they've been quite badly affected by bluetongue. So the supply is short in Europe."

It is all forcing farm operations director Nick Green to become like the market traders who hold such power over the fate of farmers.

Speaking at his farm in Redhill, North Somerset, he said: "I'm not sure about being a city trader but we're certainly trying to hedge our bets as much as we can.

"We can make money from beef, for example. When the milk price is up, and if the beef prices are down, we can make more money out of the milk. Hopefully."