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Last Updated: Monday, 1 October 2007, 09:51 GMT 10:51 UK
Snapshot of farming in the UK
farming

Animal health crises such as foot-and-mouth and bluetongue are just part of the worries facing farmers in the UK today.

Pressures from export bans and late subsidy payments to fluctuating market prices can affect income, leave morale low and result in many famers considering how or whether to carry on in the industry.

This snapshot of farming in the UK highlights some key areas of concern.

LAND USE

Farming is the dominant force in the countryside and has shaped the landscape over the centuries. The topography of England, and the whole British Isles, makes it suitable for a range of agriculture.

The following graphic shows the numbers of each category of livestock, numbers of agricultural workers employed and hectares of land cultivated in each area of the country.

Agriculture occupies roughly 70%, or 9.2 million hectares, of the land area in England.

In 2006, the area of all crops grown in the UK fell by 2.2% to 4.3 million hectares; the number of dairy cows rose by 0.1% while the number of cattle bred for beef fell by 1.7%. Sheep numbers rose by 2%.

Annual surveys consulting farmers about their intentions and concerns, while charting some improvements, show there is widespread worry about the state of the industry.

The 2007 Farmers' Voice Survey carried out for Defra, which received more than 2,000 respondents, suggests around a third of farmers surveyed intend to either give up farming completely, diversify or have worries about their future in farming, but do not know what else to do. Last year, the corresponding proportion was around 50%.

Younger farmers tend to see the need to change their style of farming or want to increase the size of their business.

The vast majority felt that in running a farm, maximising profit is most important

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Dairy farmers tend to be more concerned about their future in farming but do not know what else they could do, although the proportion thinking about giving up has fallen, according to the Farmers' Voice Survey.

But the annual Farming Intentions Survey by the Milk Development Council suggests falling milk prices have severely dented what had been rising morale among dairy farmers.

The 2007 survey, of a sample 657 producers, showed morale was almost as low as in 2004 when there was uncertainty surrounding Common Agricultural Policy (CAP) reform and subsidy payments.

Factors such as increasing input costs, and falling "farmgate" milk prices - the price paid to the farmer - as CAP reform reduces support levels have led to increased uncertainty about the future of many dairy farm enterprises.

The survey showed the percentage of dairy farmers intending to increase production fell from 26% in 2006 to 20% in 2007. If farmers carried out their stated intentions, the result would be a 7% fall in production by the 2008/09 milk year.

FARMING INCOMES

Defra experts say the figures for incomes for farmers and full-time agricultural workers per head and the total national income from farming are best considered in two periods: before and after the 1990s.

farming income

From the 1970s until the 1990s, the trend followed commodity price movements, which in part reflected changes in CAP price support policies. Weather also played its part. The peak in 1976, for example, reflects high prices during the hottest summer in the UK since records began.

From the early 1990s, the trend closely follows exchange rates - the rise in the early 1990s followed the decline in the euro/sterling exchange rate after the UK left the European Exchange Rate Mechanism.

The drastic decline in the second half of the decade was caused by increases in the exchange rate, lower world commodity prices and the impact of BSE.

RETAIL PRICES

Food is now more affordable than ever, with the average British family spending less than a tenth of its income on food compared to a third 60 years ago. Farmgate prices, on the other hand, have continued to decline in real terms.

FARMERS' SHARE OF FOOD BASKET VALUE (UK 2007)

Farmgate product Retail product 1988 (%) 2006 (%) % change
beef untrimmed, kg 67 47 - 29
eggs size 2, dozen 28 30 8
wheat white sliced loaf, 800g 23 15 - 35
milk whole milk, pint 38 29 - 22
tomatoes per kg 48 72 50

While food prices have increased by 50% over the past 20 years, the share that the farmers get has not. So, while farmers got 47% of the value of a basket of items in 1988, in 2006 they got 36.3%.

Some items have fared better than others - farmers are getting 29% less of the price paid for a kilo of untrimmed beef than they did in 1988, and 35% less for a loaf of bread. The farmgate share of tomatoes and carrots, however, is 50% and 48% more, respectively.

UK MILK PRICES

(Prices in pence per litre)

  Farmgate Retail
2001 19.13 42.7
2002 17.05 44.3
2003 18.01 46.6
2004 18.45 47.5
2005 18.46 50.9
2006 17.94 55.3
2007(July) 19.65 56.3

Had farmgate prices grown during the past 100 years at the same rate as the general cost of living they would be, on average, four times higher than current levels, according to the National Farmers' Union (NFU).

For example, the price of wheat per tonne would now be more than 600, and not the current price in the region of about 150.

Other costs to take into account include feed, fertiliser and oil prices - according to Defra, the price of agricultural motor fuel increased by 14% in the year to October 2006.

The National Farmers Union in Scotland has warned that livestock producers have been driven into a loss-making situation, with a 100% rise in feed prices, as well as floods and global factors exerting upward pressure on production costs.

SUBSIDIES

Around 3bn is paid in subsidies to UK farmers each year. The old system of farming subsidies gave farmers money according to how much they produced - giving many an incentive to produce too much - resulting in the "butter mountains" and "wine lakes".

graph

Reform was agreed in 2003 so that farmers would receive a single payment. The UK government decided to introduce a "dynamic hybrid" system - English farmers would receive money according to the amount of land they farmed and according to how much historical subsidy they received in 2000-2002, when subsidies were linked to production.

The intention was to increase the element related to area farmed, and decrease the element related to historical subsidies until 2012, when all payments received by farmers should be on a flat-rate per hectare basis.

Other EU member states - and authorities in Scotland and Wales - decided to distribute subsidies on a historical basis, and take no account of the amount of land being farmed.

Scottish and Welsh farmers received their money in autumn 2005 but some English farmers were still waiting for overdue payments in March 2006. Some critics have put the problems down to Whitehall bureaucracy and incompetence.

Defra and Rural Payments Agency (RPA) officials said that among the causes for the delay was the fact that the number of farmers who claimed went up from 80,000 to 120,000.




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