A pledge to continue support for hill livestock farming, a boost to conservation payments and a promise to reduce bureaucracy greeted farmers at the NFU AGM this month.
The level of support at both Government and EU level has proved critical to land values, as latest reports reveal (see “Property Spot”).
Agriculture minister Gillian Shephard addressed the meeting soon after her department had announced one of the biggest-ever annual rises in farming income. After years of decline, UK farm incomes rose by nearly 40% in real terms last year. Provisional figures for income for farmers and their spouses show only a rise of almost 60% in real terms on 1992 figures.
The 1993 figure is unique for two reasons. A 20% rise in the Green Pound, the EU agriculture currency, followed the UK’s withdrawal from the exchange rate mechanism and boosted many farm budgets. This was followed by the payment in December of £692m in EU arable area payments (compensating set-aside and acting as a buffer in the move towards world prices) which was reported to have netted £1.25m for one farming company alone.
Simultaneous reductions in interest rates have, for many farmers, helped to ease the build-up of financial pressure during a period of recession and reform. The industry’s interest payments fell by 32% on the previous year.
Notable absentees to the income gala are pig producers and many horticulturalists. While enjoying a period of respite, even those NFU delegates who had benefited were aware that last year’s income was not a secure basis for prosperity. They were anxious to hear what lies in store, particularly with the prospect of further Common Agricultural Policy reform next year.
“The main concern for all of us is the longer-term future for farming,” said Shephard. Agriculture still occupies 77% of rural land and, with the food industry, employs 14% of the workforce.
The GATT agreement would boost the world economy as a whole, she said, which would in turn benefit farmers and the food industry.
“We believe that the GATT outcome is broadly compatible with the 1992 CAP reform package. Our initial conclusions are that, for cereals, reasonable assumptions about future trends in production and consumption suggest that the Community should be able to meet its commitments on export volumes.
“For milk, we also believe that the GATT obligations can be met, without significant tightening of quota restraints.
“The one reformed sector where more needs to be done is beef. Further reforms are clearly needed to reduce the role of intervention and to bring the market into better balance. Action will also be necessary in sectors which have yet to be reformed, such as sugar and fruit and vegetables.
“However you look at it, farming is going to be moving closer to the market-place in the years ahead. It is a challenge we all have to face,” said Shephard.
Addressing the meeting in a video speech from Brussels, EU trade commissioner Sir Leon Brittan supported her view. But both David Hadley, deputy permanent secretary at MAFF, and NFU president David Naish implied that further reform may be necessary. Mr Naish implied that British farmers face two stark alternatives – lower prices or increased set-aside and quota cutbacks.
The GATT deal is, nevertheless, expected to create a stronger world price, narrowing the gap between the Community’s price for grain and the world market price. “We may reach a point some years down the track where EU grain is exported without subsidies,” said Hadley.
Shephard announced:
- Easier animal identification. On cattle, it will be a single tag only; on sheep and pigs the ministry is seeking derogations from the directive to allow identification of animals through a system of temporary marks and record keeping. Farmers will also be able to issue their own documents for the movement of pigs off their own farms and for the identification of cattle.
- Some Environmentally Sensitive Areas are to receive a £500,000 boost to payments.
- A possible £2m increase, subject to Brussels approval, in the 1993 beef special premium.
