This week, I’m giving a talk to The Monmouthshire Agricultural Club in Usk – I’m “a local”, living 12 miles down the road in Monmouth. Here’s the gist of what I had to say. Do flick through these few pages and, then, if you’re of a mind, click on this link to look at the slides I used in my presentation.
Click here to download the presentation.
Henry Dimbleby’s National Food Strategy Plan has a lovely representative map of how land is used in the UK. We’re good at growing grass – 60% or so is down to pasture for cows, cattle and sheep. We’ve got a good lump of peatlands and broadleaf & conifer woods. Our fruit and vegetable area (not including potatoes) isn’t much bigger than our acreage for golf courses. The built-up area is close to the size of Wales! Intriguingly, the overseas land used to produce animal and human food for the UK is close to the size of the area we use for domestic food production in the UK.
Global food commodity prices peaked in March 2022 and have declined month by month since then, although they’re still historically high and at the elevated levels we saw in 2008 and 2012. These took time to pass through the supply chain and consumer food price inflation peaked at close to 20% in April 2023, exacerbated by the Russian second invasion of Ukraine in February 2022. Come 2024 year end, food price inflation should be down to 2% or so but, remember, prices are continuing to inflate and not returning to the halcyon stable times between 2015 and 2019. The cost-of-living crisis remains with us and explains the ferocious grocery retail price wars fuelled by hard discounter continued store expansion. Are supermarkets the villains? Well, they may be for mauling fresh food suppliers but their operating margins have been under pressure, too (less than 2% in FY 2022/23).
But, hey chill out! The pandemic is over (fingers crossed). The Russia-Ukraine war (our war, too) is limping towards stalemate. Tranquil times are coming …… apart from: the tragic mess in the Middle East; international trade routes under threat in the Red Sea/Suez Canal and the Panama Canal; frightening evidence of the acceleration in planet-harming climate change; and half the world’s population are having national elections this year which is leading to a frenzy of mis/disinformation, a lurch to political extremes and added uncertainty for businesses worldwide. In the midst of this, food producers are being asked to accelerate their farming activities to meet challenging net zero targets. In the EU, farmers are revolting and have bent the ear of government. In the UK, we’re being very British about it and we’re jolly cross!
Empty supermarket shelves through the recent turbulent years have fuelled concerns both about food self-sufficiency (60% for all food and 73% for indigenous type food) and, separately, food security at the national and individual household levels. Food self-sufficiency levels in the UK (and elsewhere) are hugely influenced by government policy: close to 100% prior to 1846; with the repeal of “The Corn Laws”, a downward swing to 35% in the early 1950s reflecting the extended period when we in the UK produced the machine goods and our colonial compatriots produced most of our food; the near catastrophe of the 2nd World War years where we close to starved; a recovery of food self-sufficiency after the introduction of deficiency payments emanating from the 1948 Agricultural Act; boosted further as we joined the EEC; and, latterly, drifting down to current levels as we exited the EU in the 2020s.
As an aside, our lowest area of food self-sufficiency relates to fresh produce. Whilst partly explained by consumer preferences and climate (26% of ALL fresh fruit consumption in the UK is accounted for by bananas), we produce only 16% of fresh fruit and only just over 50% of fresh vegetables consumed in the UK. The emergence of advanced hydroponics and vertical farming could and, indeed, should, switch these percentages to our advantage over the next few years. However, what consumers value is changing. Fresh fruit is struggling in the market against “real” fruit-based processed products such as smoothies, dairy-based fruit drinks and the like. Similarly, there’s a host of “real” vegetable-based snacks with “clean” ingredient labels nudging fresh vegetable dishes off the table. Across Europe, and in North America, per capita consumption of fresh fruit and vegetables has declined through the recent turbulent years. The clothes of the fresh fruit and vegetable sectors have been stolen by fmcg snacking companies and the cosmetic and natural pharmaceutical industry. Have a peek in Boots, it’s a fruit & vegetable extract pharmacy!
Notwithstanding our exit from the EU, most of our food imports come from Europe which is where most of our food exports go to. Us Brits respect our home farmers but our commitment to purchasing home grown is much less than Italian consumers who have a much stronger food culture wrapped around local foods with strong heritage and stories. Our appetite for imported foods shouldn’t surprise us – we’ve been doing it for centuries (e.g. bacon from Denmark and lamb from New Zealand). What’s more, the vision of a swashbuckling Britain freewheeling our trade way around the world is reflected in post-Brexit trade deals with Australasian friends and more and is unlikely to drive food self-sufficiency at home!
With some trepidation, here’s some commentary on farmers’ incomes in the UK. Bonanza years apart (e.g. for some cereal and oilseed producers in 2022), for most farmers, income from agricultural activity per se is less and, for a whole slew substantially less than income earned through other sources such as basic payment schemes, environmental payments and non-farming business activities. Some agricultural input prices (e.g. fertiliser) have declined but are still well above pre-Ukrainian invasion levels. Farmer margins are not set for significant growth. Net agricultural income from lowland and LFA farms is virtually zero and farming income for many largely comes from the public purse and non-farming activities. Yet, direct income support from Government programmes has been and will very likely continue to decline. Like the cavalry, ELMS/SFI monies (payment to farmers for providing “green” public goods on-farm) are slowly arriving, if one has the intestinal fortitude to navigate the 200+ page rule book that is a precursor for accessing “green” grants. One distressing outcome of this squeeze on farm income has been a sharp jump in emotional problems on the farm. FCN report worrisome escalations in financial and mental wellbeing calls for help.
A word or two on diversification on the farm. English data shows that close to 70% of farms undertake non-agricultural diversification, up from 50% 15 years ago. Most of such diversifications are “other than letting buildings” (e.g. to customers seeking to rent storage space) This is no surprise to me. Thirty plus years ago, I started teaching on the annual Worshipful Company of Farmers Advanced Farm Management course. In 1990, each participant would introduce themselves and it took a minute or less: “Elwyn Hughes, dairy farmer from Carmarthenshire” – job done. Now, it’s a veritable lecture verging on homily: “John/Jill Lomax, broad acre farmer from Lincolnshire, equestrian events, weddings, yurt glamping, gin distillery, rare breed zoo, pumpkin sculpting, drone displays & training, etc.!”.
For many farmers, the non-farming diversification element of family income is only going to grow – for farm businesses operating at smaller to large-scale. The topic is vast and not to be waved through in a paragraph squirreled within a blog. For some, diversification will be gaining leverage from the farm’s intrinsic advantages with investment that reflects the reality of sparse family finances. For others, with greater access to capital, grander and riskier “value-adding” schemes may be on the cards. Two on-farm gin examples come to mind: the first, Tipplemill London Dry Gin from a family farm in South Lincolnshire and the second, intriguingly, Wa-Gyn from a Yorkshire Wagyu beef business where the gin is washed for 48 hours with molten Wagyu fat (see pics. In the slide presentation)!
In the UK, we have the advantage (albeit sometimes a disadvantage for those who’ve had machinery stolen/animals harmed/crops flattened, etc.) that we farm in countryside which is close to the urban population. What’s more city folk relish visiting rural areas. They like many of the products and experiential services we can offer them. They’re on our doorstep whereas, in North America, farms are somewhere “Out West”! Mind you, it requires a substantially different set of skills to deal directly with customers, not least from the general public, arriving with a rural idyllic view of the countryside, than the many and varied skills required to run a farm growing produce for less personal commodity markets. For the agricultural producer tentative about non-farming diversifications, perhaps leave such enterprises for the generation beneath or the one by your side. Only partly with tongue in cheek, I know that there’s many a dyed in the wool farmer who should never meet a food consumer or tourist face-to-face lest they put the fear of God in them!
If you’ve got this far, thanks for your attention and take a peek at the slides. It has been and continues to be turbulent times for many UK farmers and, indeed, for millions of UK consumers. But, I’m reminded that, tough although it may be, there are so many others in our world that have current challenges at monumentally more difficult levels – such as the 800 million people in our world who wake up hungry and go to bed hungry, the civilian population in Gaza, those facing famine in Tigray, Ethiopia, and at a much higher income level but nonetheless cataclysmic, families living in Grindavik, Iceland, who have just seen their homes engulfed and devastated by volcanic eruptions and lava flow.
David Hughes
Monmouth
February 8th, 2024
Supermarkets in your pocket. 