Fordyce Maxwell: Sadly, it appears the CAP still fits for our aspiring farmers

Published on Monday 6 February 2012 00:00

A WEEK today, 13 February, two young-ish farmers will lead a debate at NFU Scotland’s annual meeting. The subject will be what help young farmers and potential new entrants need to secure a future in food and farming.

The duo represents the union’s New Generation group, “positive and enthusiastic individuals who aim to provide an insight into how they see a sustainable future for farming and food production in Scotland”.

I can only hope their contribution goes beyond hoping what a new-look European common agricultural policy (CAP) from 2014 can do for new farmers, namely give them access to the annual single farm payment – or as we might say, “subsidy” – that existing farmers get.

That main conclusion from the most recent meeting of the New Generation group doesn’t say much for go-getting, entrepreneurial drive among Scotland’s younger farmers and would-be farmers.

Surely the new look should apply to forward thinking of how to succeed without the CAP, not hope for subsidies from a 50 years old system trying to support a steadily declining number of European farmers in ways convoluted and complicated, and likely to remain so?

Uncertain though these times may be, except for bankers, it is not unusual for young hopefuls with limited funds to find it difficult to get a start. It has never been easy. Doyen of agricultural pundits A G Street was advising against it, with figures to back him up, more than 60 years ago. How many thousands of new entrants have forced a way into farming since then?

Most new entrants still tend to be those who have made money in other industries, have married into farming or been installed there by father, an existing farmer. Only a few manage to save up enough to make their own start. But it can be done – matrimony, patrimony and outside business interests are excellent ways in, but parsimony and stubbornness can do it. They always have and, in spite of the way the world and farming has changed over the past half century, always will.

In spite of farmers’ obsession with support payments and how they can be claimed there have surely been enough examples of successful, unsubsidised, farming entrepreneurs in Scotland in recent years to fire the imagination of youngsters?

It’s easy, if depressing, to see why the CAP should still be seen as the most significant single factor affecting farming’s future, even with an increasing world population looking not only for more food but, as income increases in big consumers such as China, more meat and protein.

Export markets are seen as important, as is meeting home demand, but markets and weather can be volatile while subsidy is reliable. That sentiment showed up again last week in the annual TSB Lloyds Bank survey. The bank’s chief economist, Donald MacRae, reporting his findings for the 16th year found confidence at a record high, with the future of the CAP as the main concern.

Why that should be so was confirmed next day with annual statistics from the Scottish Government. Scottish farming output in the farming year 2010/11 was £2.76 billion. Total income from farming, almost, but not quite equating to profit, was up £23 million at £596m.

But included in those figures was £598m in CAP subsidies. Without that, Scotland’s farmers would have lost £2m. Costs, mainly feed, fuel and fertiliser, rose by £277m to a total of £2.4bn.

Wherefore, then, the confidence uncovered by the survey? Mainly because we discuss farming as an entity when not only is there a range of systems and mixes, but because there is a wide range of ability among farmers.

Some systems have been more profitable than others recently. High market prices for grain boosted arable profits. Sheep and cattle prices have been high. There are fewer dairy farmers, but those sticking with it have bigger herds and are getting better prices. At the other end of the scale, only about 10 per cent of hill farmers made any profit if subsidy was not included.

Some farmers have big overdrafts. Some are successful entrepreneurs and developers making use of cheap credit. Others are in big trouble. But 30 per cent have no bank debt at all. Most in the TSB survey said they were not only confident, but planning to expand.

Above and beyond systems, hopes and overdrafts, there is the confirmation from every survey ever done on crop or livestock production that the top one-third make a profit regardless of CAP, market conditions or constraints, and the bottom third struggle even when all factors are in their favour.

When agreed, the new CAP won’t vary much from the old except to be even more complicated and tied to inspections, penalties and nit-picking. It will continue to loom over farming progress. But the way ahead for a new generation must be to plan as if the CAP doesn’t exist, not pin their hopes on it. Go on, NFU annual meeting – surprise me.

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bumpkin

Monday, February 6, 2012 at 09:03 PM

get rid of the lairds first, they suck up all the subsidy and are just parasites. we wouldnt need subsidy without landlord bloodsuckers

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Daye Tucker

Monday, February 6, 2012 at 11:01 AM

Perhaps I missed something but the message I took from Maxwell's article was a bold, refreshing one, questioning the value of CAP subsidies at all in terms of sustainability. Did I not read a similar bold statement from SAC's Alan Renwick recently? We need to heed the warnings that have been put out since 2005 about gearing up farm business resilience. Every business needs a good clean out in order to renew itself and thrive and Scottish Farming plc is no exception. I've never fallen for the global food shortage message and place it in a similar category to the Climate Change message. The biggest issue in global terms is the disparity between the haves and the have nots, all else in between is spin, grasped or rejected according whether it suits the individual, the government, the fund managers or any which else. George Lyon is now warning of a reduced budget for the CAP. Now is the time for farmers to evaluate their options in a more realistic way without including subsidy in their calculations. Release unviable farms to the young, energetic and innovative.

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Wee Shooie

Monday, February 6, 2012 at 08:30 AM

With land being finite , if most of the TSB farmers are wishing to expand , there is obviously even less chance of new entrants starting up farming on their own .

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Organic peasant

Monday, February 6, 2012 at 07:33 AM

Amused at the double standard Fordyce. Young farmers must be entrepreneurial and look beyond subsidy? Aye right. Old farmers particularly those with slippers on must be protected at all costs perhaps? This attitude is mince, if we must have subsidy it must be fair. That is what the new entrants want. It is impossible to compete in any sector when the competition get an average of £70k a year in free money for a walk to the phone for a new Mercedes. As my slipper wearing neighbours proved again this year. Fair subsidy, and no more historic or no subsidy at all is the way forward. Some of us have had a decade of practice at it now.

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