Dairy Crest’s latest set of financial results, confirming a 60% drop in profits, is further evidence of the total meltdown that is now taking place within the UK’s agri food sector.
And, no doubt, the same can be said for the rest of the EU. It strikes me that the only way of getting to the bottom of this issue is for Agriculture Commissioner Phil Hogan to instigate a fundamental review of the sector. And once the causes of the problems have been fully identified, his next job should be that of appointing a series of national supermarket ombudsmen. It will be their task to ensure there is no future slippage when it comes to the fully transparent operation of the EU’s agriculture, food and retail industries.
The fundamental driver for this is the fact that farmers must receive realistic prices for their produce, if they are to remain viable. And this is not happening at the present time. For most of the past 20 years producer prices have consistently fallen in real terms, while all input costs have increased. In response to this pressure farmers have done one of two things: grow their businesses – in the hope of becoming more efficient – or get out of the industry all together. And, increasingly, they are taking the latter option.
The other kicker within all of this is the fact that farmers can look forward to five years of reduced Pillar 1 support payments. The reality is that, even in Euro terms, the value of new single payment will fall in real terms as no correction for inflation is built into the new support scheme. This leaves farmers between a rock and a hard place, a situation created by a combination of falling farmgate returns and a support system that is not fit for purpose.
Phil Hogan’s first opportunity to do something about all of this will come courtesy of the upcoming mid-term CAP review. Let’s hope he commits to introducing fundamental changes in favour of farmers at that stage.