Farmers lose £1 for each hectare of land

Oct 24 2002

By Anna Lognonni, The Journal


North farmers could be driven out of business, with a new survey revealing they lose £1 for every hectare they work.

Deloitte and Touche's food and farming survey revealed that modern farmers are currently earning nothing from growing crops or milking cows.

They are being forced to look at other ways of making a living, such as converting buildings on their land into holiday homes, farm shops, offices or industrial units.

According to James Craddock, senior manager with Deloitte and Touche's North agriculture group in Leeds, lowland farmers in the North lost £1 for every hectare (2.5 acres) of land they used to produce food from.

Next year looks even bleaker as the firm predicts farmers will lose £19 a hectare for food production, after European subsidies have been paid.

The only reason farmers managed to earn £46 a hectare from their farms was from non-food producing activities, such as farm shops.

These figures relate to a large, well-managed farm, stretching to 1,000 acres, but making only between £15,000 and £20,000 a year, from which the farmer has to draw a wage and re-invest in the business.

However, most farms in the North are much smaller than this - many are less than half this size - and the profit per hectare is predicted to drop in the 2002/3 financial year to £30.

Gordon Meek, North-East livestock delegate for the National Farmers' Union, said: "There's no doubt that farmers in the North, and the whole of the UK in fact, have been under severe pressure from falling prices.

"The prices we get at the farm gate have dropped for five years while the price in the shops has often risen. That gap is getting larger all the time and that's very worrying."

Mr Craddock said: "Five years ago, farmers gained most of their income from food production and only a small amount from other enterprises. But now we are seeing a reversal of fortunes."

More and more food is being imported, contributing to a £20bn trade deficit in an industry that generates £65.7bn a year and employs 500,000 people.

In a situation mirroring manufacturing industry, food companies have closed factories in the UK and moved their operations abroad, where costs are cheaper. Mr Craddock said: "An increasing amount of food is being imported now but British farming still underpins the food industry in this country.

"But looking to the future, if farmers cannot make money from food production, are they going to stay in the industry? If they leave the industry, what will be the knock-on effect on companies that manufacture these raw products?

"We have already seen a number of companies move part of the operation to Eastern Europe and elsewhere in the world where costs are cheaper.

"In the short term, the consumer may benefit from cheaper prices, but it's important to look at the other impacts such as unemployment and the effect food imports will have on our biosecurity. After all, we still don't know how foot-and-mouth started."