This is no surprise to anyone, says NFU chief economist Phil Bicknell. The UK recorded its second wettest year ever in 2012, and no farming sector was immune.
Bicknell also warned of poor weather’s drag on farming finances.
“On top of delayed planting last autumn, crop development has been slow and spring planting is behind schedule in many parts.
“For livestock producers, the immediate concern is a lack of fodder after a long winter, which follows on from higher feed bills in 2012. We may only be four months into the year, but the pointers are for UK farming profitability to be further squeezed in 2013.”
NFU president Peter Kendall underlined the challenges facing farmers.
“Falling farm profitability shatters the myth that high commodity prices would mean high profits. It is vital that farmers turn a profit and that they re-invest. The reality is that low profitability and falling confidence does not provide a secure framework for a sustainable food industry.
“In recent weeks there has been much talk of shortening supply chains in the agri-food sector. Yet it’s clear those supply chains also need viable farming businesses as their foundation.”
The role of CAP in farming’s resilience should not be discounted either, Kendall says. The weather chaos has laid bare the importance of CAP payments.
“With profits squeezed, a larger number of farmers will again be forced to rely on CAP’s direct payments to underpin their business in the year ahead. Managing risk and volatility are both key and that must be recognised by the government in its CAP negotiations and in pricing decisions taken by the food chain.”
