Economics of the real world

Posted By on 29th June 2016




Another year, another show over. By the time you read this, planning for 2017 will be well underway.

 
One of the stands at the show was offering airfares and eight months’ accommodation for people willing to go and work on farms in New Zealand. I wonder how many of Cornwall’s Young Farmers will have been tempted by that.
 
Every year a bunch of City boys called Deloitte and Touche produce a report on the state of British agriculture – where the value comes from, who generates that value, and where the money goes.
 
Last year’s D&T report for producers in the dairy sector was truly dire – falling commodity prices, accelerating consolidation (farm mergers) and fewer farmers. The main drivers for this collapse in milk prices were a dramatic slowdown in demand from China and the impact of Russia banning imports of dairy products.
 
In 1939, Britain had almost half a million farms, the majority less than 40 hectares, and employed almost 15% of the population. Since then Britain has lost over a third of its farms and the agricultural workforce has been in serious long-term decline.
 
As farms get bigger, they get fewer in number; the number of people working on the land has been tumbling for decades. Another thought-provoking stand at last week’s show was the robotic milking system which offers to milk your herd for only £30 a day. I know that wages for contract milkers are low, but I don’t think anyone could afford to do it for less than £30 a day.
 
Many of the structural issues affecting dairy farmers are now spreading to the cereal and meat sectors. Food prices have fallen to their lowest level for five years. British beef prices fell by 15% last year, while the country remains a net importer of the meat.
 
Talk about the butterfly effect: some bureaucrat in China or Russia types at a computer keyboard, and my neighbour goes out of business. I find it hard to get my head round how far the agriculture sector has come from the days when milk from the farm seldom travelled beyond the nearest town.
 
I am not a farmer, I have only three acres of land and I essentially just mess about, scratching a long-held itch to learn more about agriculture and what it is that makes rural Cornwall what it is.
 
One thing seems clear. The divorce between consumer and producer has grown so wide that a natural product like milk is now simply a “commodity” which is traded on rollercoaster stock exchanges around the world.
 
Politicians have set up, and then abolished, milk marketing boards; they have set up, and then abolished, milk quotas; we have now arrived at a situation where supermarkets dictate what is to be produced and how much they want to pay for it.
 
This separation between town and country has profound implications for all of us.




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