Following the NFU Organic Forum’s latest meeting, Paul writes:
This month saw the Forum tackle the subject of Brexit. I was somewhat frustrated and a little exhausted of all of the hypothesis’ that may or may not happen regarding Brexit, so I was hoping the meeting may re-enthuse me!
I arrive home from the meeting with newly installed gusto regarding the subject as well as an understanding that there is so much we need to communicate to the Government. I look around my farm the very next day and see that much of the machinery I have is manufactured in the EU. I wonder what will the cost and availability will be like for the replacement of these machines post Brexit. Maybe there will be a British manufacturing base up and running in the next 18 months? I then start to think about the produce I sell, most notably my lambs; their price is very much driven by exports. What does the future hold for these? Will my sheep flock become an expensive weed management tool? Then my malting barley - I suddenly remember that last year this mostly went to the continent. I do the sums and I realise two thirds of my income is reliant on access to the single market. The replacement cost of around 75% of my machinery fleet is also reliant on a tariff free trade deal.
One of the messages we were asked to take from the forum meeting was to look and evaluate our businesses in terms of three key pillars: Volatility, Productivity and the Environment. As discussed in the NFU's Vision paper for a New Domestic Agricultural Policy.
Well, as with many farming business’ I am a price taker not a price setter. Volatility is therefore a major risk to my business as price is something that I feel I have little or no control over. I ask myself ”what do I do on my farm to reduce the risk of volatility?” Firstly we are entered into an environmental scheme which provides us with an income that is not exposed to that volatility. I view environmental stewardship as our fourth enterprise and I have a fixed rate for 10 years. In addition, we minimise our production costs as much as possible by running a low input grass based system. Therefore we are not as exposed to input cost fluctuations as maybe a high input system might be. We look to fix and lock into purchase contracts for the few commodities we buy. Currently we are looking to reduce debt and fix interest rates where possible in preparation for Brexit. It is likely that whatever markets we have access to, the prices we receive are going to be more volatile post-Brexit.
With regard to Productivity, this is probably one area that we have the greatest potential to increase. Even though we are organic, much of our productivity is comparable to that of conventional systems, and we do try and be as productive as possible within the realms of sustainability. Productivity is an on-going goal and as new techniques and systems become available and used, we apply them to our business.
With regard to the Environment, our organic farming system means that many of our production techniques enhance the environment and provide increased habitat for wildlife. In conjunction with our organic farming techniques, the farm is entered into a Higher Level Stewardship (HLS) scheme. So I feel we are already farming to a fairly high environmental standard. Of course we are continually looking at our system and looking to increase that further, and believe in a multi-pronged approach. We are also always looking to be less reliant on fossil fuelled machinery as well as using alternative renewable electricity sources. However, we do have to be careful as that too much emphasis on environmental land management options can often reduce productivity and, hence, it will be where the economics lie that will dictate or future direction of travel. We are a business after all and we aim to have a profitable sustainable business.
Volatility, Productivity and the Environment is the framework which the NFU advocates the new Domestic Agricultural policy (DAP) should be built on. You can read the NFU's vision paper here.
Being a first generation farmer I only know agriculture under the CAP. As new entrants trying to get on the farm ladder we found parts of the CAP hindered our access to land. This is largely due to the single farming payment system inflating land rental values. Also some of the environmental schemes have made it more attractive for land owners to keep land in-hand rather than letting it out. However now we have successfully secured a tenancy and those very schemes that hindered our start, now help and support us as we establish our business.
I am very nervous of a DAP that has too much emphasis on environmental stewardship unless it is only available to farm businesses that actively take the risk in producing food. It has to be combined with farming and food production. If rates are set too high then many landowners will take the environmental option and I feel that may restrict the availability of land particularly to new entrants. We would see land types where production potential is high becoming more intensive and those areas with low production potential more attractive to environmental options. However where this line is drawn will depend on the profitability of the core enterprises and where environmental stewardship rates are set post-Brexit.
The NFU is working hard to communicate our views to the Government so that we get a DAP that is fit for purpose. I would please encourage you all to feed your views and experiences into this as much as possible by attending and engaging with the NFU at regional and national meetings and shows.