We're being decimated by costs and little support

Anyone with any hands on knowledge of agriculture will already be experiencing rates above 18%, whatever the Bank of England tell us. Indeed, the ‘real’ rate of inflation in our world is certainly more than 25% right now and shows little sign of easing off, despite softening commodity prices for feed and fuel, at least for now.

Feed barley has come back to almost manageable levels from the lunacy of the spring, trading at around £230/tonne, dropping about 50% of its increase from harvest, 2021. We can also almost live with the price of some protein (probably not soya), from the eye-watering prices earlier this year.

Red diesel is back below £1/litre but both it and DERV should be much less than they are, with crude oil trading around $95/barrel. The weakness of sterling against the $US and refiners exploiting the market with exorbitant margins – four times greater than two years ago – mean retail prices remain stubbornly high. Mind you, I have seen petrol at £1.60/litre on the forecourt this week!

The real killer is fertiliser. With gas prices totally out of anyone’s control, particularly politicians’ and a few dominant fertiliser manufacturers, who have operated like a cartel for years, we really are on a hiding to nothing.

Fortunately, I have never seen or experienced a better growing season at the head of the Nith Valley than this year. We have been spared the destruction that the drought has brought the East and South of the UK, (and further afield), with drizzly misty mornings and showers pretty much all summer. Consequently, second cut silage was completed at the end of July with full pits, and now we have aftermath in abundance.

The efficient use of slurry certainly helped, meaning we have enough unused fertiliser left for a first application in spring, 2023. A good job when I hear where prices have gone, with an astonishing £890/tonne being rumoured for 34.5% AN last week, an increase of over 40% since June and 300% since last year.

Many input costs which weren’t immediately apparent in the spring are becoming all too real, including rising borrowing costs. Electricity is the most obvious, with its link to gas – a cost that we never bothered about too much previously, is now a real concern.

If – and it’s a big 'If' – prices for beef and lamb follow their seasonal norm from now, then this all may be manageable, but £4.70-£4.80/kg remains the break-even price for clean beef and needs to be achieved this autumn/winter, or the exodus of suckler cows in GB will continue unabated.

Similarly with milk, having seen them rise to a realistic level, they must stick. Indeed, this is the case for all agricultural commodities. UK consumers have got used to cheap food for too long – having to pay realistic prices for food for the first time in nearly a generation has come as a real shock.

It is no surprise that inflation in the UK is the highest in the G7. Much of this is undoubtedly to do with rising food prices from suppressed levels not experienced in other G7 countries.

This is, of course, entirely because we have a supply chain in the UK controlled by a handful of powerful retailers and equally powerful processor suppliers – the beef supply chain being a prime example!

We now have chaos in the country with all manner of workers on strike. Rail, public sector, dockers, even barristers are among a growing number of sectors pushing for cost of living increases in their wages. Why not, they are facing cost increases that every household will experience this winter?

We've got a rudderless UK government riddled with in-fighting, and a Scottish government more interested in scoring political points to secure independence by blaming the UK government for everything, rather than facing up to the realities of an economic meltdown.

I’m old enough to remember strikes and the three-day week in December, 1973/74 and the lights going out which brought down the Heath government. And the Winter of Discontent from November, 1978, to February, 1979 – inflation out of control, strikes across rail workers, hauliers, the NHS, gravediggers, refuse collectors, (sound familiar?), and the coldest winter for 16 years.

Actually, the ground was so frozen we didn’t play rugby from late November until the end of February that season. Anyway, Ford car workers got a 17% wage increase, public sector workers were offered 5% by the Labour government of James Callaghan and four months later Margaret Thatcher was PM.

The current situation we are in is very similar to these events, albeit the cause is different. The way politicians are handling it, or should I say not handling it, looks hellish familiar as well, so could come to the same outcome it did for Callaghan and Heath if they don’t get a grip.

Meanwhile, it’s business as usual in Scottish agri-politics – as Callaghan said on his return from a holiday in Barbados in the middle of the 1979 mess – “crisis, what crisis?” Ouch!

ARIOB continue to do little or nothing. NFUS, particularly Martin Kennedy, are acting as a media spokesman for ScotGov, bizarrely even speaking on behalf of the CabSec about officials’ plans to reduce suckler cows in Scotland to meet climate change targets.

What of any attempt by NFUS to offset the financial issues ALL of their members are currently facing? Five hundred quid for soil sampling and paying the advance on the BPS a few days early is as much use as a chocolate fireguard.

What about acting like a lobby organisation, dare I say a union, and actually lobbying on behalf of its members for something tangible?

There is one obvious area it could concentrate on – if it had the will and the bottle to do it, which by all accounts they don’t. That is battling to preserve the value of public support coming into almost every sector of our industry.

The real value (including the impact of inflation) of agriculture support payments has reduced by 50% in the last 20 years. LFASS in 2002 was about £60-65m – today it's around £60-65m. The value of support payments to Scottish agriculture has been sitting around £500m for the last 20 years.

In 2019, for example, published Scottish government statistics show total support payments were £488m, a fall of 2% in real terms by its own admission.

It’s not just the reduction in the value of these payments eroded by inflation which is the problem, it’s the buying power of these reduced payments that is causing more concern. Fuel costs up 237% for DERV and 570% for red diesel, contractor costs up 245%, labour for skilled trades up 333%, feed up 390%, electricity up 429%, fertiliser up 470% – a few real examples from real farmers of cost increases since 2002.

In other words, as well as accelerating inflation eroding the value of Scottish Government payments to agriculture, the buying power of same is currently being decimated. The Scottish government budget, on the other hand, was £19bn in 2001 and was £49bn in 2021 – an increase of 258%.

Finished sheep and cattle are both up around 235% in 20 years but that isn’t touching the increased costs we are currently facing and there is no guarantee they will stick.

So, workers in almost every sector imaginable are striking, fighting for cost of living increases for their hard pressed families. We have an admission by ScotGgov that support payments are not reflecting inflation, never mind the particular costs we face in agriculture and there has been absolutely no response from Martin Kennedy.

Rumour has it that he doesn’t think it’s 'credible' to ask for cost of living increases for farming families. If that is true, I would use 'incredible' as the adjective to describe this ridiculous position.

It represents a complete dereliction of duty by NFUS and if not this, what do they have in mind to support their members? But then NFUS is now so close to ScotGov maybe he’s forgotten why he was elected and what NFUS is supposed to stand for. I’m not the only past president, or vice-president to think that.

We’re used to being abandoned by politicians and officials, particularly those with an anti-meat agenda, but abandoned by the organisation set up to represent the views of the industry – this is a whole new ball game.