By Wendy Short

SIR James Paice, former farming minister, told the NIAB TAG 30th anniversary Outlook Conference at Scotch Corner, that the majority of politicians do not understand the complexities of the Common Agricultural Policy (CAP) and consider farm support payments a drain on taxpayers’ money. 

He reminded growers at the sell-out event that farming was not at the top of any party political agenda, with some politicians still viewing agriculture as an obstacle to environmental conservation.

Sir James said: “We need to get a clear message across, about the ways in which farmers help to manage the environment. There are still influential people out there who think that taking land out of agricultural production will improve biodiversity. They do not recognise that it needs to be managed, for maximum benefit to wildlife.”

He had witnessed significant tension among European Union representatives, with officials from some member states regarding the CAP as a social mechanism, whose main purpose was to keep farmers on the land. Meanwhile, others felt it was vital to support agriculture as an economic industry.

The growing global demand for food and price volatility were subjects that had only been added to the political scene fairly recently, he said. 

“Last time the CAP was reviewed, food shortage issues were given little consideration,” said Sir James. “That will most certainly not be the case when it comes to the end of the current period of reform, which runs until 2020.

“It should have been realised that opening up markets would increase price volatility, which is difficult to manage in agriculture. But I am afraid that the situation is here to stay and we will have to learn to live with it. I would like to see Europe set out broad rules and budgets and give each country greater flexibility over how the rules are interpreted.”

While he thought it unlikely that farm support would cease altogether in the foreseeable future, it was inevitable that payments would diminish. A clear strategy was needed, to help farmers cope during the transitional period.

 Sir James spoke bluntly about the row over whether the UK should leave the European Union.
“If we have a referendum over our European Union membership in 2017, I would strongly urge farmers to vote to stay in. If we left, our treasury would not be prepared to provide farm support at anything even close to current level. 

“In addition, we would still have to meet all the European standards of production for our exports. We would find ourselves being forced to meet these exacting standards, without any opportunity able to participate in the way the rules are drawn up.”

Animal feedstuffs broker, David Norris, was cautiously optimistic about grain prices, explaining that exceptionally cold weather and lack of moisture had led to the poor establishment of winter wheat in Russia. The imposed trade sanctions had also taken their toll, he said.

“In my opinion, the lack of finance available to Russian farmers owing to the sanctions is as big, or an even bigger issue, than the condition of the country’s crops,” said Mr Norris. He is the author of the “Nogger’s Blog” website, which provides updates and commentary on global trade.

“Very few banks will lend to Russian farmers and those that will are imposing very high interest rates. This will severely limit the purchase of inputs, which in turn will restrict yields. To add to their problems, inflation in Russia rose dramatically last year.”

Growing conditions in the Ukraine, another country where the wheat crop affected the world market, had been similar to Russia, with the economic situation also proving challenging. 

Almost half of Ukrainian wheat growers surveyed said they planned to reduce fertiliser applications, a decision partly due to a 100 per cent increase in the cost of ammonium nitrate, compared with the previous year. Diesel prices in the Ukraine had also gone up, by an estimated 60 per cent. 

Mr Norris concluded by making a number of predictions for the future. Decision-making would become increasingly difficult for arable farmers and the gap between market highs and market lows would continue getting wider. While the wheat price could rise as high as £225/tonne over the next couple of years, it could also fall back to as low as £100/tonne by 2017, he said.

“We can expect greater volatility in 2015-16. These highs and lows will take place over a shorter period than we have been used to. We have seen prices alter significantly over 12-18 months, but in the future this period could become even shorter."