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Farm confidence drops as feed costs keep rising

By Western Morning News  |  Posted: December 29, 2012

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Confidence among livestock farmers to invest in the future is at a very low ebb – knocked by appalling weather and consequent rocketing feed costs.

And a drop in prices paid for sheep, an important sector in the South West, is adding to agricultural despondency.

A new survey carried out by the National Farmers' Union (NFU) indicates dented farmer confidence, especially in the short-term.

Lamb prices have plummeted – leading to demands that the big retailers should stop playing store wars over prices and that both processors and retailers should take a long-term view of the market and avoid sending out further negative signals to farmers.

Last week prime lambs were selling for slightly over 150p per kilo at South Molton market in North Devon. This time last year the average was almost £2 per kilo.

"The boom-bust cycle of sheep pricing is not in the interests of the farmer, processor or retailer – and sending out negative price signals is damaging to the entire sector," said Andrew Butler, NFU acting regional director. "The poor summer and rising input costs are continuing to erode margins."

Ironically the poor lamb prices have come at a time when the national flock is showing signs of increasing, and British lamb is in demand on both home and export markets.

The survey says that generally farmers remain relatively optimistic about the future of agriculture over the long-term. NFU chief economist Phil Bicknell said the results came as "no surprise" given the exceptional year many farmers had experienced.

"The challenging year we've had makes it easy to forget that farming has been something of a success story in recent years, increasing its contribution to the economy, creating jobs, and seeing improvements in farm profitability," he said.

Results from the survey, now in its third year, showed that last year's relatively optimistic outlook had faded, and only 22% of farmers surveyed were confident about the year ahead, compared to nearly one in two 12 months ago.

Some 42% of farmers told the NFU survey team they thought that their businesses were in for a tough year.

Mr Bicknell explained: "The confidence of pork, dairy and red-meat producers has tumbled as animal-feed costs have risen. While other sectors show confidence rising in the long-term, over the next five years this remains weak for red meat and pork."

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