I’ve often thought that successful farmers don’t just need great agricultural knowledge and top business skills, but also the psychic ability of Mystic Meg. Growing crops and rearing livestock is one thing, but predicting exactly what produce will be marketable and command the best price in the future is something else entirely.
It’s a tricky business, but get it right and you’re laughing. And just like any other investment, when it comes to arable I’m a great believer in spreading the risk.
On my farm we’re currently growing three crops: wheat, oilseed rape and malting barley. The hope is that at least two of them will do well in the coming year, but if the markets and the weather go our way so that all three crops come up trumps, then I will be over the moon.
I’m naturally optimistic and there’s every reason to be at a time when the world population is growing and the demand for staple foodstuffs such as wheat is increasing. That’s especially true for milling wheat as consumers in Asia get an increasing taste for bread and baked goods.
Oilseed rape is a crop that is very much in vogue. When trends are being set, a smart farmer will want to be in on the action. Our rape seed is crushed to make a healthy cooking oil and a new type of salad dressing, as well as for use as a biofuel.
Selling beer to Germans
Meanwhile, the outlook for malting barley, used for making beer, is even brighter. That’s due to a disastrously wet harvest in Northern Europe and Scandinavia. There’s a rather sweet irony about selling barley for export to the brewing giants of Germany and Denmark. So it’s clear that what’s driving demand is worldwide consumption, and in particular the expanding markets of India and China.
However, economic fluctuations that could have a disastrous effect on farmers’ profits are happening much closer to home. As a new year gets under way, the Euro crisis continues to cause the greatest concern and instability. That’s because in the last three months of 2011, uncertainty among traders meant that the value of all cereals dropped by around 20 percent.
That price slump also affects the crops that are in the ground now and due for harvest later this year. Some farmers will have fixed the price they’ll receive for their cereal crop, so they should still do ok, but for the unlucky ones who are going to feel the full force of the price drop, it will be like getting a backdated pay cut.
Chickens up, pigs down
We run a mixed farm, so I know the issues that can help or hinder livestock farming. Poultry farmers I know always seem to do well. Producing chicken is profitable for them thanks to the huge international appetite for the meat and the short production time before the birds are ready for the table.
Thanks to the recent healthy price of lamb, the prospect of making money from sheep farming is also good. It’s all down to the reduction in our national flock over the past 10 years due to high feed costs, coupled with a trend for New Zealand farmers to turn from sheep to dairying. Less New Zealand lamb in the shops is good for UK producers and I’m making plans to increase the size of my flock.
However, the picture isn’t so rosy for pig breeders, and many have left the business as feed and welfare costs overtake profit.
As for beef farming, while prices have been good for the past 18 months, it’s not a sector for novices; it’s hard to start a herd from scratch and expensive. Of course, bovine TB still casts a long shadow over the industry and we’ve decided that we won’t expand our beef herd this year. Like everyone else, I’ll wait with interest for the planned badger cull trials and vaccination programmes then consider the results seriously when they’re published.
What is certain is that there are no quick fixes because the difficulty with arable production – and to a similar extent livestock farming – is that there’s a long time between the planning, the planting and the profit. We’re working on a year-long production cycle, and even after harvest it could be another year before all the crops are sold. Next time you’re doing the weekly food shop, spare a thought for the farmer who helped fill the shelves by successfully gazing into his crystal ball 24 months previously.