farmingstudy07

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Published on December 28, 2007

Author: yilmar

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HAMPSHIRE FARMING STUDY Review 2007:  HAMPSHIRE FARMING STUDY Review 2007 Last Review 2004 (Original Study 1997):  Last Review 2004 (Original Study 1997) 3 principal elements: Reading University Farm Business Data DEFRA census data Other DEFRA data Farm incomes Diversification Environment Current Review:  Current Review Changed data sets due to Departmental reorganisations: South East Region Farm Business Survey Data DEFRA census and other data Natural England environmental data Current Review Objectives:  Current Review Objectives Identify trends since last review, particularly following CAP reform and introduction of: Single Payment Scheme (SPS) in 2005 Associated changes in Rural Development Programme, especially introduction of Entry Level Stewardship scheme Provide up to date benchmark for monitoring CAP Mid Term Review:  CAP Mid Term Review Main objectives in context of world trade negotiations: Making agriculture more market orientated Removal (mostly) of production related subsidies Increased linkage of subsidies to delivery of public goods – e.g. environmental gains Increased funding for broader rural social and economic development Single Payment Scheme:  Single Payment Scheme New predominant form of farm subsidy introduced 2005: For England a hybrid subsidy of historic receipts and new area payments, but migrating over time to a universal area payment Payment no longer linked to production (‘decoupling’), but to environmental and animal welfare ‘cross compliance’ conditions Land does not have to be farmed, only kept in ‘good agricultural and environmental condition’ Payments reduced by ‘modulation’ over time, i.e. transfer of funds into Rural Development Programme Some modulation imposed by EU, and some at discretion of UK government Entry Level Stewardship Scheme:  Entry Level Stewardship Scheme Largest single change to Rural Development Programme: All farmers qualify for ELS provided they undertake sufficient number of environmentally beneficial management measures Measures aimed at readily achievable actions to achieve widespread uptake (the ‘broad and shallow’ recommendation of the Curry Commission) Standard payment £30/ha Slide8:  FARM INCOMES UK Farm Incomes:  UK Farm Incomes TIFF (Total Income From Farming) is inflation adjusted and before deducting Value of unpaid labour Notional rent for owner occupiers UK TIFF per full-time person equivalent (e.g farmer and spouse) 1995: £28,300 2000: £8,700 (31% of ’95) 2002: £12,500 (44% of ’95) 2003: £16,800 (60% of ’95) 2006: £13,800 (49% of ’95) UK Farm Incomes (cont):  UK Farm Incomes (cont) Farmgate prices as % of retail price (DEFRA) 1988: 47% 2003: 34% 2006: 36% 23% proportional drop in farmer’s share since 1988 South East Regional Farm Incomes Previous 2004 Review Based On University Of Reading Farm Business Data For 2002:  South East Regional Farm Incomes Previous 2004 Review Based On University Of Reading Farm Business Data For 2002 ‘Reading Province’ covered central southern England and parts of Midlands Principal income measure in data was ‘Management and Investment Income’ (MII) MII = Net income calculated after deducting Value of unpaid labour Imputed rent for owner occupiers Reading Province MII 2002 Data:  Reading Province MII 2002 Data On average farms made a loss of £16/ha in 2002, compared with a profit of £238/ha in 1995 Loss despite the inclusion of ‘other’ non farming income (on farm diversification, contracting, and sundry income) Slide14:  Reading University Time Series Analysis of MII 1990 to 2002 £/ha – All Farms ‘Current’ Farm Income Data For SE (2003 – 2005):  ‘Current’ Farm Income Data For SE (2003 – 2005) Reading University farm account data analysis discontinued Replaced by national Farm Business Survey with data analysed on basis of government regions SE regional data used, but: Different sample of farms Data not available for 2002 (the last benchmark year analysed in 2004 Hants farming study review) Data only available for 2003 – 2005 period Data includes MII measure Management And Investment Income South East Region 2005:  Management And Investment Income South East Region 2005 Includes income from diversification, contracting, rental income, agri-environment schemes, and SPS Excludes off-farm employment 2005 SE results by main farm type: Cattle and Sheep - £88/ha (loss) Cereals - £40/ha (loss) Dairy + £98/ha (profit) Mixed - £5/ha (loss) Slide17:  MII/Ha 2003 V 2005 MII For Traditionally Unsupported Sectors:  MII For Traditionally Unsupported Sectors Horticulture (South East) Positive MII in both 2003 and 2005 Pigs and poultry (English data only) Positive MII in both 2003 and 2005 Slide19:  South East MII 2005 Slide20:  FARM PHYSICAL STATISTICS DEFRA CENSUS DATA FOR HAMPSHIRE 2003 v 2006 (Note: 2003 data used in 2004 Hants Farming Review) DEFRA Census Data 2003 v 2006:  DEFRA Census Data 2003 v 2006 LAND USE Temporary Grassland: - 8% (Eng: – 6%) Permanent Grassland: + 17 % (Eng: + 10%) Farm Woodland: + 5 % (Eng: + 13%) Set-aside: - 30 % (Eng: – 25%) Crops and Fallow: + 3 % (Eng: no change) Slide23:  Cropping Cereals area: - 6% (Eng: – 6%) Other crops: + 15% (Eng: + 0%) Oil seed rape: + 17% (Eng: + 10%) Minor crops/fallow: + 72% (Eng: + 78%) Horticulture less than 1% of Hants agricultural area Livestock:  Livestock Cattle and calves: - 7% (Eng: - 4%) Dairy Herd: - 14% (Eng: - 10%) Sheep and lambs: - 7% (Eng: no change) Pigs: +2% (Eng: no change) Poultry: - 10% (Eng: + 4%) Employment:  Employment Total agricultural workforce: +2% (Eng: + 2%) Now 9,015 Full-time 3,385: - 7% (Eng: - 5%) Part-time 4,288: + 10% (Eng: + 8%) Casual 1,342: + 1% (Eng: + 6%) Employment (cont):  Employment (cont) Hants full-time work force 1995: 71% full-time (Eng: 60%) 2003: 41% full-time (Eng: 46%) 2006: 38% full-time (Eng: 42%) DIVERSIFICATION:  DIVERSIFICATION DEFRA Data :  DEFRA Data ENGLAND 2005/6 50% of holdings have diversification activities Diversification income accounts for only 6% of total farm turnover, but 22% of total farm ‘income’ (profit before rent and own labour) SOUTH EAST 2005/6 73% of holdings have diversification activities (highest level in England) Diversification income (£128 m) accounts for 46% of total farm ‘income’ (profit before rent and own labour) Diversification Assistance:  Diversification Assistance England Rural Development Programme New scheme pending for 2007/2013 80% of funds will go into agri-environment schemes (Axis 2 – administered by Natural England and Forestry Commission) Balance administered in SE by SEEDA Axis 1 – Improving competitiveness of farming and forestry Axis 3 – Rural quality of life and economic diversification £60 million for Axis 1 and 3 for whole period ENVIRONMENT:  ENVIRONMENT Natural England Data:  Natural England Data New agri-environment regime introduced March 2005 Entry Level Scheme (all farms eligible – standard payment £30/ha) Higher Level Scheme (competitive and restricted budget) Parallel schemes for organic producers Old schemes (Countryside Stewardship/ESAs) closed to new applicants Countryside Stewardship June 2007:  Countryside Stewardship June 2007 SOUTH EAST Second highest of 8 English regions for number of agreements Fifth highest for area under agreement HAMPSHIRE Second highest of 10 SE counties for number of agreements (280 – 15% of total, up from 14% in 2003) First for total area under agreements (25,065ha – 36% of total, up from 15% in 2003) New Environmental Stewardship Agreements:  New Environmental Stewardship Agreements SOUTH EAST Seventh highest of 9 English regions (inc London) for number of agreements Fifth highest for area options HAMPSHIRE Third highest of region’s 9 counties for number of agreements - 14% of regional total Third highest for area options - 21% regional total (NB: can have more than one area option on same land) Of the 452 agreements in Hampshire most are Entry Level only 44 Higher Level Scheme only 23 Organic ELS, and 3 Organic HLS Slide41:  Organic Land In SE January 2006 Fully Organic 35,200 ha in SE (15% of English total) SE Second highest region after SW In Conversion 10,700 ha in SE (20% of English total) SE Second highest region after SW Total Change Since 2003 SE 15% increase (SE and SW account for over half organic producers in England) Organic Businesses in SE January 2006 :  Organic Businesses in SE January 2006 Producers and growers 417 (418 in 2003) of which 201 are organic livestock producers Processors and importers 484 (393 in 2003) OBSERVATIONS:  OBSERVATIONS ‘THE PAST’:  ‘THE PAST’ Original Hants Farming Study figures close to 1996 income peak (1995 data) Even at that time predominately beef and sheep farms were MII loss making on average Trough in farm incomes reached in 2000 Recovery since 2000, but 2005 incomes still low in main sectors MII losses prevalent despite non-farming income Farming activities generally not profitable in own right – farm incomes especially dependent on single farm payment and diversification Slide45:  Feared removal of land from agriculture post CAP reform has not happened to great degree (so far) although ‘fallow’ land has increased The need now to understand farm income under separate categories Agricultural income Subsidy income (decoupled from production) Agri-environment income Diversification income (Note also: 2006 over 30 month beef back into food chain) ‘THE FUTURE’:  ‘THE FUTURE’ Single Payment Scheme likely to be subject to further erosion post 2012 Set aside may also go post 2012 or earlier Arable farming profitability set to improve if world commodity prices continue to strengthen World grain stocks falling Additional upward price pressures from biofuels (but is this ‘sustainable’?) World population due to grow to 9 billion by mid century But livestock producers vulnerable to increased feed prices (‘up corn, down horn’) Signs of better prices in the dairy sector, but only for some ‘THE FUTURE’ (cont):  ‘THE FUTURE’ (cont) Other potential influences Globalisation V localisation – which direction for food UK production? (consumer preference and transport costs) Continuing power of food chain to take share of retail price away from farmers Managing agriculture’s contribution (mainly methane and nitrous oxide) and response to climate change (likely to become increasing focus of policy) Many farm businesses likely to continue being ‘subsidised’ by other sources of income including off-farm employment CONCLUSION:  CONCLUSION Signs of recovery for arable sector due to changing global markets, but livestock sector likely to remain under pressure Government assistance likely to continue for delivery of ‘public goods’, particularly environment Future of Single Payment Scheme unclear after 2012, but ‘rural development’ expenditure (Pillar 2) may grow Diversification will remain important to limit exposure to farming uncertainties (both from CAP and world trade) However, diversification income dependent on general strength of regional economy

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