Tuesday 23 December 2014

The highs and lows of 2014

As 2014 draws to a close, now is the time to reflect on the highs and lows of the farming year which has proved to be a mixed bag.

The year opened with torrential rain and floods on the Somerset Levels which became international news, but as the rain stopped it gave way to one of the best periods of “growing weather” we have seen for some time. Arable crops generally yielded well, grass and maize grew strongly filling the silage clamps and barns with an abundance of good quality winter fodder.

Livestock also enjoyed the pleasant spring and summer and incredibly mild autumn, resulting in high milk production and beef cattle growing and fattening well.

However, good as the weather may have been, farmers have been buffeted by some extreme conditions on the commodity markets.

Beef farmers were the first to be hit as prices plummeted by around 20% in the first six months of the year. But since then, the market has firmed and the year ends with prices back by about 10% on a year ago with modest hope now emerging for a better 2015.

It was then the turn of arable farmers to feel the cold wind of falling world commodity markets as feed wheat prices slumped from around £170 per tonne in the spring to a low of around £100 per tonne in mid autumn. From there prices have thankfully improved somewhat, approaching £130 per tonne at the yearend.

However, the most unpleasant surprise of the year was the unexpected slump in milk prices which started reasonably gently, but in recent months has gathered pace with some dairy farmers now being paid as much as 10p per litre less than they were being paid at the start of the year. This remains a worrying situation and there will undoubtedly be casualties as the months go on and what is particularly worrying is that there does not seem to be an obvious end to this decline in milk prices.


Having said that, unlike other sectors, not all dairy farmers are suffering at the same rate because the price each farmer receives depends on the terms of the contract they hold with one of the numerous milk buyers in the market. This is demonstrated by the latest DairyCo data which shows the top monthly milk price offered in October was 36.7p per litre as compared to the bottom price of 24.98p per litre; a staggering difference for more or less the same commodity.


So, it has been a mixed year with generally good weather after a disastrously wet start but this has not been enough to offset the effects of falling commodity prices which will undoubtedly impact on farming profits in 2014. However, with oil prices also falling fast this should help reduce costs of production as we move in to 2015 thereby offsetting at least some of the effect of falling produce prices which have proved to be the dominant factor effecting farmers in 2014.  

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells

T: 01749 683381
E: james.stephen@carterjonas.co.uk

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