HAMPSHIRE FARMING STUDY 1 HAMPSHIRE FARMING STUDY Review 2010.

1HAMPSHIRE FARMING STUDY

HAMPSHIRE FARMING STUDYReview 2010


Review Process

– Original Study 1997

– Last Review 2007

– Data sources and their methodologies have changed over time

– However, efforts have been made to maintain consistency between reviews as much as possible

– Principle aims of Reviews:

• Identification of regional and county trends

• Benchmarking against national data


Current HFS Review 2010

4 main elements:

1. Farm Business Survey data for SE

2. Farm Census data for Hampshire

3. Natural England environmental data for the region and county

4. Other data from sundry sources, including national data


CAP Policy Context

No major overhaul of the CAP since 2007 HFS review, but

2005 CAP ‘Mid Term Review’ sought to:

• Make agriculture more market orientated by removing (most)

production related subsidies - replaced by the Single Farm Payment

• Increase linkage of subsidies to delivery of public goods – e.g.

environmental gains provided by Entry Level Stewardship scheme

• Increase funding for broader rural social and economic

development

(viz - Rural Development Programme for England and ‘modulation’)


FARM INCOMES


UK National Farm Income

• TIFF (‘Total Income From Farming’ - DEFRA) – a national inflation adjusted income measure calculated without deducting

– Value of unpaid labour– Notional rent for owner-occupiers

• TIFF per full-time person equivalent (e.g farmer and spouse) at 2009 prices:

– 1995: £29,600 (peak post 1973 entry into EEC)– 2000: £8,800 (trough) – 2006: £12,900– 2008: £22,800 – 2009: £21,000 - 71% of 1995 peak

• But 2009 TIFF for whole sector totalled only 47% of 1973 level due to fewer farmers – Total TIFF 2009: £4 bn - of which £3 bn Single Payment


UK Farm Incomes (cont)

• Basic farmgate prices as % of retail price

– 1988: 47%– 2003: 34%– 2006: 36%– 2009: 36%

• Farmers’ share has fallen by nearly a quarter since 1988 but has stabilised

• National self-sufficiency in indigenous food fell from 81% in 1998 to 72% in 2006 but has remained around that level since


23% overall drop since 1988 (similar situation in 2006)

Farmers' Share Of The Value Of A Basket Of Food ItemsUK 2009

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10

20

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40

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60

70

80

Per

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Farmgate Share in 1988 % Farmgate Share in 2009 %


Product Prices Index Since 2005

Source: DEFRA


World Grain Stocks

2010 – Stocks Back To Eight Year High (Source: USDA/HGCA)


Regional Farm IncomesSouth East

• Principal income measure used in HFS Reviews ‘Management and Investment Income’ (MII)

• MII = Net income calculated after deducting

– Value of unpaid labour– Imputed rent for owner occupiers

• Includes income from on-farm diversification

• Earlier HFS Reviews based on ‘Central Southern England’ data (Reading University) up until 2002


Management & Investment Income £/Ha

-50

0

50

100

150

200

250

300

All Farms MII – Central Southern England 1990 to 2002


Current Farm Income Data South East

• Farm Business Survey data for South East Region used

from 2003 onwards based on government region

• Based on the accounts of a new sample of farms

covering whole of SE region

• Most recent data - 2008 (08/9 financial year; 08 harvest)

• Main comparator - 2005 (05/6 financial year)i.e. the latest data reported in the last HFS Review


Management And Investment Income (MII)For CAP ‘Supported’ Sectors 2008

• MII includes income from diversification, contracting, rental income, agri-environment schemes, and SPS

• Excludes off-farm employment

• 2008 South East results by main farm type on average:

Cattle and Sheep - £32/ha (loss)Cereals + £189/ha (profit)Dairy + £234/ha (profit)Mixed + £99/ha (profit)

• In 2005 only dairy sector was in profit


MII/Ha 2005 V 2008

MII/Ha 2005 v 2008South East Region

-150

-100

-50

0

50

100

150

200

250

300

Cattle and Sheep Cereals Dairy Mixed

Farm Type

£/H

a

2005 2008


• Horticulture (South East)

– Positive MII for all years 2003 - 2008

• Pigs and Poultry (English data only)

– Likewise, except in 2007 when pig holdings were loss making (£5,600 loss per holding)

Management And Investment Income (MII)For ‘Unsupported’ Sectors 2008


South East MII & SFP 2008

MII Relative ToSingle Farm Payment & Agri-environment Payments Per Farm 2008

-10,000

-

10,000

20,000

30,000

40,000

50,000

Cattle andSheep

Cereals Dairy Mixed Horticulture

Farm Type

£

MII SFP Agri-environment

£ per farm


FARM PHYSICAL STATISTICS


Farm Census Data - Hampshire2009 v 2006

LAND USE 2009

• Temporary Grassland: + 10% (Eng: – 8%)

• Permanent Grassland: + 6 % (Eng: + 3%)

• Farm Woodland: + 22 % (Eng: + 21%)

• Crops and Fallow: + 11 % (Eng: 10%)

• Set-aside: - 100 % (Eng: – 100%)


England & Hants - similar trends, partly driven by removal of set-aside (not shown) and changes in data collection

% Change in Agricultural Land Use By Area

-15%

-10%

-5%

0%

5%

10%

15%

20%

25%

Temporary Grass

Permanent Grass

Rough Grazing

Crops & Fallow including GAEC

Farm W

oodland

Other Land

England % Change 06-09 Hampshire % Change 06-09


Cropping 2009

• Cereals area: + 13% (Eng: + 9%)

• Other crops: + 16% (Eng: + 14%)

– Oilseed Rape: + 1% (Eng: + 18%)

– Field Beans and Dried Peas: + 14% (Eng: + 0%)

– Sundry crops/GAEC: + 23% (Eng: + 40%)

• Horticulture remains less than 1% of Hants agricultural

area – 1,932 ha is same level as in 2003


Livestock 2009

• Cattle and calves: - 4% (Eng: + 2%)

– Dairy Herd: - 17% (Eng: - 10%)

• Sheep and lambs: + 2% (Eng: - 4%)

• Pigs: - 8% (Eng: - 5%)

• Poultry: - 6% (Eng: - 8%)


% Change In Livestock Numbers

-10%

-8%

-6%

-4%

-2%

0%

2%

4%

Cattle & Calves Sheep & Lambs Pigs Fowls

% C

ha

ng

e

England % Change 06-09 Hampshire % Change 06-09

Hants – falls in all categories except sheep


Employment 2009

• Total agricultural workforce: + 5% (Eng: + 1%)

– Now 9,437– Full-time 3,534: + 4% (Eng: +1%)– Part-time 4,480: + 5% (Eng: + 2%)– Casual 1,423: + 6% (Eng: - 5%)

• Full-time workforce had fallen 7% between 2003 and 2006


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%)– 2009: 38% full-time (Eng: 42%)


DIVERSIFICATION


DEFRA Farm Business SurveyDiversification Data

• Changed financial methodology since 2005/6, so a complete retrospective comparison not possible

• However, definition of diversification unchanged:

– Includes• non-agricultural contracting• letting of farm buildings

– Excludes• agricultural contracting• letting of land

• Survey limited to holdings sufficient to occupy a farmer at least half time


ENGLAND 2008/9

• 51% of holdings had diversification activities

• Diversification profits accounted for 10% of total national ‘Farm Business’ profits (i.e. before own labour, notional rent)

SOUTH EAST 2008/9

• 75% of holdings had diversification activities(highest level in England – slightly up from 73% in 2005/6)

• Diversification profits accounted for 23% of total regional ‘Farm Business’ profits


Similar situation to 2005/6 for England and SE, though other regions have fluctuated more

% Farms With Diversified Activities - English Regions 2008/9

0%

10%

20%

30%

40%

50%

60%

70%

80%

England NW NE & YH EM WM EE SE SW

Farms With Diversification Enterprises


Very similar position to 2005/6 for both SE & England

% Farms with Diversification by EnterpriseEngland & South East 2008/09

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10%

20%

30%

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60%

70%

England % of Farms South East % of Farms


Local Food And ProduceIGD survey February 2010

Over the preceding month:

• 30% of shoppers bought locally produced food (up from 15% in 2006) - and of those:

– 57% wanted low mileage fresh food– 54% wanted to support local producers and farmers

(up from 28% in 2006)

• 31% of shoppers said they want more local products (up from 12% in 2005)


Diversification Assistance

England Rural Development Programme 2008/13

• 80% of funds go into agri-environment schemes(Axis 2 – administered by Natural England and Forestry Commission)

• Balance has been 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

• As at March 2010 £2.9 million in grants for diversification projects funded in SE (including processing, farm shops, and renewable energy for off-farm sale)


ENVIRONMENT


Natural England Data

New ‘Environmental Stewardship’ regime March 2005

• Entry Level Scheme(all farms eligible – standard payment £30/ha)

• Higher Level Scheme(competitive and restricted budget)

• Parallel schemes for organic producers


Stewardship Agreements 2010SOUTH EAST

– 7th of 9 English regions for number of agreements (same as in 2007)

– 5th for area options (same as 2007)(NB: can have more than one area option on same are of land)

HAMPSHIRE

– 3rd of region’s 9 counties for number of agreements - 14% of regional total (also 3rd in 2007)

– 1st for area options - 21% regional total (up from 3rd 2007)

– Of the 682 agreements in Hampshire:• most are Entry Level alone (including 25 organic)• 152 Higher Level Scheme (including 3 organic)


Natural England Environmental Stewardship Option AreaSouth East 2010

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50,000

100,000

150,000

200,000

250,000

300,000

350,000

400,000

450,000

Hampsh

ireKen

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Oxf

ordshire

Buckin

ghamsh

ire

West

Susse

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East S

ussex

Berks

hire

Surrey

Isle

Of W

ight

Are

a H

a


Agri-environment Payments South East £/Ha

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Cattle and Sheep Cereal Dairy Mixed

Farm Type

£/H

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2003 2005 2008

(Farm Business Survey Sample Farms)


‘Campaign For The Farmed Environment’

• Industry’s response to withdrawal of Set-Aside

• A voluntary scheme introduced 2009 primarily aimed at arable

farms to promote:

Resource Protection, Farmland Birds, and Farm Wildlife

• Strong focus on retaining un-cropped land

• Supported by DEFRA and conservation groups - but could be

replaced by regulation if insufficient take-up by June 2012

• DEFRA survey published May 2010 – Six in ten respondents

have joined campaign, or plan to


Organic Land In SE 2008

Fully Organic

• 47,200 ha in SE – 34% up on 2005 (England up 19%)

• SE remains 2nd region after SW with 17% of English total (also 2nd in 2005)

In Conversion

• 10,400 ha in SE – 3% down on 2005 (England up 71%)

• SE remains 2nd region after SW with 11% of English total (NE and West Midlands close behind)


OBSERVATIONS


‘THE PAST’• In 2008 UK total farm income reached its highest level since

1995

• This was reflected in improved farm incomes in the South East helped by prices, sterling, and diversification – but cattle and sheep farms still generated negative MII on average

• Where generated, MII profits in the supported sector remained heavily dependent on the Single Farm Payment

• The non-supported sector has remained profitable for most of the period since 2003 without the Single Farm Payment


THE PAST (cont)

• Full-time farm employment in Hampshire is higher than in 2006

• Cattle numbers, especially dairy, have continued to fall

• Set-aside has gone, with resulting concerns about environmental impact

• However, Hampshire's general participation in agri-environment schemes is impressive


‘THE FUTURE’• Commodity price volatility expected to continue

• Supermarket ombudsman due to be introduced – but will it be

effective?

• CAP Reform for 2014/2020 uncertain:

– will total CAP budget be cut?

– how much will get transferred to new member states?

– how well will the Single Payment survive?

– how much will be transferred into agri-environment and wider rural development programmes?

• But there is at least one certainty - milk quotas to go in 2015


‘THE FUTURE’ (cont)

• Tensions between globalism and localism expected to continue - EU proposals for country-of-origin labelling may help some markets

• Increased global competition for natural resources (hydrocarbons, other minerals, and water) is moving food security, including production efficiency and food chain waste, up the agenda

• Climate Change Act 2009 has set stringent greenhouse gas obligations

– How will agriculture manage its methane and nitrous oxide emissions, and also the land-use and food production implications of biofuels?

• New economic opportunities are arising for rural based renewable energy following the introduction of ‘Feed-In Tariffs’ in 2010


CONCLUSION

• A generally better economic picture than 2005/6

• Much uncertainty looking ahead, but also some clear economic opportunities linked to ‘sustainability’ e.g. energy and local food

• Diversification will remain important, but vulnerable to the general state of the economy – ensuring access to rural broadband will help

• However, food is the product that all consumers must buy before any other – so agriculture should have more resilience than some other sectors

• Providing a skilled and versatile workforce will remain essential


Mark Griffiths FRICS FAAVCarter Jonas

Hampshire Farming ConferenceSparsholt College

17 June 2010

HAMPSHIRE FARMING STUDY 1 HAMPSHIRE FARMING STUDY Review 2010.

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