Farming Insights - New Year, New Challenges

13 January 2019

As the daylight hours start to lengthen and the festivities are a distant memory, livestock farmers across the country are reviewing their budgets to make the figures stack up.

Despite the mild UK winter so far, many are struggling to balance the books, with the cost of straw and fodder having doubled in the last 12 months due to last summer’s drought. Combine that with the price and quantity of store cattle through the markets dropping compared to January 2018 prices.

 

Prices Increases from Harvest 2018

The increase in feed and malting barley from harvest 2018, is a double-edged sword. For the producer or seller, the increased price helped absorb some of the losses that would otherwise have occurred due to the lower yield.

  • For the purchaser, the lower yield and higher prices directly affect the number of cattle that are being kept on the farm.
  • Many livestock farmers are reducing the number of cattle on-farm as they simply cannot afford to keep them and make a profit when they go to market.  
  • If the livestock numbers reduce, the amount of locally produced, high welfare, red meat available for the consumer is going to also reduce.

Adding to their concerns are:

  • The uncertainty over the export capacity for sheep post-Brexit.
  • The recent announcement of the reduction in LFASS (Less Favoured Area Support Scheme) support to 80% of current, in 2019.
  • Further reduction in LFASS payments to 40% in 2020.

In some cases, these factors has lead Scottish hill farmers to consider the viability of their whole farming or crofting operation.

One ray of sunshine on the horizon is that the Scottish Government have confirmed that any 5-year Agri-Environmental schemes entered into this year (deadline 31st March), will be honoured for the full 5 years, irrespective of the political picture, now or in the future.

 

Maintaining the Highest Welfare Standards

Farmers are custodians of the land and rightly strive to maintain the highest level of animal welfare for their stock, whilst on their farm or on way to a new destination. The combination of increased upkeep costs and reduction in support for the areas where the land is not suitable for growing arable crops makes life difficult in some circumstances.

This can affect the livelihood of the tenant farmer and also the landowner who relies on the agricultural activity to maintain the land in the best condition it can. Without active farming, this ground could end up being overrun with gorse and other invasive weeds. This does not help either party or the varied wildlife which our farms, hedges and hilltops provide food and shelter for.

So, when the weather breaks and winter storms arrive, and we all need to get out there and drive, please remember the farmer who tends their cattle and sheep. Frozen water pipes, frozen hands and frozen feet; and clearing the roads to make them safe for others to go about their daily work.

 
Get in Touch

If you have any questions regarding agriculture insurance or rural business insurance, please get in touch with us here.

 

bruce stevenson insurance broker, insurance broker, rural business executive

Farms and Estates Account Executive

Contact Us