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1HAMPSHIRE FARMING STUDY
HAMPSHIRE FARMING STUDYReview 2010
2HAMPSHIRE FARMING STUDY
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
3HAMPSHIRE FARMING STUDY
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
4HAMPSHIRE FARMING STUDY
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’)
5HAMPSHIRE FARMING STUDY
FARM INCOMES
6HAMPSHIRE FARMING STUDY
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
7HAMPSHIRE FARMING STUDY
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
8HAMPSHIRE FARMING STUDY
23% overall drop since 1988 (similar situation in 2006)
Farmers' Share Of The Value Of A Basket Of Food ItemsUK 2009
0
10
20
30
40
50
60
70
80
Per
cen
tag
e
Farmgate Share in 1988 % Farmgate Share in 2009 %
9HAMPSHIRE FARMING STUDY
Product Prices Index Since 2005
Source: DEFRA
10HAMPSHIRE FARMING STUDY
World Grain Stocks
2010 – Stocks Back To Eight Year High (Source: USDA/HGCA)
11HAMPSHIRE FARMING STUDY
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
12HAMPSHIRE FARMING STUDY
Management & Investment Income £/Ha
-50
0
50
100
150
200
250
300
All Farms MII – Central Southern England 1990 to 2002
13HAMPSHIRE FARMING STUDY
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
14HAMPSHIRE FARMING STUDY
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
15HAMPSHIRE FARMING STUDY
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
16HAMPSHIRE FARMING STUDY
• 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
17HAMPSHIRE FARMING STUDY
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
18HAMPSHIRE FARMING STUDY
FARM PHYSICAL STATISTICS
19HAMPSHIRE FARMING STUDY
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%)
20HAMPSHIRE FARMING STUDY
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
21HAMPSHIRE FARMING STUDY
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
22HAMPSHIRE FARMING STUDY
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%)
23HAMPSHIRE FARMING STUDY
% 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
24HAMPSHIRE FARMING STUDY
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
25HAMPSHIRE FARMING STUDY
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%)
27HAMPSHIRE FARMING STUDY
DIVERSIFICATION
28HAMPSHIRE FARMING STUDY
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
29HAMPSHIRE FARMING STUDY
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
31HAMPSHIRE FARMING STUDY
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
32HAMPSHIRE FARMING STUDY
Very similar position to 2005/6 for both SE & England
% Farms with Diversification by EnterpriseEngland & South East 2008/09
0%
10%
20%
30%
40%
50%
60%
70%
England % of Farms South East % of Farms
34HAMPSHIRE FARMING STUDY
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)
35HAMPSHIRE FARMING STUDY
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)
36HAMPSHIRE FARMING STUDY
ENVIRONMENT
37HAMPSHIRE FARMING STUDY
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
38HAMPSHIRE FARMING STUDY
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)
39HAMPSHIRE FARMING STUDY
Natural England Environmental Stewardship Option AreaSouth East 2010
-
50,000
100,000
150,000
200,000
250,000
300,000
350,000
400,000
450,000
Hampsh
ireKen
t
Oxf
ordshire
Buckin
ghamsh
ire
West
Susse
x
East S
ussex
Berks
hire
Surrey
Isle
Of W
ight
Are
a H
a
40HAMPSHIRE FARMING STUDY
Agri-environment Payments South East £/Ha
0
10
20
30
40
50
60
Cattle and Sheep Cereal Dairy Mixed
Farm Type
£/H
a
2003 2005 2008
(Farm Business Survey Sample Farms)
41HAMPSHIRE FARMING STUDY
‘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
42HAMPSHIRE FARMING STUDY
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)
44HAMPSHIRE FARMING STUDY
OBSERVATIONS
45HAMPSHIRE FARMING STUDY
‘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
46HAMPSHIRE FARMING STUDY
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
47HAMPSHIRE FARMING STUDY
‘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
48HAMPSHIRE FARMING STUDY
‘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
49HAMPSHIRE FARMING STUDY
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
50HAMPSHIRE FARMING STUDY
Mark Griffiths FRICS FAAVCarter Jonas
Hampshire Farming ConferenceSparsholt College
17 June 2010