As I ‘phone merchants desperately looking for a bid for my new crop wheat I’m told that “strong sterling” and “low United States prices” have collapsed the trade. Consequently the best offer I have so far for wheat off the combine for August is £109 per tonne.
At dark moments like these my mind involuntarily starts to fish its memory banks for an historical context in my farming career alongside which I can place such low returns. Etched on that memory is the mental scar of the dreadfully low prices of the mid noughties when, just after subsidies were decoupled in 2005, the value of grain dipped towards £60 per tonne. I also remember the glorious peak of 1996/7 after sterling was bundled out of the exchange rate mechanism and I happily sold feed wheat off the combine for £140 per tonne.
But these are just small snapshots from a 37 year farming career that are inevitably dominated by extreme wheat price highs and lows. These prices were very often fleeting and are no guide to profitability as they take no account of input and other farm costs.
A more accurate assessment of the real value of wheat would be to cast my mind back to when I first started farming in partnership with my father in the late 1970s. Wheat was worth the same in 1978 as it is today and the worrying thing is that I have hardly increased my average wheat yield in all that time – I averaged close to three tonnes to the acre when I started and rarely exceed that even today. This means that, unlike sugar beet or potato growing colleagues (where average yields have rocketed over the past three decades), I have no productivity gains to fall back on to cushion me from the effects of static wheat values.
Of course, static wheat prices, even over a 37 year farming career, wouldn’t matter if growing costs hadn’t risen. But, as we are all aware, this has not been the case. The first new tractor I bought in 1978 (a two wheel drive John Deere 2130) cost me £7,500 which would now barely pay for the wheels of a current model. My head tractor driver in 1978 was on £55 a week and if I still had a head tractor driver (I now only employ one person) that wouldn’t pay his wages for a day. Fertiliser, agrichemical and diesel prices have also shot up, as have farm rents.
The only slight compensation for all this is that we now have the basic payment scheme, which didn’t exist in 1978. But with that forecast to be barely £65 per acre this year this is unlikely to compensate growers for the catastrophic fall in the real value of wheat.
Of course we have responded to this cost price squeeze by either getting bigger acreages or by getting out. But at this rate unless something cracks soon who will be able to continue? Even if there were only one arable farmer left in the whole of South East England farming hundreds of thousands of acres, it still wouldn’t be a profitable farm.