The best bid I can currently get for November 2016 feed wheat is £115 per tonne, and November 2016 oilseed rape is £240 per tonne.
This means that, based on my average yields of both crops, I am expected to grow winter wheat for £373 per acre and winter oilseed rape for £300 which, if one includes a rent on the land, is completely impossible in both cases, even allowing for the single farm payment (SFP).
So, as usual, I am reduced to sowing my crops on an entirely speculative basis. All I can do is hope that there will be a shift in currency markets or a poor harvest in a number of significant grain growing countries that will suddenly lift the price of arable commodities at some point before I sell the crops.
When the SFP was introduced in 2005 there was a lot of talk that farmers would be able to step off this roller coaster. The financial cushion that the SFP provided would, it was predicted, allow arable farmers to opt out of production if they could not find a forward contract for their produce that offered them a profit. But arable commodity prices since 2005 have rarely offered farmers a profit and yet hardly any of us have opted to pocket the SFP and stop producing. Why is this?
For tenant farmers the answer is simple. Landlords and their agents quickly demanded (and rather gung ho farmers soon bid) rents that soaked up all of the SFP money with, in some cases, a significant rent on top. With the landlord enjoying all of the SFP, tenants were then forced to engage in speculative production if they were to stand any chance of earning a living.
But why have owner occupiers continued to produce? They account for 70% of the UK’s arable acreage but hardly any of them have taken a step back from production no matter how appalling arable commodity prices have been over the past decade. The answer, of course, is that while arable farmers proclaim themselves to be hard nosed businessmen most of us are really nothing of the sort. Instead we are vocational arable producers dedicated to our craft.
This means that rather than the SFP providing an opportunity for arable farmers to step off the treadmill of loss making production, it has instead given us licence to continue to produce combinable crops whatever the level of our losses. In some cases, it has even encouraged owner occupiers to spend their SFPs bidding crazy rents to take on additional acreage (making them a menace to bona fide tenant farmers).
So I have ordered the seed, fertiliser and agrochemicals for another campaign. When I meet my arable farming peers over the coming months we will, no doubt, continue to moan about the cost of everything we buy and the price of everything we sell and pretend that those things are important to us.
In reality the only thing that really matters to us is that we are still able to afford to produce – and that is our tragedy.