Sunday, July 23, 2006

UK farmers slow to respond to reform

A survey of farmers carried out by HSBC Bank shows that most farmers are aware of the need to adapt their businesses as production support declines, but few have a clear vision of how to achieve this.

The survey found that 64 per cent of farmers have done the calculations to find the level of their likely Single Farm Payment over the next three to five years. However, 87 per cent of the sample intended to either maintain their set aside at the same rate as last year or ro reduce it, indicating that the cropped area for the 2007 harvest is likely to remain at a similar level to that of recent years. Surprisingly, only 52 per cent of the farmers questioned know the cost of producing a tonne of wheat on their units which is the key of basic information that one would think that any business needed to make commercial decisions.

Few farmers are planning ahaead to replace the state support or reduce their costs in line with its withdrawal. Stuart Ellwood, head of agriculture at HSBC, is surprised that the rate of change is not faster and is urging producers to move away from the traditional cropping patterns dictated by CAP payments to growing for other food and feed markets, and alternative land uses such as biofuels, pharmaceuticals and textiles.

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