Unwanted and unloved

Farmers find it hard to adjust to being derided as subsidy junkies and environmental destroyers

THE FARM sector is in a deep crisis, which is both financial and psychological. Farm incomes have plummeted over the last two years and comparisons are often made with the farming crises of the 1870s or the inter-war years. But is that comparison really valid?

While we should not underestimate the impact on individual farm households, or indeed on the wider rural economy, the present crisis is not as deep or serious as those earlier agricultural depressions. There are a number of reasons for this.

First, the causes of the present crisis can be seen as the unfortunate coincidence of a number of relatively short-term adverse factors. Second, the problem, although widespread, has not affected the whole industry equally. Third, the decline in the rural economy is diluted by the fact that farming is now a much smaller part of the British rural economy than at any previous point in our history.

There are three principal causes of the present situation. The BSE crisis has had a significant effect on the demand for beef. Currently, the farmers with the lowest incomes are the lowland cattle and sheep producers. Although BSE principally affected dairy cattle, it is the beef producers of the north and west of Britain who have suffered most.

The second cause of the crisis in British farming is the strength of the pound. The farming prosperity of the early 1990s, before BSE, was built on a weak pound and an ability to put competitively priced high quality red meat into other EU member states. The strong pound would have succeeded in limiting export markets even if there had been no BSE-driven export ban. The strength of the pound also leads to competitive imports of agricultural products from other countries, further undermining the position of domestic farmers.

The third cause of low incomes this year has been the poor yields and difficult conditions. The wet weather has created harvest difficulties and poor quality crops. Cereal yields are generally down and many cattle have required supplementary nutrition because of the poor quality of grazing. Difficult farming conditions often are counterbalanced by higher prices, as with potato prices in the aftermath of the 1976 drought but with more open economies these benefits are less apparent.

Of these three factors, the BSE crisis casts a longer shadow than the other two. In spite of evidence that the demand for beef has picked up, BSE leaves a deeper and nagging doubt in the mind of the consumer about the quality of the food we are eating. The pound has slipped back from its peak against the Deutschmark, and although it remains relatively strong, this problem is likely to continue to ease. Hopefully, the third problem of a year of adverse conditions will not repeat itself again next year.

The problem of lowland farm incomes has not affected all sectors equally. Hill farmers and the lowland livestock producers have undoubtedly suffered most and inevitably many smaller farmers have been amongst the worst hit.

Arable farms and dairy farms have felt the pinch this year and there are problems in the intensive livestock sector, which have forced some big players into bankruptcy.

The rural economy is now a vastly different place compared to what it was during previous agricultural depressions in the 1870s and Thirties. The rural population is not now an occupational community dependent on the land. Instead most rural economies are more mixed. There are large numbers of commuters; and there has been a significant diversification of the rural economy into services (including tourism) and a range of other economic activities.

There are few rural districts where the farming population exceeds 10 per cent of the workforce. The farm sector's influence extends, of course, beyond the farm to the demand for inputs and the selling of outputs to the food industry. The farming population also places more general demands on rural services.

In some areas, such as south west England, west Wales, south west Scotland or Orkney the importance of agriculture is such that it has a significant knock-on effect on other sectors of the rural economy but over many parts of rural Britain the impact of a dramatic reduction in farm incomes will be relatively small.

However, we should beware the fashionable trend to deride the insignificance of agriculture. It is true that many other sectors, such as tourism, are bigger in many rural areas, including most of the highlands of Scotland and many parts of western England. But rural tourism depends to a considerable degree on the public goods that farming provides.

Impoverished farmers are unlikely to make attractive landscapes. Further, beyond the commuting frontier, there are still large areas where the land- based sector remains the principal motor of the rural economy.

How does this crisis compare to previous downturns in farmers fortunes? The depression of the 1870s and 1880s was caused by free trade and the opening up of new territory that could produce wheat more competitively than British farms.

However, over 100 years ago, Sir James Caird, a prominent agricultural writer, wrote that "agriculture must adapt itself to change, freely accepting the good it brings and skilfully using the advantages to which proximity to the market must always command". The crisis of the late 19th century was particularly a crisis of the cereals sector, and with hindsight, some have asserted that the agricultural depression at this time was a myth constructed by an articulate cereals farming lobby.

The crisis of the interwar years was far deeper than the present crisis. Much farmland lay idle. Squatter settlements sprang up on land on which farm production had ceased on some of the heavy clays of Cambridgeshire, and evidence of these settlements can still be seen today. In many parts of rural Britain there was deep poverty, and it took the crisis of war and the accompanying blockade to restore a degree of prosperity. The countryside of the pre-war years was described by the wartime Scott Report as "ragged and unkempt".

But the present crisis is real and, for the much smaller farming community of the present, it is deeply felt. The principal sufferers are those farm households that have not diversified outside farming and are exclusively dependent on agriculture and its allied industries. A proportion of farmers will be driven from business, but this shake-out will be unlikely to reach the levels of the Thirties.

Fortunately, many rural households have alternative sources of income. And farmland values will be kept relatively high by those seeking a place in the country. This should help keep values up and stop a downward spiral in land prices.

The present crisis is also psychological. Farmers feel more unwanted than at any time in the last 50 years. Having been praised as food-producing heroes in the postwar period, it has been hard to adjust to being derided as subsidy junkies and destroyers of the environment. But, as Sir James Caird noted in his day, that the industry must adjust to new circumstances, remains true today.

These new circumstances are not those of the short term - BSE, currency fluctuations, and bad harvests. Farmers must also face the prospect of deeper changes to the Common Agricultural Policy in the wake of the next round of agreements on world trade.

No one knows yet how these reforms will develop, but it is reasonable to suppose that our farmers will face more competition from abroad and find production-related subsidies even more difficult to come by. It gives farmers little hope for the future to realise that hot on the heels of the present crisis, another deeper and more structural crisis must be faced.

The writer is senior lecturer in rural economics at Aberdeen University