Farmers should look to customers rather than politicians

Farming the taxpayers

Should we feel sorry for the beef farmers? We would not sympathise with a pharmaceutical company if it put a faulty medicine on to the market; we would be angry. But in the topsy-turvy world of agriculture, it is the producers who are angry and the customers who are sorry.

In many moods I don't have much regard for the beef farmers. We subsidise them in more ways than we know. Whenever we go shopping and buy anything upon which VAT is levied, say, a CD player at Dixons, a part of the tax we have paid goes, via a European budget, into the pockets of farmers.

Then, when we visit the butcher's shop, we are paying, without realising it, prices that are far higher than they need be. There is a steep wall of high tariffs around the European beef market. Even in the protected North American market, beef prices are 20 per cent lower than they are here - as anybody who has been to a restaurant in the United States recently will have noticed. If there were free trade in beef, it wouldn't be highly priced Irish supplies that angry farmers would be throwing into the sea, it would be Australian beef, undercutting British prices by some 40 per cent or so.

I will grant that farmers' incomes are quite volatile. But if you look at the accounts of the nation's cattle and sheep farms, you find that last year an average farmer had a revenue of about pounds 48,000 from a market that is rigged in the farmer's favour, and in addition received subsidies totalling pounds 27,000 from taxpayers. From these receipts of pounds 75,000, the livestock farmer had to meet costs of some pounds 57,000, leaving pounds 18,000 net farm income. If you go back 10 years, and adjust for inflation, you find that the long-term trend of farm incomes has been stable.

Let us be clear what this means for a group that speaks the language of dependency much more vociferously than any lone parent, or any out- of-work youngster or disabled person. Unlike millions of other people, livestock farmers have work, have income, have amenities.

Yet listen to what they say. Sir David Naish, the chairman of the National Farmers Union, goes to speak to a group of farmers in the Midlands and feels that he must tell then a truth "which we cannot ignore". What is this revelation? "That consumers are all-powerful, and our future depends upon their willingness to buy what we produce". Surely farming is the only business activity in the land where the people involved have to be reminded that they do in fact have customers.

"The Government are killing our industry," shouted a protesting farmer recently. No, it is the other way round. Given the risks to health which BSE poses, it is the farming industry which has been trying to kill us.

Broadly, the message from the farming community is: "whatever happens, you, the taxpayer, must look after us and keep us in business by one means or another". Sir David Naish even complains that farmers receive no reward for activities such as landscape management and environmental enhancement. Show me the enhancement. We are still losing hedgerows. And have not set- aside payments been a reward for doing exactly nothing?

How the British coal-miners must wish they were as well treated as British farmers. When the pound sterling commands a high rate of exchange against other currencies, the farmers demand compensation and, sooner or later, they obtain it. When the same exchange rate has the effect of pricing British coal out of foreign markets, there is no help. The Government could distort the energy market to prevent natural gas from driving coal out of power stations, but it hardly lifts a finger. Coal-miners will go on losing their livelihoods. Yet governments continue to fix agricultural markets for the benefit of farmers.

Will they go on doing so? Beef farmers are entitled to have their doubts. Perhaps they are not, in the end, going to avoid the day of reckoning which shipbuilding workers, steel workers, and coal miners have confronted, long delayed though it has been. Beef consumption per head has been dropping since the early Eighties, long before the BSE crisis. A switch to convenience foods has reduced demand; health considerations have been a negative factor for many years; and poultry has become relatively much cheaper. Now the downward trend in demand is even steeper.

At the same time, the methods which European governments have used up to now to take surplus supply off the market may no longer be effective. New rules for world trading make it more difficult than it once was to subsidise exports to the Middle East and elsewhere. It is also becoming harder to maintain high tariff protection of the European market. Governments can put excess beef into cold storage and let a beef mountain build up again, but they are not enthusiastic about doing this at a time when public expenditure is tightly constrained. Calves could be slaughtered in great numbers to reduce the size of herds, but public opinion is likely to be hostile to such barbarity.

This is why European governments are beginning to wonder whether they should adopt a radically different policy. Instead of supporting beef prices in order to protect farmers' incomes, they would let prices drop by 35 per cent, or whatever is required to equate with the world price, and pay compensation direct for the loss of income. But the British Government, for one, has said that it could not meet the whole bill. In other words, without a recovery in domestic demand, beef farmers are in real danger.

One way of seeing the threat is to consider what would be the consequences of a scenario in which agriculture was not a highly protected and subsidised activity. British dairy farmers would survive, and probably build up a good export trade in milk and milk products. The substantial amount of beef that comes from dairy herds would continue to be available. Large- scale cereal production would remain profitable.

What would disappear would be livestock-rearing in the hills, and the way of life that goes with it. Unfortunate indeed. But then, there is no more tin-mining in Cornwall, or shipbuilding in Birkenhead, or cotton- spinning in Bolton.

Occupations wax and wane. It is the natural order of things. Farmers should understand.