Published:
4:53 PM March 23, 2022
Farmers plan their crops months in advance, buying fertiliser, seed and sprays across the year when prices are competitive. This is the same the world over.
The lack of wheat normally produced in Russia and Ukraine could have a massive impact on world supply and prices for the UK. Russia and Ukraine combined typically account for almost 30% of global export volumes, so we are highly likely to see an increase in world prices.
Jeanette Dennis of Ashtons Legal discusses the affect that rising costs and supply issues could have on the country’s rural communities
– Credit: Ashtons Legal
This is potentially good news for UK farmers, but it is not just about predicted sales prices – costly inputs impact on profits and rising oil prices mean the already high 2021 fertiliser prices are likely to climb further, as well as diesel, and the hike of 54% in electricity and gas.
Economist Mark Berrisford-Smith of HSBC suggested recently that we are possibly in a position reminiscent of 1973 with the OPEC crisis and the Yom Kippur War. This resulted in the 1975 rise in inflation to 25% due to the quadrupling oil prices.
Older farmers out there will remember those times well, and may not be prepared to sit through the same again, choosing to pass the baton of alternative farm income generation to their younger counterparts as we, too, enter uncertain times after the 2024 fall in subsidies as a result of the Agriculture Act 2020.
There is, however, opportunity for this sector, as change driven by necessity is embraced by farming families in their succession planning, coupled with recognition in local communities of farmers not just being food producers, but also as custodians of wildlife and wellbeing.
Non-farming ventures will need to be considered carefully by farming families – some older members may not have the stomach to abandon food production in the short term due to price rises, but the younger generation may want to borrow on fixed low interest rates to invest in energy production and environmental projects which, in the medium to long term, produce greater returns.
Careful, professional advice will be needed, and no “one size fits all” will work here in East Anglia – each farming family and farm is different.
For further advice, please contact Jeanette Dennis at Ashtons Legal at jeanette.dennis@ashtonslegal.co.uk or 07971 671193.
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