'Current subsidies are funding in-efficient farming' - Micheal Gove (Chat away)

[tepapa]

No it isn't. What you are assuming is that the 'more efficient' producers always produce more from the same amount of land. Some for sure. But its also possible to be be 'more efficient' by producing less, but at a lower cost, so your profit is greater.

Efficiency is about cost of production, not getting the maximum amount of grain from a 10 acre field regardless of cost.

If I produce 2t/acre of wheat but my costs are £100, i'm in a better position to the man who produces 3t/acre but whose costs are £250/acre. He produced more, but I was more efficient (cost per tonne of production £50 vs £83). I also made slightly more overall profit (with grain at £140/t), and I had less capital at risk in the ground too.

This is farming blind spot. It's been living in the post war 'produce more at all costs' mentality for so long that it only measures 'efficiency' in output per acre. Its forgotten entirely about the profit margin on its operations, because the taxpayer has always supplied a healthy one at the end of the year.

Its entirely possible UK food production could halve eventually as a result of these changes, yet at the end of it everyone still in the industry will be making a profit, because they're farming larger areas more extensively, producing less but at far lower COP.

Ok i see where your coming from and i agree. I was looking at it from a different angle and to be honest from a sheep farming production point of view. e.g. better sheep management and increased scanning %. better lambing management and lamb survival. Now Mr Farmer has extra lambs for sale which will reduce his COP/ kg lamb sold but has also increased supply.

 

[milkloss]

If you pay someone a flat area rate for just being in control of that area, then it is not going to promote efficiency.

If a farm needs funds to improve efficiency then this can surely be financed through a bank rather than subsidies, if it's not backed by a bank, then I very much doubt that it is a worth while investment.

How much were the banks subsidised/bailed out for a few years ago which is probably ongoing? Google tells me £850 billion at the end of 2009 and admittedly it’s now at £58 billion but still. I like the idea but the banks should have feck all to do with it: they have their own agenda.

Don’t forget we’re not the only industry to get support, business in the U.K. gets a £93 billion every year in grants, subs or whatever to be here too.

 

[Goweresque]

Ok i see where your coming from and i agree. I was looking at it from a different angle and to be honest from a sheep farming production point of view. e.g. better sheep management and increased scanning %. better lambing management and lamb survival. Now Mr Farmer has extra lambs for sale which will reduce his COP/ kg lamb sold but has also increased supply.

But will his COP have actually dropped much? Yes he has more production, how much more capital was required for the scanning equipment and more costs imposed by the additional management input?

The question we have to ask ourselves is this - in countries where there are no subsidises, what sort of systems do they run - high production/high cost ones, or low production/ever lower cost ones? UK farming has been running on the former for 70 years, I suspect we're going to have to start thinking about the latter pretty sharpish.

 

[Henarar]

The question we have to ask ourselves is this - in countries where there are no subsidises, what sort of systems do they run - high production/high cost ones, or low production/ever lower cost ones? UK farming has been running on the former for 70 years, I suspect we're going to have to start thinking about the latter pretty sharpish.

not all of it has, you generalise, I know I could produce more produce here but I don't think it would put more money in my pocket so I don't do it and there will be loads more running at rather less than full throttle for the same reason

 

[S J H]

How much were the banks subsidised/bailed out for a few years ago which is probably ongoing? Google tells me £850 billion at the end of 2009 and admittedly it’s now at £58 billion but still. I like the idea but the banks should have feck all to do with it: they have their own agenda.

Don’t forget we’re not the only industry to get support, business in the U.K. gets a £93 billion every year in grants, subs or whatever to be here too.

I don't think we'd of had a country if the goverment hadn't bailed out banks, but that's not really got anything to do with what I was saying,

I don't know how much other industries are subsidised, but are they not subsidised because they have a plan to bring employment and opportunities to an area? Are there any other industries subsidised on a yearly basis, that as an average, would lose money without subsidy?

 

[tepapa]

But will his COP have actually dropped much? Yes he has more production, how much more capital was required for the scanning equipment and more costs imposed by the additional management input?

The question we have to ask ourselves is this - in countries where there are no subsidises, what sort of systems do they run - high production/high cost ones, or low production/ever lower cost ones? UK farming has been running on the former for 70 years, I suspect we're going to have to start thinking about the latter pretty sharpish.

Are you suggesting looking to how NZ has adapted since their loss of sub's? Are you mad? You'll be hung drawn and quartered for suggesting such a thing on here!

 

[milkloss]

I don't think we'd of had a country if the goverment hadn't bailed out banks, but that's not really got anything to do with what I was saying,

I don't know how much other industries are subsidised, but are they not subsidised because they have a plan to bring employment and opportunities to an area? Are there any other industries subsidised on a yearly basis, that as an average, would lose money without subsidy?

You raise good points and, no, I don’t know any other that would be losing money on such a regular basis. A previous poster suggested the abandonment of farming, if that were to occur it would effect the whole of the U.K. everywhere to various degrees and affecting tourism, the environment, loads of things even down to national pride I expect. I’m not putting forward an argument for the sub status quo but I feel the ‘I don’t get it, I don’t need it’ crowd are perhaps a little short sighted.

 

[DRC]

The most efficient thing I did was put land into HLS which paid £16k year for only loosing 28 acres of production.
The 28 acres themselves were very efficient with almost zero cost, but produced nothing to sell.

 

[gone up the hill]

I don't think we'd of had a country if the goverment hadn't bailed out banks, but that's not really got anything to do with what I was saying,

I don't know how much other industries are subsidised, but are they not subsidised because they have a plan to bring employment and opportunities to an area? Are there any other industries subsidised on a yearly basis, that as an average, would lose money without subsidy?

Yep renewable energy for one, without subs all the things like solar panels/ digesters etc would be a total non starter, they bring less jobs into the area than a mixed livestock farm would.

Reality is that without subs the UK beef/sheep and arable sectors are fhinshed and would be replaced by imports, when arable goes then so would the UK pig/ poultry sectors and all the jobs off farm that rely on them!

Goves speech is a complete load of hogwash, make no bones about it, he only cares about his own career and is quite happy to sell UK AG down the river to further his own career!

 

[gone up the hill]

The most efficient thing I did was put land into HLS which paid £16k year for only loosing 28 acres of production.
The 28 acres themselves were very efficient with almost zero cost, but produced nothing to sell.

ELS/ HLS schemes were workable.

The new ones like Mid Tier etc are totally unworkable for anything but very large arable farms.

 

[Goweresque]

You raise good points and, no, I don’t know any other that would be losing money on such a regular basis. A previous poster suggested the abandonment of farming, if that were to occur it would effect the whole of the U.K. everywhere to various degrees and affecting tourism, the environment, loads of things even down to national pride I expect. I’m not putting forward an argument for the sub status quo but I feel the ‘I don’t get it, I don’t need it’ crowd are perhaps a little short sighted.

The point is that farming is like perennial teenager, living at home with its parents (the State) and not wanting to leave home and go its own way, because 'You'll miss us when we're gone! Who'll mow the lawn? Who take the bins out? I do loads around here, it'll all go to rack and ruin if I go! You'll be lonely without me! You don't want that so keep giving me the allowance, even though I'm 45....'

At some point the people get fed up of hearing the same old excuses, and say 'You know what, just go. We're fed up with the whining. And yes we'll have to find someone to mow the lawn. Its not the hardest thing in the world. We'll survive. Close the door on the way out.'

As in any failing relationship there's only one way to see if there's anything of value left - split up and give it time apart. Maybe all the points made previously were valid, and there is something worth salvaging, but that can only happen when both parties want to salvage something. At the moment the farming industry is begging the UK public to keep paying us, and they're 'Why should we?' Thats no basis for a longterm relationship.

Who knows, in 15-20 years time all those predictions about world production crises will have proved true, and the UK public will come crawling back 'Please produce more, we'll pay you extra!' and farmers will be 'Sorry, we're doing quite nicely in the free market, thanks.'

Ultimately 'You'll miss us when we're gone' can only be proved by leaving.......

 

[DRC]

Tell me mr Gove, which government decided that paying AD plants to generate energy was very efficient , with maize being carted miles and grown on already subsidised land.
Can’t blame the farmers who do it, including folks like me who grow the maize, but it was your policy.
Suddenly we are the villains again!

 

[S J H]

Tell me mr Gove, which government decided that paying AD plants to generate energy was very efficient , with maize being carted miles and grown on already subsidised land.
Can’t blame the farmers who do it, including folks like me who grow the maize, but it was your policy.
Suddenly we are the villains again!

Are you sure that was a Tory government that started them?

 

[S J H]

You raise good points and, no, I don’t know any other that would be losing money on such a regular basis. A previous poster suggested the abandonment of farming, if that were to occur it would effect the whole of the U.K. everywhere to various degrees and affecting tourism, the environment, loads of things even down to national pride I expect. I’m not putting forward an argument for the sub status quo but I feel the ‘I don’t get it, I don’t need it’ crowd are perhaps a little short sighted.

I really don't think it would be as bad as everyone says. Trade deals are far more important than subs,

If subs stop tomorrow, I can think of plenty of people that would carry on as normal.

 

[DRC]

Are you sure that was a Tory government that started them?

Maybe not, but have certainly had many years to change things, if they were so concerned.

 

[onthehoof]

No it isn't. What you are assuming is that the 'more efficient' producers always produce more from the same amount of land. Some for sure. But its also possible to be be 'more efficient' by producing less, but at a lower cost, so your profit is greater.

Efficiency is about cost of production, not getting the maximum amount of grain from a 10 acre field regardless of cost.

If I produce 2t/acre of wheat but my costs are £100, i'm in a better position to the man who produces 3t/acre but whose costs are £250/acre. He produced more, but I was more efficient (cost per tonne of production £50 vs £83). I also made slightly more overall profit (with grain at £140/t), and I had less capital at risk in the ground too.

This is farming blind spot. It's been living in the post war 'produce more at all costs' mentality for so long that it only measures 'efficiency' in output per acre. Its forgotten entirely about the profit margin on its operations, because the taxpayer has always supplied a healthy one at the end of the year.

Its entirely possible UK food production could halve eventually as a result of these changes, yet at the end of it everyone still in the industry will be making a profit, because they're farming larger areas more extensively, producing less but at far lower COP.

Nail on head

 

[gone up the hill]

I really don't think it would be as bad as everyone says. Trade deals are far more important than subs,

If subs stop tomorrow, I can think of plenty of people that would carry on as normal.

You have no idea if that would be the case or not that they would carry on...

Things would look a hell of a lot different if subs go, input prices rise 25% and farm gate prices drop 25%..

Nothing is certain at all what will happen post Brexit and to assume you know is dangerous ground.

 

[5312]

Maybe they are not "pretty crap farmers" after all if they "do very little,and have a fairly easy life living off the subsidies" ,probably more like the height of achievement.You can bet your life that those kinds of farmers have put a good proportion of their SFP into good pensions or investments over the last 10 years or so as well.It will pay them much better in the future than "to try hard to do better and increase efficiency",(to produce more and sell it for less) And how on earth will it be better for younger entrants if they leave the industry? If they are tenants on AHA,they would surely be relet on a FBT.Owner occupied farms being bought up by larger farmers. If you havent already read "On the smell of an oily rag" by the late John Cherrington,it would be good reading for you. If things get really tough after Brexit,the only way to survive will be to spend next to nothing,or as little as possible.

The thread is about Gove's comments on farmers being inefficient. As a politician he is responsible for spending tax payers money. If you asked most tax payers if they agreed to the "crap farmers" I was referring to who live very well while doing extremely little apart from owning land I think most would agree with him.

 

[milkloss]

The most efficient thing I did was put land into HLS which paid £16k year for only loosing 28 acres of production.
The 28 acres themselves were very efficient with almost zero cost, but produced nothing to sell.

This is the kind of sub (I include enviro money in the sub pot) that is frankly ridiculous! No offence meant and if I could get it I’d do the same.

How many farmers are saying they can farm without sub yet are drawing large amounts of cheeky enviro money?

 

[DRC]

This is the kind of sub (I include enviro money in the sub pot) that is frankly ridiculous! No offence meant and if I could get it I’d do the same.

How many farmers are saying they can farm without sub yet are drawing large amounts of cheeky enviro money?

I agree. Money for old rope. Shame it ended last year after 10 years.