How has Covid-19 affected agriculture?

On the whole the Covid-19 crisis has not been such a disaster for the farming sector as it has for many other industries. It is fair to say that countryside communities have, thankfully, seen fewer cases of the disease than the more urban areas, thus ensuring that staffing levels have not fallen significantly. The fruit and veg sector has in some cases struggled to find staff as for several reasons their usual Eastern European migrant labour has been slow to return. The idea that British labour laid off from their normal work could take up any slack proved not as simple as it might appear, as training and accommodation expenses were difficult to justify for workers who may stop at any moment and return to their original employ. As ever, in situations like this, enterprise will out and there are those who have flown workers in from Romania and other regions to fulfill requirements.

The arable sector has used the dry spring weather to ‘catch up’ with their planting. The very wet autumn and winter meant that many arable businesses were unable to complete their drilling schedules leading to more spring planted crops than planned. Prices for new crop wheat are in the upper £150/tonne, little different to 12 months ago. The pandemic has made very little difference to these businesses, the joke going around that most tractor drivers spent all day ‘isolated’ in their cab anyway so what’s the problem!

However the livestock sector has experienced more issues. The dairy sector has, in the main, weathered the storm quite well. There were news reports of farmers pouring milk down the drain and whilst this had a huge affect on those individuals involved it amounted to approximately 900,000 litres or 0.4% of nationwide production that week. The issue affected suppliers to two specific dairies, Freshways and Medina. Both dairies supplied the service sector whose consumption switched off overnight. Combined with the issues of not collecting and hence failing to pay for milk thrown away, these companies have also announced payment delays and price drops. This has prompted DEFRA to offer grants of up to £10,000 to help ease cashflow worries for businesses that are affected. The issue is now resolved and there are no longer reports of milk being discarded.

Elsewhere, for the majority, prices have remained firm with some of the supermarket aligned contracts giving slight rises and many cheese makers guaranteeing prices until the end of June. The five year rolling average milk price across all contracts is 26.9 p/ltr. Whilst this is a useful figure for budgeting purposes for many businesses it is far too close to the cost of production for comfort.

Beef producers have also been affected by the closure of the service sector. Traditionally the beef carcass is viewed as a mix of expensive cuts towards the rear of the carcass, steaks/roasting joints with the less expensive cuts made up of meat from the forequarter. The off cuts and these cheaper joints are usually manufactured into burgers and mince type products. The closing of pubs and restaurants and the resultant drop in sales of the more expensive cuts has made the valuing of this ‘carcass mix’ a problem. Butchers have found it more difficult to find a profit when they cannot sell the expensive joints but have an increased demand for the cheaper mince and burgers.

There is no doubt that the Covid-19 pandemic has tested the food and farming sector in ways we haven’t seen since the Second World War. The public increasingly demands high quality fresh food, at a cheap price, and the ‘just in time’ systems, in place to provide that, were sorely tested. On occasions, shelves were empty and it is a demonstration of how food security is vital to any nation. It is fair to say that the country was never short of food, it just was not in the right place. For example there was never a shortage of eggs! There was a shortage of egg boxes, and when demand switched from service sector to domestic use, supplies of egg boxes ran out, hence no eggs on the shelves. It was for a while the same story with milk. There was plenty of milk around just not enough capacity to switch to domestic use.

The Agriculture Bill is currently creeping its way through parliament and will result in the biggest transformation of agriculture and food production since 1945. Our government has been urged to ensure that any trade deal that may be undertaken, following Brexit, ensures the same standards of production, environmental protection and animal welfare, as we currently enjoy. This is seen as crucial to British agriculture which over the last forty years has worked hard to develop some of the highest animal welfare and environmental standards in the world. Surely the events of the last two months demonstrate that food security is vital to any nation. We must not fall into the trap that interwar governments fell by abandoning British farmers and relying on cheap food imports.

Patrick Godwin, agricultural consultant and Business Money contributor.

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www.business-money.com/fpb/ Business Money, an FPB member since 1995.