Drought then flood of biblical proportions
As we approach the end of yet another year, I suspect arable farmers would have been rubbing their hands with glee if they had been told this time last year that by the end of 2012 feed wheat prices would be £212 a tonne and oilseed rape £365 a tonne, up 56% and 8% respectively on the prices of a year ago.
But, behind these price increases lies a tale of drought followed by flood of almost biblical proportions.
It seems hard to believe but by the end of March we had experienced the driest spring for over a century but in April this gave way to the wettest April to June period on record and since then it has hardly stopped raining.
The swing from drought to flood was one of the most dramatic turnarounds in weather conditions ever recorded in this country and as a consequence it had a severe impact on crop yields and quality.
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However, arable farmers were lucky to the extent that other parts of the world also experienced problems which drove up world commodity prices.
This meant that although this year's UK harvest was probably the worst for 20 years, the value of that which was successfully harvested was high, thereby offsetting some of the losses that would otherwise have been incurred. But because it has been so wet, many farmers have yet to sow their crops for next year which is likely to have an impact on the quantum of the 2013 harvest.
As far as livestock are concerned it has been a mixed bag; beef prices have stayed firm, currently trading at around 367p/kg, around 7% up on last year but lamb prices are down by about 22% to 357p/kg. In both cases the increase in cereal prices is a major concern because of the impact it will have on the cost of supplementary feeds.
Finally, the dairy industry continues to struggle although the number leaving the industry has slowed quite sharply this year which is good news.
The average milk price paid to dairy farmers is currently about 29p/litre but in reality whether or not a profit is made often depends upon to whom the farmer is contracted to sell his milk. In this context the variation between different contracts is massive; currently it ranges from between 25.9p/l to 31.5p/l. This is a variation of 5.6p/l or around £56,000 for an average dairy herd; this makes all the difference between profit and loss.
Dairy farmers also hit the headlines during the summer when they picketed milk factories in protest at the sudden and dramatic fall in milk price.
So all in all it has been a year dominated by the weather which has made farming difficult for many and despite the generally firm commodity prices, profits are likely to be down this year which will put pressure on some businesses going forward.