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Hope remains for 2016 as the farm sector reflects on a difficult year

The industry looks for positives after a challenging 2015 for UK farmers


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The average price of a Christmas dinner has fallen on last year, figures show
The average price of a Christmas dinner has fallen on last year, figures show

It may take just a small change in supply or demand to tip farmgate prices in producers’ favour in 2016.

 

This was the positive message from industry leaders as they reflected on one of the most difficult years UK farming has faced.

 

Prices have been depressed across a variety of commodities for much of 2015. With high supplies and a difficult currency exchange working against UK farmers on a variety of goods, several experts said there was little chance of a significant recovery in current conditions.

 

But the industry has been reminded a small shift in demand or production levels could boost industry fortunes.

 

NFU president Meurig Raymond said: "There is a dangerous perception around the supply chain there is still an ample food supply in the world.

 

"I think that is a bit short-sighted. We only need a climatic problem somewhere in the world and things can change very quickly."

 

Mr Raymond discussed the economic slowdown in China as well as the Russian ban affecting Western food imports and posed questions of how these issues could change over the next 12 months. But he acknowledged there was little to suggest farm fortunes may recover quickly.

 

Allan Bowie, NFU Scotland president, also addressed the seriousness of the situation for the farm sector.

 

"The currency perspective is not helping with dairy products coming in and the difficulties exporting lamb," he said. "Coupled with farm payments which are going to be late and less, we need to get margins back to farmers."

 

But Mr Bowie said one positive for the industry was consumer willingness to back British produce and the industry could help by delivering consistency and raising awareness of UK food production.

 

Analysis from comparison website MySupermarket has shown the average price of a Christmas dinner has fallen 4.4 per cent on last year to £16.25, with turkeys down 10.6 per cent.

 

With the supermarket price war continuing, Mr Bowie claimed the UK retail sector was currently one of the most competitive in Europe.

 

Beef and sheep prices both stand significantly back on last year, with beef prices failing to receive a seasonal price increase heading to the Christmas period and sheep prices hit by high supplies and a tough export climate, especially earlier this year.

 

Debbie Butcher, senior analyst at AHDB Beef and Lamb, suggested ongoing issues over processor specification requirements would bring challenges to the beef sector next year, but pointed to the potential for tighter lamb supplies than previously anticipated, which could boost prices.

 

Matt Johnson, dairy analyst at Rabobank, said there would be continued difficulty in European dairy markets in the first half of 2016 while Helen Plant, senior analyst at AHDB Cereals and Oilseeds, suggested current market conditions meant it was not an easy situation for arable farmers.


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