farm poverty

Struggling farms run out of options as cash flow crisis spreads to wider rural economy

This article tells us.

The Prince’s Countryside Fund commissioned The Andersons Centre in March 2016 to complete snapshot research to gain a greater understanding of the cash flow pressures at farm level and their impact on the wider agricultural sector. Through an analysis of recent data and a series of telephone interviews with 21 agricultural businesses an overview of the current situation resulting from the cash flow challenges in farming and its knock on effect to with wider rural economy has been identified and evaluated. The snapshot found: (a) Levels of farm borrowing have almost doubled in the past 10 years. This trend is set to continue as farms across all sectors are affected by the continued decline in commodity prices. The worst affected sectors are cereals, milk and pigs where incomes are dropping sharply. (b) 17 per cent of farms face major financial problems as their liquidity ratio demonstrates they do not have the ability to pay off their short term debt. (c) Half of UK farms are no longer making a living from farming alone, and 20 per cent of farms generated a loss even before accounting for family labour and capital. (d) The businesses surveyed identified that on average more than half the proportion of their farming customers were currently experiencing cash flow issues. (e) The volatility of output prices does not just negatively affect farming businesses but the decreased cash flow filters through the wider agricultural sector. This negatively impacts other businesses from input suppliers, vets, auction marts to consultants. Its effects include reduction in available work, decreasing income and potential staff redundancies although the full extent is not completely understood.

Lord Curry, Chairman of The Prince’s Countryside Fund said, “The research presents a very bleak picture not only for farmers; but also for the wider rural economy. Volatile commodity markets are not just affecting farmers; decreased cash flow is affecting the industry as a whole, from vets to feed and machinery suppliers to auction marts. The full extent of the crisis is not yet fully understood.

“As a result we are witnessing a trend towards increased and sometimes risky borrowing by farmers. Distressingly the outlook does not look set to change in the short-term and the degree of uncertainty about the future is affecting everyone. This in turn is causing suppliers to consider making job redundancies and think about coming out of agriculture. ‘It is essential that farm businesses seek professional advice, have all the support they need to cope and that they are equipped with risk and business management tools. Confidence, better cooperation and communication throughout the supply chain are needed if they are to survive.”

 

Retirement age to rise by as much as six months per year

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This article makes me think of my friend Tony, who grew up on a farm in South Yorkshire and claims not to have known what weekends or holidays were until he started school. Many rural dwellers never get the opportunity to fully retire, particularly in places like Upper Teesdale or West Cornwall, where they are literally and metaphorically tied to the land. I think in places like this agriculture is more akin to crofting (a land based approach to subsistence) than our modern image of farming. An interesting lens through which to consider this article which tells us:

Older people will be encouraged to work longer under a Government plan to increase the average retirement age by six months every year.

Ministers believe that the retirement age needs to increase dramatically to reflect Britain’s ageing population and to avoid a health care crisis.

The average age of retirement is 64.7 for men and 63.1 for women. The Department for Work and Pensions said in its business plan that it would like the average to rise by as much as six months every year.

The number of over-65s in England is expected to increase by 51 per cent over the next 20 years, and the numbers of those aged 85 and above will double by 2030. Ministers accept that the trend will hugely increase the costs to the NHS, elderly care and state pensions systems.

Steve Webb, the Liberal Democrat pensions minister, admitted that the target was “ambitious” but said the retirement age had already been rising for women.