SUPERMARKETS and consumers have been warned they are about to learn some hard truths.
The era of cheap food, and the “just-in-time” approach to food supplies was declared dead by farmers on the Pembrokeshire County Showground last week.
“The cheap food policy is a thing of the past. The markets are moving and it’s a wake-up call for consumers, retailers and processors,” said National Farmers’ Union deputy president Meurig Raymond.
“The climate has changed,” said NFU Cymru Pembrokeshire county chairman Perkin Evans, a dairy and cereals farmer from Croesgoch, Haverfordwest.
“The mountains of grain in Europe have turned into a little pimple. We have had hundreds of acres lost through wet weather in the UK and droughts in other parts of the world.”
Growing concern about future food stocks in Europe has effectively been acknowledged by European Farm Commissioner Mariann Fischer Boel, who tabled a proposal to abolish the system of compulsory set-aside, introduced in 1992 as part of a package of measures to tackle the over-production of cereals in the EU.
There are 4,527 hectares of set- aside land in Wales – nearly 112,000 acres where farmers are paid not to grow food.
But with some of the world’s major cereal-producing countries hit by drought and growing demand from places like India and China, the price of grain is rising after a decade in the doldrums.
“We are at last seeing the true cost of growing cereals coming through in prices and we are now back where we were in 1996,” said Perkin Evans, who is also vice-chair of NFU Cymru’s Combinable Crops and Horticulture Working Group.
With this year’s harvest not yet complete, wheat for feed is fetching up to £150 a tonne, and bread wheat is up to £180 – the highest for 11 years.
World market experts say some countries are panic-buying wheat in anticipation of shortages. Barley prices are also soaring, with farmers now receiving around £120 a tonne off the combine, compared with £107 in 1995.
“There’s a huge demand for grain and world stocks are down to around 112 million tonnes, which is about 20 days’ supply,” said Meurig Raymond.
“They have not been seen at that level since the early 1970s. The demand is there from eastern and central Europe and China but retailers and processors have to understand that they must meet the costs of production.”
Mr Raymond said some inflation in food prices was inevitable.
“But we make no apologies for that because the farming industry cannot survive on what we have been getting,” he said.
“Reality is coming back into the market place. These are world economics in a global market.”
Mr Raymond, who farms dairy, cereals and livestock on 2,800 acres in Pembrokeshire with his twin brother Mansel and their families, said a similar dynamic was beginning to operate in the milk sector. Recent farm gate price rises were welcome, but still not enough to meet the costs of production.
“We need between 25p and 30p per litre, and we think the money is there, particularly as world commodity prices of cheese and skimmed milk powder have all gone up in July and milk production is significantly down,” he said.
Perkin Evans said dairy production was a four-year cycle – the time it takes to rear a heifer from birth to the milking parlour – and there had been severe under-investment on dairy farms over the past 10 years.
“The only way the family farm can survive is by working virtually slave labour,” said Mr Evans.
