European Overview
by Philip Clarke

Since Britain joined the European Economic Community (as it was then) over 30 years ago, the influence of Brussels policymakers on the nations farms has been paramount. As such, FARMERS WEEKLY attaches the utmost importance to keeping its readers fully informed of the key policy developments as they unfold in the various EU institutions. In recent times, that has meant the mid-term review of the Common Agricultural Policy in 2003 and all the huge changes that encompassed in terms of decoupling subsidies from production and the introduction of the single farm payment. That is still unfolding at member state level. But in Brussels the agenda has moved on to the next big issues - reform of the sugar regime, the future of rural development policy and the next phase of funding the EU. These will come to a head during 2005 and FARMERS WEEKLY will be watching closely and interpreting the outcomes for readers.

Livestock Overview
by Jonathan Long

The challenges brought by introduction of single farm payments, will see many changes to the way livestock farm businesses are managed in 2005 and beyond.

The beef and sheep sectors appear most likely to be affected by de-coupling. While this will bring some freedom of choice in enterprise mix and managing the farm, whether production becomes more extensive or intensive on individual farms will depend on potential profit without headage payments. I also feel more of these farms will become simpler, part-time enterprises, with diversification or outside work increasingly depended on for income.

With fewer historic payments, the dairy sector should arguably be less affected by CAP reform than beef and sheep. But the reforms effect on milk prices, which are already low, could have a damaging impact. It is difficult to get a handle on the high numbers appearing to quit milk versus the many expansions we hear of to determine the effect on output in the 2005/2006 quota year. I wouldn't like to bet on whether the UK will meet quota or not.

The pig sector has different challenges and numbers have declined, but with the experience gained in tackling disease which have had a crippling effect over the last decade and hopefully a more sustainable price, perhaps this year will see the sector return to a more positive outlook.

Poultry Overview
by Richard Allison, Editor Poultry World

All sectors of the industry, meat, eggs and turkey face major challenges not least due to the plethera of legislation but also uncertainty with regard to imports of cheap products from  markets where the controls on production are not to UK and EU standards.
In particular the egg industry  awaits the outcome of the review of the Welfare of Laying Hens Directive which will determin the future course of egg production in the UK and EU. Other key issues facing the market include  product labelling and reducing the incidence of foodborne diseases in particular campylobacter.
Through it's news and features sections Poultry World covers the key issues facing the industry on a regular basis providing detailed analysis and opinion.

Land Overview
by Andrew Shirley, Editor Land

The UK land market is undergoing a period of drastic change. Uncertainty caused by the mid-term review of the Common Agricultural Policy, new alternatives to in-hand farming and the continued favourable tax treatment of agricultural property means farm sales have dwindled to a trickle of what was seen at the end of the 20th Century.

At the same time, a steam of lifestyle buyers keen to buy a slice of the rural idyll has helped keep land prices buoyant. The productive capacity of soil no longer provides much of a guide as to how much it is worth.

However, as the full impact of CAP reform unfolds, the UK economy inevitably ebbs and flows and government policies change, this situation will undoubtedly remain fluid. But, whatever happens, Farmers Weekly's unequalled and expert commentary on the land market and up-to-the-minute coverage of property sales will help keep you informed of the latest trends.

Business Overview
by Rob Harris UK

This year marks a watershed for UK farming.

From now on, farm support is no longer conditional on producing crops, meat or milk. Instead, the new single farm payment (SFP) has been earmarked as a producer subsidy, payable to the farmer in return for land management.

This, the most radical shake up in the history of the Common Agricultural Policy, is actually very good news. It offers farmers a real opportunity to revitalise their farming businesses.

For the next few years at least, farmers are guaranteed a minimum income without having to produce. No longer will they have to use support payments to prop up loss-making operations.

In the short term, it is understandable that many farmers intend to use their single farm payment cheque to do just that, as the new system beds in. Longer term, it would be folly.

It’s time to turn such thinking on its head. Far better to take the payment and scale back operations that don’t make money. That will cut losses, and provide much-needed extra time to reassess the farm business and ensure it is fit to face the challenges that lie ahead.

There is, of course, no set recipe. Some will do the sums and decide to call it a day. But many more will rise to the challenge of a more volatile, uncertain future, even though radical structural change might be required.

Farmers have, over the years, shown remarkable resilience and ability to adapt. They are being offered a chance to accelerate that process, and should grab it with both hands.

Arable Overview
by Charles Abel, Technical Editor

NEW ERA – NEW AGENDA
DECOUPLED AID spells a new contract between tax-payers and crop producers. No longer is crop production the key to support payments – good land and environmental management is now enough on its own. That gives growers a new opportunity to ditch crops that just doesn’t pay.

But don’t expect a wholesale shift out of unprofitable cropping. Hope springs eternal, and there’s the thorny issue of overheads. Labour and equipment costs still need covering and downsizing is unlikely to be a reversible process – once disinvested how many businesses could afford to re-equip to exploit any future market up-turn?

So decoupled aid is a powerful tool for farmers to wield in contract negotiations and will help ensure farm profits are optimised. But the need to crop profitably remains. And that means rigorous attention to soil care, seed choice, weed, pest and disease control, crop nutrition, efficient harvesting and storage, and tip-top marketing. We will continue to provide topical technical advice to help farm businesses overcome those challenges and remain profitable in the new era of decoupled aid.

FOOD CHAIN TARGET
CROP PRODUCTION has become more specialised and more sophisticated than ever before. Market demands, global competition and regulatory challenges have all ensured that.

Today’s producer have to be aware of modern market requirements, how to achieve lower unit costs than competitors in the US, Australia or South America and how to meet burgeoning regulatory requirements.

That is a big challenge, and one that demands a far better reward. Yet extracting a fitting reward from the multi-billion pound food chain is a major headache. Retailers do it, processors do it and merchants do it – so why not growers?

Of course commoditisation of crops is the problem. To overcome that growers need to offer produce that meets market needs more closely, more consistently and more efficiently. Perhaps the commodity tag can then be replaced by a preferred supplier one. And that is the first step to being involved in the added-value production that undoubtedly awaits as consumer demands become ever more stringent.

Machinery Overview
by Nick Fone

The agricultural sector is going through a period of change, or as some might say, turmoil. Those changes are affecting the industry as a whole, not least the machinery marketplace, which is particularly sensitive to fluctuations in farm incomes.

Farmers are more reliant than ever on world commodity prices, whether from an inputs perspective or looking at the value of the products they turn out. 

Of course this affects machinery buying decisions - typically when farm gate prices rise new machinery sales follow suit. But when input prices increase or market prices fall, new machinery sales suffer, often to the benefit of the second-hand market.

Add to this the uncertainty that fluctuating exchange rates, CAP reform and the Single Farm Payment generate and you're looking at a fairly volatile and unpredictable market.

Farmers are becoming increasingly professional about they way their businesses are run. Equipment is kept longer and worked harder than ever to ensure that depreciation is controlled and fixed costs are minimised.  

Every last penny of expenditure is scrutinised and questioned. Every effort is made to ensure machines generate a worthwhile return.

As average enterprise size grows, equipment gets bigger and more powerful. Larger kit run by fewer operators seems to be the pattern as average tractor power heads for the 130hp barrier. 

There are significant challenges ahead for producers and most are meeting them head on, with significant changes in farming practices being implemented right now.

One thing is for sure - British agricultural sector will continue to evolve and remain one of the most efficient farming industries in the world.