Yet another problem hitting our farmers
by Michael Smith (Veshengro)
Red diesel prices are starting to edge upwards more and more, according to results from the Inputs Price Monitor by Farmer's Weekly and the NFU, suggesting farmers should be thinking about making their winter purchases sooner, rather than later, such as NOW.
Red diesel, for readers outside the United Kingdom, is agricultural diesel which attracts lower taxes in order to help the farming industry. However, we are seeing this ring-fenced system coming under attack more and more and the tax regime changing on it.
The data, collected from about 150 farmers who took part a survey in August 2009, shows that the average cost of red diesel across the country came to 42.91p/liter. This was up 2p/liter on the previous month's figure.
To some extent, the rise reflects the fact that harvest has been squeezed into a short window in many parts of the country, exaggerating short-term demand, and this has fed through to prices.
"Some farmers have also brought forward deliveries of red diesel, to preempt fuel duty increases, which came into force on 1 September," said NFU farm inputs adviser Hannah Moule. Red diesel duty went up 0.38p/liter recently, while road fuel duty was raised by 2p/liter.
More generally, there is continuing upward pressure on crude oil prices globally. "The $80/barrel mark is already being talked about by some energy market analysts, given that oil prices are seen as a barometer for the global economic recovery," said Miss Moule.
"As heavy industry around the world ramps up production, energy demand will rise and UK diesel prices are likely to reflect this trend in the coming months. Farmers would do well to negotiate with their suppliers now."
Apart from red diesel, the other main change in August was for a fall in the price of glyphosate, which dropped about 50p/liter to £4.31p/liter. "In sharp contrast to last year, global supplies are better matched with demand and the price trend seen in global markets is being mirrored in the UK," said Miss Moule.
In the fertilizer market, however, there has been a £2/tonne increase in the price of domestic ammonium nitrate to average £179/t, reflecting the monthly increment as set out by GrowHow at the start of the season.
The situation with the red diesel which we may find sooner or later is going to be seen by the EU as something that we have to change in the UK is just one more problem that is being thrown at the farmers in this country.
It may be time to reconsider our farming practices and the use of those huge diesel guzzling tractors and other machines and look at other ways again.
The Amish in America may be able to give us a few hints there, I should think, seeing that they, basically, are nearly the only farmers that actually make profit from their farms in comparison with the huge agri-industrial places that mostly just about break even.
All this dependence on petroleum-based products, from fuel to fertilizer and everything else in between in squeezing farmer's and farming and while the production cost, for the ordinary commercial farms, rise they prices they get for their products from the supermarkets are the same as they have been or the retailers are even pushing the prices down further. Not that the retailers pass this on to the consumer, though.
While milk is about 70-something pence retail a liter the farmer gets less than a third of that and somewhere in the region of 15-17pence a liter. Now somewhere along the line this does not compute.
The problem, however, for the modern commercial farms that work with modern methods and machinery is that the overheads are far, far too high. Fuel costs, fertilizer, heating, purchase or lease cost of vehicles and machinery, insurance, etc., etc. and many farms can hardly break even. Profits is something they often can but dream of.
More and more farmers in Britain are quitting the industry and the country, the government, is doing little about it and the public do not seem to care either. But the nation's food security is dependent on home farms. Imports cannot guarantee that.
Instead of quitting maybe a change in practices is what farmers should be looking at. Practices that could an d would reduce their overheads and also their environmental footprint. Generate your own power and heat and go back to some more animal and human power on the farms rather than ever bigger and more powerful tractors and such.
Could this be done? I think so.
© 2009
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