SHROPSHIREHILLS ESA Tier 1A - All Land £20 per ha Tier 1B - Permanent Grassland £35 per ha Tier 1C...
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AG704 : AGRICULTURE, ENVIRONMENTAND SUSTAINABILITY
ECONOMIC AND POLICY ISSUESASSOCIATED WITH THE SUSTAINABILITY
OF AGRICULTURAL SYSTEMS
OBJECTIVES
1. to assess the current sustainability of farmingsystems from the economic and financialperspective
2. to outline possible future policy developments
3. to discuss topical issues associated with theeconomic and political sustainability ofagricultural systems
Agriculture and the national economy
1994 1996 1998
Percentage of GDP 1.5 1.4 1
Percentage of workforce 2.4 2.3 2.3
Self sufficiency
% of all foods 73 70 68% indigenous 86 83 82
Consumer spend on foodas % of income 17 16.5 16
Financial and Economic Sustainability
Related to the micro and macro economicperspectives outlined by Richard Lowerance
Very volatile indicators: the price of crude oil, orpossibly imported Soya could have a major impact onthe financial sustainability of a given farming system
However, financial viability underpins businesssuccess which in turn impacts on the way the land ismanaged and therefore the ecological and agronomicsustainability of systems
But, attempts to instil financial viability via subsidyhave not always led to ecologically sustainablefarming practices
INDICATORS OF FINANCIAL VIABILITY(SHORT-TERM SUSTAINABILITY)
Various standards available from the Farm BusinessSurvey
Return on tenants capital=100* MII/ tenants capital
Gearing =100* net capital/ total assets
Working capital = current assets - current liabilities
Liquidity ratio = liquid assets : liquid liabilities
Return on proprietors stake = 100* profit/proprietorsstake
Level of borrowing
Article 39 57/58 of the Treaty of Rome in short,
To increase agricultural productivity…….
To ensure a fair standard of living…….
To stabilise markets
To assure availability of supplies
To ensure goods reach consumers at a fair price
EU subsidies in million ECU
1986 % of tot 1990 % of tot 1992 % of tot 1996 % of tot
EU 15 8629 100.0 14242 100.0 18993 100.0 35299 100.0UK 835 9.7 968 6.8 1310 6.9 3781 10.7IRL 225 2.6 499 3.5 533 2.8 1094 3.1NL 114 1.3 156 1.1 213 1.1 406 1.2France 1398 16.2 1592 11.2 2725 14.3 8242 23.3Italy 1829 21.2 2947 20.7 3583 18.9 3804 10.8Germany 2285 26.5 2938 20.6 4726 24.9 5344 15.1
Subsidy per head employed in 1996
Subsidy Agricultural Subsidy per head millions of ECU Employment employed in ECU
EU 15 35299 16000000 2206UK 3781 600000 6302IRL 1094 300000 3647NL 406 250000 1624France 8242 1500000 5495Italy 3804 4300000 885Germany 5344 1200000 4453
How is subsidy related to the economicsustainability of UK agriculture?
Level of subsidy to agriculture 3781 M ECU
OR £3060 M
Gross output from UK agriculture in £16414
Support as % of gross output 18.6%
Total income from farming(provisional 1998) £2173 M
Support as a % of farm income 140%
SO WHERE DOES THE SUPPORT GO?(Provisional figures for 1998/99)
Intervention boards £1053 M
General measures 2184 M
i.e Area Aid Payment cereals £780 M Suckler cow premium £350 M
Agri Environment £170 M
i.e ESA, NSA, CSS
Conservation £16 M
Agriculture in special areas £129 M
i.e. HLCA
Other £3.4 M
TOTAL £3554
Environmentally sensitive areas: how do theyimpact on financial sustainability?
For further information see
http://www.maff.gov.uk/environ/envsch/esa2.htm
22 ESA's in England- flagship environmental policy
Total spend seems to be about £60 M
Uptake is variable across schemes, as are thepayment levels
In some cases joining the ESA can make asignificant contribution to farm income
Some join tier 1 of the scheme without makingmany (any) changes to their farming practice
However, joining constrains change in farmingpractice for a 5-(10) year period.
SHROPSHIREHILLS ESATier 1A - All Land £20 per ha
Tier 1B - Permanent Grassland £35 per ha
Tier 1C - Extensive Permanent Grass£50 per ha
Tier 1D - Moorland £75 per ha
Tier 2 Heather Moorland £95 per ha
Hay Meadow Supplement £90 per ha
Wet Area Supplement £160 per ha
Extensive Grazing Supplement £60 per ha
Commons Supplement £5.00 per ha
Woodland Tier £150 per ha
Public Access Tier £170 per ha
Reading Region Farm Business Survey
Management and Investment Income (£/ha)
1996 1997 1998
Milk producers <50ha 212 -55 -80
Milk producers >50ha 342 257 -108
Milk and arable <150ha 215 29 53
Milk and arable >150ha 337 162 85.6
Cattle and sheep -15 -177 -176
Cereals >150 ha 244 52 0
Cereals <150ha 134 3 -71
Pigs and poultry 734 4.7 n/a
ALL FARMS 218 32 -119
CONCLUDING THOUGHTS
Short-term financial viability of many farms iscurrently under threat
Certain farm types are more threatened than others
Agriculture makes a small contribution to thenational economy at a high cost to the taxpayer
The environmental consequences of currentchanges in agriculture are difficult to predict
Pressure to reduce subsidy and to tie them in withenvironmental benefits
Can the government "afford" to let theconsequences of current change run their fullcourse?