The world’s supply and demand for food hinges on grain commodities, said George Chichester of Strutt & Parker at their annual Rural Land Briefing in London on 5th February; and the unpredictable weather in UK over the past two years has had a devastating effect on harvests.   

The wettest summer ever recorded in England was in 2012, which resulted in poor yields and quality for both arable and forage crops.  With the rest of the world having a relatively unexciting harvest also, wheat price shot up by around 30% to £200/T – which compensated in part for the poor physical performance, although having sold too early many British farmers did not benefit fully from this strengthened price.  The wet weather continued into the autumn and winter, resulting in around 20% of land scheduled for planting remaining fallow and – despite a big increase in spring cropping - some 75,000 hectares of land which was scheduled for cropping lay unplanted.

The winter crops established poorly, and the spring crops - which established well - suffered from a dry June which led to low yields all round.  However, with all other main grain growing areas in the world having an excellent harvest, the price of grain tumbled back to around £150/T, with the result that farmers’ poor yields were not offset by a strong price and the profits from the 2013 harvest have been even worse than from 2012. According to DEFRA’s analysis of Farm Business Income – published on 30 January - arable farmers saw profits fall by 30% for the 2012 harvest and a further 28% for the 2013 harvest.

Dairy and livestock farming has, however, fared much better.  Dairy profits may have fallen 40% following the floods of 2012, but doubled in 2013.  Beef and sheep farming profits have remained fairly constant.  Those who have benefitted most from the collapse in grain price are farmers who specialise in poultry and pigs.

Chichester says, “there is such a narrow band of surplus or deficit in the world’s grain supply that a slight swing in one direction or the other has a hugely disproportionate effect on the commodity price.  The market is therefore hugely sensitive to weather factors which are becoming increasingly erratic.  The outlook is equally dependent on global population and economics”.