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Weather Has Big Impact on Supply Chains

07 October 2013
National Farmers Union

UK - "Many farmers are still working under the shadow of 2012’s appalling weather and the knock-on impact this has had," said Phil Bicknell, NFU Chief Economist at a recent Monmouthshire NFU Cymru county meeting.

Mr Bicknell went on to say, "For most, the problem is now in the office - working to balance the books and covering production costs. Looking ahead to next year, I’m hoping we can move on to a more positive outlook."

Members present at the NFU Cymru meeting held in Raglan, scrutinised past production figures and future projections for the UK red meat, cereal and dairy sectors.

Mr Bicknell said, "Margins are constantly being squeezed as we pay the price for the awful weather conditions experienced in 2012, which was extended further by the most challenging spring in decades. This has put serious pressure on the bottom line with profits being eroded.

"Cash flow problems have naturally followed, farmers have been faced by increased bills and less favourable credit terms with some merchants. It will take time to rebuild confidence within the industry but there should be some confidence. The global population is increasing and as the world gets richer, people improve their diets. Demand for meat will increase considerably and the challenge for UK farmers now, is whether we can assist in meeting this demand.

"The future is looking stronger but there is going to be more volatility in commodity prices. As an industry, costs of production since 2006 have rocketed from £9bn to £14bn and we can never underestimate the impact the weather can have on the supply chain."

As the Union is due to launch the 2013 confidence survey, it is expected that this year’s main factor in determining confidence within the industry will be the outcome of the Common Agricultural Policy (CAP) negotiations. Over recent years, input prices have been the main factor concerning farmers but the current CAP discussions and decisions taking place at a Welsh Government level are clearly at the forefront of farmers’ minds.

Monmouthshire NFU Cymru County Chairman, Nigel Bowyer, said, "There are significant changes ahead under the new CAP regime and the uncertainty at the moment is making it extremely difficult for farmers to plan ahead and make informed business decisions. Profit and confidence within the agricultural industry are key components in order for re-investment to be made on farm. It is absolutely vital that the Welsh Government exhaust every avenue possible to try and minimise the impact of moving to an area based system in Wales."

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