1. HAMPSHIRE FARMING STUDY 1 HAMPSHIRE FARMING STUDY Review 2010

2. HAMPSHIRE FARMING STUDY 2 Review Process –Original Study 1997 –Last Review 2007 –Data sources and their methodologies have changed over time –However, efforts have been made to maintain consistency between reviews as much as possible –Principle aims of Reviews: Identification of regional and county trends Benchmarking against national data

3. HAMPSHIRE FARMING STUDY 3 Current HFS Review 2010 4 main elements: 1.Farm Business Survey data for SE 2.Farm Census data for Hampshire 3.Natural England environmental data for the region and county 4.Other data from sundry sources, including national data

4. HAMPSHIRE FARMING STUDY 4 CAP Policy Context No major overhaul of the CAP since 2007 HFS review, but 2005 CAP ‘Mid Term Review’ sought to: Make agriculture more market orientated by removing (most) production related subsidies - replaced by the Single Farm Payment Increase linkage of subsidies to delivery of public goods – e.g. environmental gains provided by Entry Level Stewardship scheme Increase funding for broader rural social and economic development (viz - Rural Development Programme for England and ‘modulation’)

5. HAMPSHIRE FARMING STUDY 5 FARM INCOMES

6. HAMPSHIRE FARMING STUDY 6 UK National Farm Income TIFF (‘Total Income From Farming’ - DEFRA) – a national inflation adjusted income measure calculated without deducting –Value of unpaid labour –Notional rent for owner-occupiers TIFF per full-time person equivalent (e.g farmer and spouse) at 2009 prices: –1995: £29,600 (peak post 1973 entry into EEC) –2000: £8,800 (trough) –2006: £12,900 –2008: £22,800 –2009: £21,000 - 71% of 1995 peak But 2009 TIFF for whole sector totalled only 47% of 1973 level due to fewer farmers – Total TIFF 2009: £4 bn - of which £3 bn Single Payment

7. HAMPSHIRE FARMING STUDY 7 UK Farm Incomes (cont) Basic farmgate prices as % of retail price –1988: 47% –2003: 34% –2006: 36% –2009: 36% Farmers’ share has fallen by nearly a quarter since 1988 but has stabilised National self-sufficiency in indigenous food fell from 81% in 1998 to 72% in 2006 but has remained around that level since

8. HAMPSHIRE FARMING STUDY 8 23% overall drop since 1988 (similar situation in 2006)

9. HAMPSHIRE FARMING STUDY 9 Product Prices Index Since 2005 Source: DEFRA

10. HAMPSHIRE FARMING STUDY 10 World Grain Stocks 2010 – Stocks Back To Eight Year High (Source: USDA/HGCA)

11. HAMPSHIRE FARMING STUDY 11 Regional Farm Incomes South East Principal income measure used in HFS Reviews ‘Management and Investment Income’ (MII) MII = Net income calculated after deducting –Value of unpaid labour –Imputed rent for owner occupiers Includes income from on-farm diversification Earlier HFS Reviews based on ‘Central Southern England’ data (Reading University) up until 2002

12. HAMPSHIRE FARMING STUDY 12 All Farms MII – Central Southern England 1990 to 2002

13. HAMPSHIRE FARMING STUDY 13 Current Farm Income Data South East Farm Business Survey data for South East Region used from 2003 onwards based on government region Based on the accounts of a new sample of farms covering whole of SE region Most recent data - 2008 (08/9 financial year; 08 harvest) Main comparator - 2005 (05/6 financial year) i.e. the latest data reported in the last HFS Review

14. HAMPSHIRE FARMING STUDY 14 Management And Investment Income (MII) For CAP ‘Supported’ Sectors 2008 MII includes income from diversification, contracting, rental income, agri-environment schemes, and SPS Excludes off-farm employment 2008 South East results by main farm type on average: Cattle and Sheep - £32/ha (loss) Cereals + £189/ha (profit) Dairy + £234/ha (profit) Mixed + £99/ha (profit) In 2005 only dairy sector was in profit

15. HAMPSHIRE FARMING STUDY 15 MII/Ha 2005 V 2008

16. HAMPSHIRE FARMING STUDY 16 Horticulture (South East) – Positive MII for all years 2003 - 2008 Pigs and Poultry (English data only) –Likewise, except in 2007 when pig holdings were loss making (£5,600 loss per holding) Management And Investment Income (MII) For ‘Unsupported’ Sectors 2008

17. HAMPSHIRE FARMING STUDY 17 South East MII & SFP 2008 £ per farm

18. HAMPSHIRE FARMING STUDY 18 FARM PHYSICAL STATISTICS

19. HAMPSHIRE FARMING STUDY 19 Farm Census Data - Hampshire 2009 v 2006 LAND USE 2009 Temporary Grassland: + 10% (Eng: – 8%) Permanent Grassland: + 6 % (Eng: + 3%) Farm Woodland: + 22 % (Eng: + 21%) Crops and Fallow: + 11 % (Eng: 10%) Set-aside: - 100 % (Eng: – 100%)

20. HAMPSHIRE FARMING STUDY 20 England & Hants - similar trends, partly driven by removal of set-aside (not shown) and changes in data collection

21. HAMPSHIRE FARMING STUDY 21 Cropping 2009 Cereals area: + 13% (Eng: + 9%) Other crops: + 16% (Eng: + 14%) –Oilseed Rape: + 1% (Eng: + 18%) –Field Beans and Dried Peas: + 14% (Eng: + 0%) –Sundry crops/GAEC: + 23% (Eng: + 40%) Horticulture remains less than 1% of Hants agricultural area – 1,932 ha is same level as in 2003

22. HAMPSHIRE FARMING STUDY 22 Livestock 2009 Cattle and calves: - 4% (Eng: + 2%) –Dairy Herd: - 17% (Eng: - 10%) Sheep and lambs: + 2% (Eng: - 4%) Pigs: - 8% (Eng: - 5%) Poultry: - 6% (Eng: - 8%)

23. HAMPSHIRE FARMING STUDY 23 Hants – falls in all categories except sheep

24. HAMPSHIRE FARMING STUDY 24 Employment 2009 Total agricultural workforce: + 5% (Eng: + 1%) –Now 9,437 –Full-time 3,534: + 4% (Eng: +1%) –Part-time 4,480: + 5% (Eng: + 2%) –Casual 1,423: + 6% (Eng: - 5%) Full-time workforce had fallen 7% between 2003 and 2006

25. HAMPSHIRE FARMING STUDY 25 Employment (cont) Hants full-time work force –1995: 71% full-time (Eng: 60%) –2003: 41% full-time (Eng: 46%) –2006: 38% full-time (Eng: 42%) –2009: 38% full-time (Eng: 42%)

26. HAMPSHIRE FARMING STUDY 26 Hants – improvement stronger than England

27. HAMPSHIRE FARMING STUDY 27 DIVERSIFICATION

28. HAMPSHIRE FARMING STUDY 28 DEFRA Farm Business Survey Diversification Data Changed financial methodology since 2005/6, so a complete retrospective comparison not possible However, definition of diversification unchanged: – Includes non-agricultural contracting letting of farm buildings – Excludes agricultural contracting letting of land Survey limited to holdings sufficient to occupy a farmer at least half time

29. HAMPSHIRE FARMING STUDY 29 ENGLAND 2008/9 51% of holdings had diversification activities Diversification profits accounted for 10% of total national ‘Farm Business’ profits (i.e. before own labour, notional rent) SOUTH EAST 2008/9 75% of holdings had diversification activities (highest level in England – slightly up from 73% in 2005/6) Diversification profits accounted for 23% of total regional ‘Farm Business’ profits

30. HAMPSHIRE FARMING STUDY 30 ‘Farm Income’ is before cost of family labour

31. HAMPSHIRE FARMING STUDY 31 Similar situation to 2005/6 for England and SE, though other regions have fluctuated more

32. HAMPSHIRE FARMING STUDY 32 Very similar position to 2005/6 for both SE & England

33. HAMPSHIRE FARMING STUDY 33 Small increases in off-farm employment in both England and SE since 2005/6

34. HAMPSHIRE FARMING STUDY 34 Local Food And Produce IGD survey February 2010 Over the preceding month: 30% of shoppers bought locally produced food (up from 15% in 2006) - and of those: –57% wanted low mileage fresh food –54% wanted to support local producers and farmers (up from 28% in 2006) 31% of shoppers said they want more local products (up from 12% in 2005)

35. HAMPSHIRE FARMING STUDY 35 Diversification Assistance England Rural Development Programme 2008/13 80% of funds go into agri-environment schemes (Axis 2 – administered by Natural England and Forestry Commission) Balance has been administered in SE by SEEDA –Axis 1 – Improving competitiveness of farming and forestry –Axis 3 – Rural quality of life and economic diversification –£60 million for Axis 1 and 3 for whole period As at March 2010 £2.9 million in grants for diversification projects funded in SE (including processing, farm shops, and renewable energy for off-farm sale)

36. HAMPSHIRE FARMING STUDY 36 ENVIRONMENT

37. HAMPSHIRE FARMING STUDY 37 Natural England Data New ‘Environmental Stewardship’ regime March 2005 Entry Level Scheme (all farms eligible – standard payment £30/ha) Higher Level Scheme (competitive and restricted budget) Parallel schemes for organic producers

38. HAMPSHIRE FARMING STUDY 38 Stewardship Agreements 2010 SOUTH EAST –7th of 9 English regions for number of agreements (same as in 2007) –5th for area options (same as 2007) (NB: can have more than one area option on same are of land ) HAMPSHIRE –3rd of region’s 9 counties for number of agreements - 14% of regional total (also 3 rd in 2007) –1st for area options - 21% regional total (up from 3 rd 2007) –Of the 682 agreements in Hampshire: most are Entry Level alone (including 25 organic) 152 Higher Level Scheme (including 3 organic)

39. HAMPSHIRE FARMING STUDY 39

40. HAMPSHIRE FARMING STUDY 40 (Farm Business Survey Sample Farms)

41. HAMPSHIRE FARMING STUDY 41 ‘Campaign For The Farmed Environment’ Industry’s response to withdrawal of Set-Aside A voluntary scheme introduced 2009 primarily aimed at arable farms to promote: Resource Protection, Farmland Birds, and Farm Wildlife Strong focus on retaining un-cropped land Supported by DEFRA and conservation groups - but could be replaced by regulation if insufficient take-up by June 2012 DEFRA survey published May 2010 – Six in ten respondents have joined campaign, or plan to

42. HAMPSHIRE FARMING STUDY 42 Organic Land In SE 2008 Fully Organic 47,200 ha in SE – 34% up on 2005 (England up 19%) SE remains 2nd region after SW with 17% of English total (also 2 nd in 2005) In Conversion 10,400 ha in SE – 3% down on 2005 (England up 71%) SE remains 2nd region after SW with 11% of English total (NE and West Midlands close behind)

43. HAMPSHIRE FARMING STUDY 43 Organic Businesses In SE 2008 Producers and Processors 1041 No - up 16% from 2005 (England up 20%) 19% of English total Market Conditions Organic sales fell for first time since 1995 due to recession – down 13% on 2008

44. HAMPSHIRE FARMING STUDY 44 OBSERVATIONS

45. HAMPSHIRE FARMING STUDY 45 ‘THE PAST’ In 2008 UK total farm income reached its highest level since 1995 This was reflected in improved farm incomes in the South East helped by prices, sterling, and diversification – but cattle and sheep farms still generated negative MII on average Where generated, MII profits in the supported sector remained heavily dependent on the Single Farm Payment The non-supported sector has remained profitable for most of the period since 2003 without the Single Farm Payment

46. HAMPSHIRE FARMING STUDY 46 THE PAST (cont) Full-time farm employment in Hampshire is higher than in 2006 Cattle numbers, especially dairy, have continued to fall Set-aside has gone, with resulting concerns about environmental impact However, Hampshire's general participation in agri- environment schemes is impressive

47. HAMPSHIRE FARMING STUDY 47 ‘THE FUTURE’ Commodity price volatility expected to continue Supermarket ombudsman due to be introduced – but will it be effective? CAP Reform for 2014/2020 uncertain: –will total CAP budget be cut? –how much will get transferred to new member states? –how well will the Single Payment survive? –how much will be transferred into agri-environment and wider rural development programmes? But there is at least one certainty - milk quotas to go in 2015

48. HAMPSHIRE FARMING STUDY 48 ‘THE FUTURE’ (cont) Tensions between globalism and localism expected to continue - EU proposals for country-of-origin labelling may help some markets Increased global competition for natural resources (hydrocarbons, other minerals, and water) is moving food security, including production efficiency and food chain waste, up the agenda Climate Change Act 2009 has set stringent greenhouse gas obligations –How will agriculture manage its methane and nitrous oxide emissions, and also the land-use and food production implications of biofuels? New economic opportunities are arising for rural based renewable energy following the introduction of ‘Feed-In Tariffs’ in 2010

49. HAMPSHIRE FARMING STUDY 49 CONCLUSION A generally better economic picture than 2005/6 Much uncertainty looking ahead, but also some clear economic opportunities linked to ‘sustainability’ e.g. energy and local food Diversification will remain important, but vulnerable to the general state of the economy – ensuring access to rural broadband will help However, food is the product that all consumers must buy before any other – so agriculture should have more resilience than some other sectors Providing a skilled and versatile workforce will remain essential

50. HAMPSHIRE FARMING STUDY 50 Mark Griffiths FRICS FAAV Carter Jonas Hampshire Farming Conference Sparsholt College 17 June 2010