Market volatility 'will affect agriculture for the next decade'

NFU president Meurig Raymond warned that falling farmgate prices posed the biggest threat to the long-term prospects of UK agriculture when he spoke at Agibusiness 2015.

Held at the East of England Showground in Peterborough, Mr Raymond said that market volatility could affect the industry for the next decade.

He stressed that the current key focus of the NFU was working to create opportunities for its members’ businesses to grow. He said ahead of the 2015 general election he would be working to help shape the farming agenda for a sustainable, profitable and resilient future.

He called on everyone involved in the food and farming sector to ensure farmers could look to the future and have the confidence to make important long-term business investment needed.

"But we can all too often focus on prices; what really matters is margin. Most of us are still trying to get to grips with the extent of this problem for farm businesses," he said.

"The dynamics of agricultural commodity markets have shifted. We’ve seen changes in farm policy and agricultural support around the world. Many governments have tried to reduce intervention in agricultural markets. We’ve seen a reduction in tariff and trade barriers to fuel the expans ion of trade. We see agri-food companies that operate on a global level. I believe this really is the new trading environment for us.

"It was the food price spike in 2007/8 when these new dynamics in the market first hit home, and global commodity markets have seldom stood still since. Prices now seem to move as much from day to day as they used to in weeks or even months pre-2007; often responding to the latest supply and demand prospects from around the world."

Raymond said the government has a role to play, just as Ireland's has set the agenda by recently extending their period for tax averaging from 3 years to 5.

"I would also like to see serious consideration given to the introduction of an infrastructure investment allowance. Most G20 countries support business capital infrastructure investment by providing some form of tax allowance. The lack of these allowances in the UK is creating a barrier to investment for many farm businesses.

"An infrastructure allowance, offering delivering relief over the long term would send out the right investment signals to business. It says loud and clearly that the Government wants businesses to grow."