Select Committee on Environment, Food and Rural Affairs Minutes of Evidence

Supplementary memorandum submitted by the Co-operative Group (A 52(a))

  I list below the subsidised commodity sectors where Farmcare has an existing interest, with indications of our current volume of production:

Arable Products  
Wheat 96,000 tonnes
Barley 29,000 tonnes
Rape 11,500 tonnes
Dried Peas and Beans c 7,000 tonnes


  Farmcare currently has a milk quota of just over 30 million litres, milking 3,500 cows across 12 herds in England and Scotland.


  Farmcare received IACs payments of £2.5 million for the last year, including set-aside payments of £500,000.

Projections for the Future

  Farmcare's commercial goal is to manage a farming business that achieves acceptable levels of profitability without production subisidies. We believe that this goal is realisable over the long term but requires recognition that subsidies to our global competitors must also be withdrawn. However the delivery of profitable farming in the UK without subsidies will require substantial changes to what and how we farm.

  Farmcare, for instance, is unlikely to continue to produce dried peas and beans for the commodity sector. Farmcare is also currently re-evaluating its dairy interests and while we expect to continue to have an interest in the dairy sector, the downward pressure on farmgate prices (caused in part by lowering export refunds) will force us to reduce our herd.

  At its current price, wheat is at barely acceptable levels of profitability for Farmcare. If subsidy was to be withdrawn now, we could not produce wheat at a profit on the current field system. However, we are moving towards large scale, block cropping—bearing in mind certain environmental considerations—over the next two years as the only way in which we could secure a profitable future for Farmcare in wheat production without subsidy.

  Farmcare's view is that although production subsidies cushion farmers' incomes in the short term, their global impact stimulates over-production and distorts the market which, in turn, depresses the world price of these crops. However, the unilateral withdrawal of subsidies to the UK farmer would disadvantage us against our global competitors many of which farm in a highly subsidised environment, either overtly or covertly.

  The profitablity of UK farming is also inextricably linked to the competitiveness with which farmers market their produce. The Curry Commission contains some important recommendations in this respect and Farmcare is actively seeking to reconnect with the market and its customer (in its many guises) by meeting product specifications and developing customer supply contracts which are long term and based on agreed price formulas. Wider and deeper agricultural co-operation will be an important mechanism in delivering renewed sustainability.

8 April 2002


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