OPINION: Gwyn Jones Farm Diary

As the poor harvest comes to an end across Europe, including the UK of course, it's time to take stock of global supplies and markets. The latest supply figures from US Department of Agriculture (USDA) show some pressure on supply with a reduction in stocks. Total world production is estimated to be down 2.2% this year (2.950 billion tonnes), with stocks reduced by 4.4% as usage remains steady.

Stocks are now the equivalent of 95 days usage, down by 4 days on last year. Wheat output is estimated to be down 2.8%, with coarse grain (including grain maize or corn) down 2.1%, with stocks down 7.0% (69 days usage). Rice production is down 1.5%, and only oilseeds have increased production (by 3%) and again stocks are set to fall by 3.3% to 87 days usage.

European and UK crops are down far more than that, with a predicted 8.2% drop overall (to 286.6 million tonnes), wheat down by 6% (to 143.7mt) due to heatwaves this summer. Grain maize was down by 10% or more and rape-meal down to 21.2mt, with larger areas planted this year making up for the poorer harvest.

Russia is expected to harvest 90mt of wheat, and whilst the Ukrainian harvest looked reasonable, grain exports were down by 76% due to conflict disruption, and Russian itself has 90% of grain export capacity affected. Fruit and vegetable production is also affected with French growers reporting an expected 25% drop in courgette yields, 35% drop in lettuce and a 60% drop in broccoli. Spanish production was harvested earlier with stone fruit production up 5%.

Milk production was impaired by the drought, with the UK down 2.5%, lower Irish production figures and the same for France. The Southern Plains of the US experienced significant drought, with wheat production down by 22.9% (to 41.7mt), the smallest crop since 1970. This has pushed prices up on the Chicago exchange to $248/t, a third more than the start of the year. This is still only 57% of the price seen in May 2022 after Russia’s invasion of the Ukraine.

The Canadian harvest is expected to drop by 13% (to34.6mt) due to reduce plantings and a difficult spring. So why are prices still reluctant to increase? According to USDA the second largest US grain maize crop on record at 406mt is keeping wheat prices in check. That figure is 6.3% more than last year as US farmers planted an extra 1,120,000 acres of grain maize this year.

They continue to move away from wheat and other cereals, with oilseed production (which includes soya) also up over 5% to 132.7mt. US milk output is also expected to be up this year as the national herd continues to expand. Asia and Africa do not export much but are by far the largest consumers of food. China’s grain harvest is estimated to be a record 150.75mt, due to increase yield, but are expected to continue their national policy of increasing grain stocks. USDA estimates that China held 69% of global corn stocks, 60% of global rice stocks and 51% of global wheat stocks last year.

India experienced temperatures of up to 45C during the growing and harvesting period this spring, and their wheat production was 113.5mt rather than the 120mt expected. Fruit production was also badly affected as was milk production. Many parts of Africa have had better harvests than expected at 10% above 5-year average, but East Africa has suffered extreme heat with prolonged drought in Sudan, South Sudan, Ethiopia, Eritrea and Somalia. Experts say that there are 55 million people in Nigeria and Chad facing food insecurity, with conflict and high fertilizer prices making things a lot worse.

Forecasters say that Southern Hemisphere production over the coming months could be impacted by the evolving El Nino weather pattern. In the past it has led to drier conditions in Australia and New Zealand and wetter weather in South America. US Climate Prediction Centre say that there is a 69% chance that it will be the strongest El Nino since 1950, impacting Southern Hemisphere, but also a 90% chance of a strong event for us in the Northen Hemisphere next year.

Commodity prices are strengthening, but not by much. However, economists are predicting that they will rise from now on, with higher food prices following by the end of the year as there is a 3-to-6-month lag between higher commodity prices and higher food prices. It is a complex weather driven production system, but conflict, high energy and fertilizer prices test farmers’ willingness to keep planting, keeping it all together. If low margins or poor returns blunt farmers appetite for risk, then it becomes more precarious.

The world does have around 11 months of food in store if we count everything: grain stocks, household storage and basic reserves. Corn, wheat, rice and potatoes as major staples provide around 3 months of global supply, and meat, dairy oils, sugar and other basic reserves add to that. However, there are big regional differences. Africa holds around 4 months of food stocks, whilst Oceana hold 32 months. Supermarkets and local grocery stores hold just a few days - a week at most, due to ‘just in time’ delivery systems.

Our government therefore has a complex picture when it comes to our food security and how they protect the nation’s food supply for the future. The obvious answer is to assist our farmers to grow as much food as possible, but that needs some fundamental changes in policy. Food production needs to gain in importance and political support, with environment and nature not dominating important decisions as they do at present. Farmers need to make a profit to stay in business and have confidence for the future in order to invest.

All farms need water and planning laws need to change otherwise we will see the same protests over reservoirs and storage systems as we now see over data centres. We need proportionate and sensible regulation and the will to override vested interests in order to get things done. A proper explanation, well communicated and rational decisions would go a long way to defuse many of these issues, as often the same people who attempt to halt progress are the first to complain when things fall short.

Should we have another season as dry as this one soon, there will be many farmers who may consider giving up, as there is a limit to how long they can keep losing money. Marginal land and very dry areas of the country will suffer most, with real pressure on those trying to make a living. Others need to make real adjustments to their farming methods and become acclimatised to their environment. Many West Sussex dairy farmers have done that, growing more maize and relying less on grassland, whilst calving their cows in the autumn which means they are dry and under less pressure in the hottest, driest months of the summer.

There will be scientific progress of course, with new varieties and new techniques, but the fundamentals will stay the same and good agricultural practices will be essential in order to survive. Governments need to realise that chemical fertilizer feeds the world and that herbicides and insecticides are crucial. Following ridiculous policies and listening to pressure groups will get us into trouble, as will being fanatical about unrealistic aims such as Net Zero by 2030; a policy which is about to change at long last. Moderation, moderation, moderation should be the government’s motto.