In jap England’s breadbasket, autumn’s dry, golden climate has been very best for sowing cereals. After final 12 months’s low yields, it ought to present some consolation for farmers similar to Charles Bracey.
However this 12 months it doesn’t. “We’re drilling this week within the information that we’re not going to make any cash from it,” mentioned the 60-year-old farmer, who grows wheat, sugar beet and greens throughout two farms totalling 1,000 acres between the villages of Postwick and Stalham in Norfolk. “Costs are grim and it doesn’t appear like they’re going to get any higher.”
Agricultural commodities similar to grains and sugar have plummeted on futures markets as world provides have surged. European farmers are struggling specifically as they cope with excessive enter prices and more and more aggressive world rivals.
Benchmark wheat futures in Paris have fallen greater than 20 per cent this 12 months to multiyear lows, dragged down by bumper harvests in Russia, Australia and components of South America. In the meantime, speculators are constructing bets on additional value falls, with funding funds including greater than 280,000 new brief tons in milling wheat futures within the week to November 21, extending their internet brief place, in line with Euronext knowledge.
For UK growers, the autumn has been brutal. Wheat costs at the moment are little greater than half the degrees reached in 2022 following Russia’s invasion of Ukraine. But fertiliser, gasoline and equipment prices — inflated in the course of the power shock — have barely retreated.
For arable farmers in Europe, “it’s not a contented state of affairs in any respect,” mentioned Ole Hansen, head of commodity technique at Saxo Financial institution. There’s a huge hole between “a budget crop that leaves the farm gate” and the value of bread “when it hits the shop”, he mentioned.
Whereas the upcoming harvest in Norfolk appears promising, the UK’s wheat yields at this year’s harvest fell after final winter’s torrential rain. However as a result of worldwide markets are effectively provided, that doesn’t translate into greater costs.
“It’s the right storm: low yields and low costs,” mentioned Bracey’s enterprise associate, Nick Hood, who’s within the means of merging their operation with one other to unfold mounted prices. “On the arable aspect, you’re taking a look at detrimental margins virtually throughout the board.”
“We have now regional climate and world markets,” he added. “The barns are half full and it’s not value a lot.”
The monetary squeeze is prompting seen restructuring. Brown & Co, the UK’s largest devoted agricultural auctioneer, mentioned the variety of agricultural machines being put up on the market has risen sharply. “It’s turn out to be laborious to discover a day of the week with out an public sale,” mentioned associate Simon Wearmouth. “I’ve by no means identified the calendar this crowded.”
At the same time as grain markets sink, UK customers have seen little reduction in the price of bread, beer or baked items. That’s as a result of the uncooked commodity usually accounts for under a small fraction of the retail value. In a loaf of bread costing £1.50, wheat could solely account for 16.5 pence to 22.5 pence, in line with Monetary Occasions calculations based mostly on analysis by the Agriculture and Horticulture Growth Board, whereas barley solely accounts for a small proportion of a pint of beer. Power, packaging, transport and processing prices and retail margins are the principle elements of the ultimate value.
Annual meals inflation within the UK was 4.9 per cent in October, up from 4.5 per cent in September. The rise has been driven by five products — beef, butter, milk, espresso and cocoa — the place provide shortages globally have pushed up costs.
“Up horn, down corn,” mentioned Wearmouth. “The meat value is buoyant . . . however should you’re solely arable and also you haven’t acquired any irrigation water for any high-value crops to combine in amongst your rotation, then the strain is basically on in the mean time.”
Throughout the Channel, growers say the state of affairs is equally dire. In France, the place sugar beet is a flagship crop, producers describe a sector beneath existential strain after world sugar costs plunged virtually 50 per cent over the previous 12 months.
“It is a major problem,” mentioned Timothé Masson of the CGB, the French beet growers’ affiliation. “Producers are cultivating under price. You are able to do that for one 12 months, not for a number of.”
Concessions for South Africa, Mercosur nations in South America and conventional cane exporters have added to provide on a market the place European consumption is flat or declining. The consequence, in line with Masson, has been manufacturing unit closures, with six websites shutting in France for the reason that finish of EU sugar quotas in 2017, with extra anticipated if 2026 costs fail to recuperate.
“It’s an actual disaster,” mentioned French farmer Guillaume Gandon, who grows about 70 hectares of beet. Growers at the moment are “cultivating at a loss” after manufacturing prices surged post-2022 whereas yields fell, and “we’ve misplaced 9 tonnes per hectare in 10 years”, he added, as EU pesticide bans tightened. In the meantime, “cane sugar from Brazil or India arrives at very low costs — we can’t compete with that”. If costs don’t recuperate quickly, he warned, the sector will collapse.
A veteran sugar dealer mentioned: “The entire [sugar] business is in panic mode . . . they [sugar companies] are all haemorrhaging money . . . so that they’re pleading with the farmers to assist them out and never plant beets going ahead.” They added that not solely have provides of sugar surged however demand has fallen as Europeans are ditching candy treats, that are increasingly maligned as unhealthy.
Producers on either side of the Channel emphasise a structural drawback: Europe’s excessive environmental and labour requirements, whereas politically in style, make manufacturing considerably dearer than in main exporting nations.
In Brazil and India, cane cultivation advantages from beneficial climates, giant vertically built-in estates and looser guidelines on pesticides and labour. “For those who open the market totally to Brazil, you possibly can shut the European beet sector,” Masson mentioned. “We’ll by no means match these prices.”
UK cereals farmers echo the purpose. Since leaving the EU, the fundamental fee that when stabilised incomes has been virtually completely phased out in England, in favour of funds for making environmental or animal welfare enhancements, as an example. In the meantime, farmers in Scotland, Wales and the EU nonetheless obtain substantial area-based help.
“The extent enjoying discipline is lengthy gone,” Bracey mentioned. “We misplaced our greatest ally — the French — within the Brexit negotiations. Now we’re on our personal.”
Additionally weighing on the British farming sector is the federal government’s deliberate overhaul of inheritance tax reliefs for farms. From April 2026, solely the primary £1mn of agricultural or enterprise property will qualify for full reduction, with the rest in impact going through a cost of 20 per cent.
Advisers say the change is influencing succession plans in a sector dominated by family-owned operations. With incomes beneath strain and lots of youthful members of the family reluctant to take over, the prospect of a brand new tax legal responsibility is prompting some older house owners to consolidate, restructure or promote land.
“When farmers go away, the information doesn’t come again,” mentioned Hood. “That’s what worries me.”
