How many times have I gone to an agri-focused seminar and farmer speakers have bemoaned the fact that even though they have increased the productivity of their livestock and improved the technology in the growing of their crops, they are all the time running faster to stand still.

As farmers, we are constantly being told: “Don’t worry, the world population is growing so demand is increasing and there is a glorious farming future ahead”.

Perhaps, but those assurances cannot distort what has happened over the longer term.

The best agricultural statistics in the world are probably gathered by the United States Department of Agriculture and their graph here – recently republished by the Financial Times, now a Japanese-owned publication, summarises the farmers’ dilemma nicely.

Over the last 110 years or so, the fall in real terms, ie after inflation is taken into account, has been continuous

The chart graphs the growth in population against the prices farmers receive for a basket of the main farm-produced commodities.

This is different from the normal conference presentation that focuses on the price of food that consumers pay – the farmer’s share of the consumers’ food euro is falling continuously as processors and supermarkets can pay farmers less and less.

But from a farmer’s point of view, it is how much his product is worth as it leaves the farm is the key.

Over the last 110 years or so, the fall in real terms, ie after inflation is taken into account, has been continuous.

There have been, from a farmer’s point of view, very favourable periods in history – many Irish farming families benefited hugely from the war-induced boom in the first two decades of the last century but many were caught out by the depression of the 1930s which saw prices more than halve.

In the case of Ireland, this was accentuated by the economic war.

Beef and lamb have held their real prices much better

Within agriculture, the most conspicuous change over the last 70 years has been the collapse in the real price of cereals where both wheat and maize are about one-quarter of what they were 80 years ago – in other words, wheat today should in real terms be about €800/t rather than €200/t.

This of course has allowed pig and poultry meat to dramatically fall in price, especially when the rapid genetic gains in these sectors are taken into account. Beef and lamb have held their real prices much better.

But the overall hugely important trend in the developed world has been the explosion in the real purchasing power of wages when compared with food.

So what should farmers’ response be? From an individual’s point of view, technology uptake and competitiveness are obvious keys but also, the importance of developing niche products or assessing how one’s time, especially in a high-wage economy, can be best used.

Read more

China is producing more wheat than previously thought

Grain report: sentiment remains negative for grain