The crumbs under the table

What will 2022 bring for farming?

I never forget seeing the ‘before’ and ‘after’ photos of Tony Blair. The first when he became Prime Minister and the latter as he finally left the job. That being said, I’m willing to put money on Boris aging even faster. The problem for him is that next year doesn’t look like it’s going to be particularly good.

One problem is that Europe (by which I don’t mean the EU, but the continent) isn’t particularly wealthy any more. The writing is now on the wall for everybody to read. Energy is at the bottom of it.

Gas imports into the EU are seriously political, after all much gas came through the Ukraine. So the Russians built Nord Stream 2 to bypass the Ukraine (which depends on the money it makes from the pipeline) and to land the gas directly into Germany. Last year 49% of German gas came from Russia.

https://www.statista.com/statistics/1201743/russian-gas-dependence-in-europe-by-country/

Perhaps due to pressure from the US, perhaps due to pressure from the Baltic States, Poland, and the Ukraine, the Germans have put off when Nord Stream 2 can deliver. If this was supposed to be a shot across Putin’s bows, it didn’t work too well because Russia is having a colder winter than usual and can happily use all the gas it can get.

The problem is that for much of the year, wealthy countries like China, Japan and South Korea have outbid Europe when it came to buying gas.

https://www.ft.com/content/4885b7f5-97a2-4e66-af91-a9211956b0f5

Luckily the rich have filled their tanks, they’ve got plenty of stocks to last them through to spring when prices fall, so they’re not all that bothered any more. At the moment, if you’re based on the U.S. Gulf Coast, you can reckon on getting 43.205/MMBtu in Europe but Asia is only willing to spend $38.975. So a lot of really big gas tankers have turned round in mid ocean and are now sailing to Europe. We’ll have gas, but we’ll have to pay for it.

Obviously looking at the graph you can see the price is dropping from its peak. Looking ahead the futures market thinks gas will continue to drop in price.
https://www.naturalgasintel.com/lng-tankers-diverting-mid-voyage-for-premiums-in-europe-where-prices-keep-setting-records/

The BBC is estimating that the reasonably average domestic customer is going to have to find £1,277 a year. Then there are the industries that aren’t going to be able to keep going at these prices. We’re going to get other problems. Cannot see there being much fertiliser produced in the UK at these prices. In fact we might reach the stage where government helps subsidise CO2 production and companies make fertiliser as a by-product.

But either way we are almost certainly going to see redundancies, newspaper headlines about families who cannot afford to stay warm and still eat, and it’s going to be genuinely tough for some people. On top of that we’ll continue to see the steady increase in costs we face as we move over to a green economy. Talking to people working in them, the foodbanks have had a busy couple of years, but they’re gearing up for this coming year being worse.

And then we have farming. Obviously fertilisers are going to look expensive. I wonder if the supermarkets will get their arms twisted by government to allow the use of more sewage sludge in agriculture?

But on top of this, across the whole of Europe, not only are populations facing increasing energy prices, but governments are trapped between reduced incomes and vastly increased spending due to the pandemic.

Certainly in the UK, I cannot imagine government willingly doing anything that will increase food prices. In fact I think that they can be relied upon to do their best to keep prices down.

It will be interesting to see whether the EU, with a population of 447 million people, of whom 9.7 million are engaged in agriculture, (Just over 2%) has the nerve to tell the 98% that they have to dig deeper to help the 2%.

From the point of view of the UK farmer, what’s the best way forward?
Certainly if you can earn environmental money without damaging the earning power of your business, it is probably worth considering.

Then there’s always diversification to consider.

But finally, remember that the UK is hardly the prime market to sell food into. I suspect our competitors will be eying up the rich world, China, Japan, and South Korea. Even if, as a business, it isn’t our produce that is exported, we could still do reasonably well on import substitution.

But people do at least have to eat. The BBC had some nice figures as to how you could save money on energy. Reducing the setting on your thermostat by one degree could save you £55 a year. Put like that, cancelling your Netflix subscription could save you three degrees. It’s the sort of calculation people will be faced with whether they want to or not. A large part of the job of a foodbank isn’t just feeding people, it’s signposting them to those who can give them the help they need. For some, it’s help in budgeting.

Now of course, it’s entirely likely that none of the above will come true. Look at the prophecies we’ve seen in the past. Boris put a figure for the NHS on the side of a bus and it looks like chicken feed compared to what he’s had to spend. Whether he wanted to or not. We were told that Kent would end up a lorry park and funnily enough it hasn’t. We were promised a shortage of turkeys for Christmas, and my lady wife returned from a brief tour of the shops on Christmas Eve to announce that fresh turkeys were being discounted because shops had too many. With any prediction, it’s pretty much guaranteed that the ‘unknown unknowns’ will kick everything up in the air.

  
Anyway, have a good New Year, stay well and stay busy.

♥♥♥♥

 

There again, you could always talk to an expert!

As a reviewer commented, “A collection of anecdotes and observations about farming in England in the 21st century. Written by an actual farmer, this book is based on real experience and touches on a variety of subjects in a witty and engaging style. Cats, cattle, bureaucrats, workers, and the working dog all make an appearance, as do reminiscences about the old days and speculation on a possible future. This book is both entertaining and informative, a perfect diversion for the busy reader.”

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20 thoughts on “The crumbs under the table

  1. Doug Jacquier December 31, 2021 at 5:27 am Reply

    Never fear, Jim, help is on its way from the colonies. https://www.abc.net.au/news/2021-12-17/australia-signs-free-trade-agreement-united-kingdom/100706992 And we’re both going to do something or other about climate change. Happy New Year. 😉

    • jwebster2 December 31, 2021 at 6:39 am Reply

      Actually Australia has sold two boat loads of gas to the UK and Europe for the first time since 2009 as well 🙂
      But people go on about how bad that trade deal will be for the 104,000 farmers in the UK, totally missing the point that government has to worry about the 67 million people who live in the UK

  2. rootsandroutes2012 December 31, 2021 at 6:10 am Reply

    A very happy new year to you and all your readers, Jim.

  3. Eddy Winko December 31, 2021 at 8:16 am Reply

    I remember visiting my in-laws when I was fresh to Poland about 12 years ago and noting the billowing smoke coming from the house chimney. I also noted that they had a redundant gas boiler in the bathroom.
    Keen to stop the smog I asked why they didn’t use the gas boiler, to which my father in-law replied that he didn’t trust the Russians to keep the gas flowing
    Seems he was right!

    • jwebster2 December 31, 2021 at 8:18 am Reply

      I think he was absolutely spot on to be honest. But then they knew the Russians

      • Eddy Winko December 31, 2021 at 10:34 am

        He convinced me and we stuck with wood 🙂

      • jwebster2 December 31, 2021 at 12:37 pm

        Wise

  4. Stevie Turner December 31, 2021 at 12:20 pm Reply

    Lucky for us we didn’t brick up our fireplaces. When our LPG gas runs out we’ve got lots of shredding to burn…

    • jwebster2 December 31, 2021 at 12:37 pm Reply

      We have an open fire in our living room which I will light at some point in November, and it gets lit every morning until some point in March 🙂
      No gas here

      • Stevie Turner December 31, 2021 at 2:22 pm

        We haven’t got mains gas here, but households have either got oil tanks or underground LPG tanks. At the moment we have the air-con on because we’re hot!

      • jwebster2 December 31, 2021 at 5:58 pm

        The house is too old to economically fit central heating. But the walls are thick enough to act as storage heaters 🙂

  5. M T McGuire December 31, 2021 at 11:41 pm Reply

    It’s going to be interesting, hopefully it’ll be interesting in the right way. Fingers crossed.

    • jwebster2 January 1, 2022 at 6:25 am Reply

      Yes I hope so, the unknown unknowns are always a bit disconcerting 🙂

      • M T McGuire January 8, 2022 at 4:21 pm

        Fingers crossed! 🙂

  6. Jack Eason January 6, 2022 at 7:58 am Reply

    Reblogged this on Have We Had Help? and commented:
    Jim on a serious subject – Energy supply and pricing…

    • jwebster2 January 6, 2022 at 8:00 am Reply

      It is something we have to bear in mind

  7. Cecilyswritings January 6, 2022 at 8:15 am Reply

    Interesting read, thanks for your thoughts, Jim. Happy New Year!

  8. […] The crumbs under the table […]

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