Speaking at the Guild of Agricultural Journalists Harvest Lunch, Mr Kendall said that even if higher producer prices had a marginal effect on food price inflation, it was a price well worth paying for a better managed countryside and a healthier rural economy.

“We should not apologise for the fact that farmers’ prices have at last started to recover after ten years in the doldrums”, he said.

“We need to see a higher proportion of what the consumer pays for food coming back to the producer if we are to achieve a countryside that is sustainable economically and socially, as well as environmentally.

“The record of British farmers in producing higher and higher quality food for less and less money is a remarkable one. In the last decade, for example, food prices have risen by just 1.3 per cent per year, compared to 4.1 per cent for the RPI as a whole. Only 13 per cent of average disposable income in this country is now spent on food and drink compared with 26 per cent in 1970.

“But while food price rises in the shops have been kept in check, farmers’ prices have fallen sharply: by 26 per cent across all commodities, comparing 1995 with 2005. Even after the recent increases, cereal prices are below what they were in 1996 and beef prices below what they were in 1995, before the BSE crisis erupted.

“But the benefits that this has delivered to consumers and – even more so – to the profits of the retailers, has come at a huge cost in terms of the damage to investment, infrastructure, employment and output from the countryside. In some sectors, like beef, it is remarkable that the industry has survived at all.

“We can see now that the balance between food supply and demand is shifting, not just within the EU but across the world. This year’s world harvest will be one of the biggest ever, but the fact that it has fallen even slightly below expectations has given grain prices a big boost, because the margin between surplus and shortage is so small.

“As for cereals, so for beef, where the forecasters are suggesting a growing EU shortage as production subsidies are withdrawn, and more and more South American product is diverted to new markets in China and South-East Asia.

”The increasing use of land for biofuel production, both here and overseas, is another potent factor in the equation.

“But all of this is actually the best possible news for the long term ability of the world to feed itself. Higher and more realistic farmgate prices can provide farmers, both in developed and developing countries, growing opportunities for profitable production.

“Persistently low farmgate prices for food have been bad for farmers, bad for the countryside, bad for animal welfare, bad for employment and bad for the developing world.

“Of course, one swallow does not make a summer and the recent hiccup in the beef sector shows just how volatile markets can be. But the fact that the balance does appear to be shifting back just a little in favour of the food producer can only be good – provided it is sustained – for food production – and that is a priority that I can see coming more and more to the fore in the national consciousness over the years ahead.”

ThePoultrySite News Desk