Agri Market Outlook: January 2021
Jigsaw falling into place? – Phil Bicknell, AHDB Market Intelligence Director
In producing the last of AHDB outlooks last July, uncertainty was very much to the fore. As 2021 gathers pace, the ongoing impact of COVID-19 means that uncertainty is again the backdrop as we again take our regular look ahead at our farming sectors.
That said, we do have more clarity and the pieces of the jigsaw are falling into place, particularly in relation to some headline policy areas that impact our industry. The Trade and Cooperation Agreement maps out the tariff-free and quota-free trading relationship for goods between the UK and EU. That has been a critical issue for agriculture – the EU-27 is both the UK’s biggest customer and biggest supplier of a range of agricultural products.
Leaving Europe means leaving its Common Agricultural Policy. With farming policy a devolved issue, many have pointed to the uncertainty that this brings to UK agriculture and particularly given the significance of direct payments in some of our sectors. Yet the picture here is becoming clearer, and certainly in England. Yes, we all want to know the detail but knowing the timeline for phasing out of direct payments and knowing that it will be 2024 before environmental schemes are ramped up at least lets businesses plan accordingly. AHDB’s Business Impact Calculator is a handy tool for highlighting the financial impact for farmers in England.
As much as policy impacts farming, the fundamentals of supply and demand remain key drivers. The sector outlooks explore these factors in more detail. These, of course, are increasingly international in their scope and impact – it is low global grains stocks that are currently driving cereal prices rather than last year’s domestic 10 million tonne wheat crop, for example. I have no doubt that our future outside the EU will bring both opportunities and competition, but I’m also conscious that it will bring increased exposure to market volatility.
Whether you’re looking at the short term or thinking about the long term, change feels like the only constant. These outlooks are intended to highlight the various elements that will shape farming’s fortunes. The bottom line is that there won’t be a one-size-fits-all roadmap for navigating the potential impacts on your sector and your business, but our evidence and insight can help you plan, prepare and budget for the challenges and opportunities as we look to the future.
Take a look at this quick reference guide for an update on key market prices and trends across all sectors.
It should be noted that the information in these outlook reports is based on information currently available but still involves risks, variables and uncertainties. Agricultural markets are highly volatile, often unpredictable, and unforeseen factors can have a major impact on production and prices. Consequently, no guarantee is given to the accuracy of the outlooks, but they are simply put forward as our best estimates at the time of publication.