Economist warns of falling farm incomes

Mark Berrisford-Smith, a senior economist at HSBC bank, predicts a gradual downturn after a couple of bright years.

He was speaking this week at a rural business conference at Bishop Burton College in East Yorkshire examining climate change issues in response to the Government's new food strategy.

"It's not been a bad couple of years, thanks to a lovely spike in the price of cereals when it briefly reached 200 a tonne," said Mr Berrisford-Smith.

"Now the price is back where it had been in the spring of 2007."

Wheat producers around the world, attracted by the high prices, had responded by growing an extra 120m tonnes a year – a 20 per cent increase.

Global stocks had been transformed and were now back at normal levels.

Mr Berrisford-Smith said that for a time wheat prices became more important to farmers than the euro exchange rate (farmers' subsidies are paid in euros).

He thought it unlikely that the next subsidies would be paid at as favourable a euro rate as last year.

Interest rates will remain relatively low, he said. The whole UK economy had shrunk by six per cent as a result of the financial crash and was now back to its summer 2005 size.

It would be 2012 before the economy expanded to what it had been just prior to the crash in 2008.

A number of farmers at the conference gave insights into radical means that they are employing in adapting to climate change and its consequences.

Big-hitting scientists and academics offered a raft of thought-provoking and potentially profitable ideas and Richard Taylor, head of corporate affairs at Morrisons, gave the retailers perspective.