Acts of war: Ukraine and Scotland's agriculture

“We can’t go green if we’re in the red,” said Andrew Connon, a sheep farmer from Quilquox, Aberdeenshire, and vice president of NFU Scotland.

Connon, who lives with his wife Pauline, son Andrew and daughter Sarah, says post-pandemic inflation, and the effects of the Ukraine war on supply chains, are driving farmers closer to bankruptcy.

“Agriculture’s main objectives are to produce food, and to be stewards for biodiversity in nature,” said Connon.

“We’re custodians of the land and we need to be at the forefront of addressing climate change, but we need to remain profitable.

“A loss making industry cannot invest in nature, biodiversity and climate change.”

Connon also points out that agriculture is an essential part of the Scottish economy accounting for 67,000 jobs in agriculture and a further 360,000 jobs in the food and drink industry.

Scotland’s agricultural sector is also unique within the UK, with 85 per cent of the land being considered ‘less favoured’, and only suitable for livestock farming. As a result, Scottish agriculture is heavily reliant on Common Agricultural Policy (CAP) payments, which contributes around £65m to the sector each year.

Even before the recent inflation spike, which has saw the costs of fuel, feed and fertiliser sky rocket, Connon said only 81 per cent of farms were making a profit, with the majority only managing to survive thanks to CAP subsidies – without which only 37 per cent would make a profit.

Now the outlook is even bleaker. The cost of fuel has risen two and a half times over, power costs 40 per cent more on average, the cost of feed has more than doubled, and there is a huge labour shortage, due to a post-Brexit reliance on Ukrainian labour, which previously made up 60 per cent of the seasonal workforce.

At a meeting of NFU Scotland in the Scottish Borders last week, farmers heard how the pressures on the world’s agricultural sector is a deliberate tactic being used by Russian President Vladimir Putin, according to Dr Keith Dawson, the founder and director of the Central Plains Group, which farms extensively in Ukraine.

“Vladimir Putin has weaponised fuel, fertiliser and food in just a few short weeks,” said Dr Dawson, “and the difficulties will continue for some time to come.”

Ukraine is vitally important for the global food supply chain - known as ‘the breadbasket of the world’, more than 70 per cent of the country is made up of prime agricultural land, and it is estimated the country has the ability to feed up to half a billion of the world’s population.

It boasts some of the most fertile land on earth, with rich black soil, chernozem, that is perfectly suited to growing grains.

The aggressor, Russia, is also a major exporter of grain, and the two warring countries normally supply a quarter of the world’s wheat, and half of its sunflower products.

“It has wonderful soils, plenty of rain and it is flat,” said Dr Dawson, “what’s not to like?” 

“Central Plains Group has finished planting all our crops in the west of Ukraine but it's not without its risks – when you find a World War Two grenade in the potato grading line you have a heart stopping moment or two.”

The supply of grain is vitally important for Scotland’s pig and poultry farms, which are heavily exposed to fluctuations in the price of feed. NFU Scotland estimates that on average, a 400-sow herd is losing around £10,000 a week due to the increased costs of feed and energy.

“Over all farming sectors – if feed is going into the system, it is having a massive effect,” said Connon, “grain at this time last year was about £130 per tonne, now you’re looking at about £330  per tonne.

“If you process it, or have it milled, it can cost up to £400 a tonne, it’s a massive increase.

“The intensive pig and poultry sectors have it especially bad at the moment, because feed and power are their biggest costs. They really are in total crisis – there is already empty sheds for chickens, and egg production, and the pig industry is right on the edge of a cliff, it has nowhere else to go.”

Dr Dawson warned that disruption to planting and harvesting in Ukraine could still have a greater detrimental effect on prices, as the country prepares to begin harvesting next month.

“The questions are huge. Just where will the harvest be stored or shifted even if they can harvest and in ten weeks’ time we will have to start drilling next year’s crop – will that be possible?

“Some of the farmland in the east has been mined by the Russians and this will have to be cleared before it is once again usable.  We have already had the recent tragedy of a tractor driver in Ukraine killed by driving over a land mine.”

According to the NFU, farmers in Scotland need direct intervention from both governments to avoid more farmers facing bankruptcy due to the inflationary crisis.

The union is calling on the UK Government to reduce the duty on red diesel to zero, to mitigate the spiralling cost of fuel, and to implement a price cap on wholesale gas supply, “not least to ensure the continuity of domestic fertiliser production”. To remedy the disruption to the supply of seasonal workers, the NFU wants Westminster to “consider all immigration policy options”.

On the other hand, NFU Scotland is demanding the Scottish Government commits greater funding to the Sustainable Agricultural Capital Grant Scheme (SACGS), and to implement “a rapid food production impact assessment of all existing and new legislation and policy”, which would include a “food security impact check”.

NFU Scotland is also calling for a temporary halt to some environmental policies on arable land. The union wants the Scottish Government to temporarily suspend the Ecological Focus Areas component of the 2022 Greening payment requirements, which farmers receive in exchange for improving the environmental impact of farming, in order to bring back additional arable land into productive use.

Furthermore, the union wants to make food impact assessments a requirement of any application for large-scale forestry expansion on productive agricultural land.

“Scottish Government needs to try and avoid the loss of productive land to tree planting,” said Connon, “Scotland only has so much productive land, a lot of it is poor quality land, ‘less favoured’ land, so we need to maintain our productive land to produce food.”

The issue, according to Scottish Conservative MSP Rachael Hamilton, is that government policy making isn’t reactive enough to immediate pressure.

“Farmers plan five years ahead, and we are in very uncertain times because in Scotland, we have no certainty on future farm policy,” said Hamilton, “and it is unlikely farmers will know what is happening until at least 2024.”

The Scottish Government is currently working on the next Agriculture Bill, which is currently timetabled to to be voted into legislation in 2024. The first engagement with farmers is set to take place in August this year, as part of a preliminary consultation.

“It's quite a long time,” said Hamilton, “because farmers work on such long term planning because you can't just suddenly decide that you want to grow wheat, or barley, or rapeseed, or whatever it might be.

“You can't just suddenly decide that you want to go into milking or a supplier herd, and it looks as though by default, we will possibly see a contraction of livestock, particularly suckler cows, because even with the hill farmers, they're looking at selling because they're making good money on their store cattle.

“How will they replace that line of stock? We have integral and long lines of genes, really good quality cattle and sheep in Scotland, and there could be a situation where we might lose some of these lines forever, particularly native breeds, because people can't afford to feed them and they decide to contract their herds.”

On possible Scottish Government intervention, Hamilton says ministers “need to look at a serious land use policy”.

“If the priority is large scale forestry plantation,” said Hamilton, “it means that land could be given over to large scale planting, to commercial organisations that are looking to offset their emissions.

“And that’s dangerous, because it means we are further risking our future food security and agricultural production.

“The government needs to understand that whilst we need to make these biodiversity targets because of declining species numbers, et cetera, we have to also work alongside the fact that we have these unprecedented times that have put further pressures on farmers.”

“We’re a diverse sector, but with 85 per cent being in ‘less favoured’ areas’,” added Connon.

“Even so, those areas produce quality beef and lamb which have a worldwide reputation for quality – the Scottish brand is iconic, really.

“We’re also a very productive country, where farmers are good at producing but also at embracing technology and innovations.

“We’ve also got the Scottish whisky industry, which is one of the UK’s biggest exports by value - a really iconic industry that is supplied by barley grown in Scotland – a high-health sweet potato industry, and quality milk production in southwest Scotland due to the tremendous grass-growing conditions down there.

“There’s a lot to sell from Scotland which we need to preserve.”