Some Thoughts About Harvest

I have just written this (below) that should appear shortly as the 'Thought for the Week' on the Diocese of Worcester website:

We’ve all complained about the weather this summer.  Days out spoilt by rain, holidays perhaps not what we’d hoped, the garden – well!  It’s usually been mow the grass on the one bright day between the rain.

All this has an effect on our farmers too.  In modern farming most crops are normally safely gathered in by now (traditional harvest festivals in October are rather late in the year).  But much of the harvest is about a fortnight late this year because of the wet weather and the lack of warmth and sun.  The weather is still more important than just the effect it has on our holidays.

Hay has grown well where it’s been dry enough to cut (important for animal feed in the winter) but many cereals (wheat, barley, maize) and other crops are badly affected not just by the difficulty of harvesting.  If they are wet they will add to the cost of production by having to be dried and in many cases the quality is not as good as hoped.  Either the grain has not grown as well because of the wet and cooler weather or it may be diseased because of the damp.

This matters to the farmer, because even if the price goes up because of shortage (also affected by the droughts in the US and elsewhere) he may get less for his overall crop if less is harvested and if the quality is poorer he may not be able to sell it at a prime price.  All this means that not just bread, but many other food-stuffs, will be more expensive in the shops.  Whilst this may be an extra expense for us it will be more serious for many poorer people here in the UK but especially around the world.  Higher food prices may mean some people will not have enough to eat and even famine.

These higher prices also affect the cost of animal feed that is necessary to supplement the grass in the fields.  Higher ‘input prices’ might mean farmers costs go up and margins go down.  We have all become aware of this with the direct action taken by farmers over milk prices.  The processors and supermarkets wanted to cut prices they pay for milk from the farmer but at the same time the farmer’s costs (feed, fertiliser, diesel, fuel, etc.) have been going up.  Livestock (and therefore meat) prices have generally risen because as more people in places like China become better off they want to eat meat , raising demand and prices (much New Zealand lamb now goes to China and not the UK), so livestock farmers have been doing better after many difficult years.  However, as costs rise there is less profit and in markets like milk where prices are poor farmers face going out of business or selling herds and scrapping expensive dairy equipment to grow a different crop or animal.

Many of us take the food in the supermarket or on our plate for granted.  The size of supermarkets and the long ‘distance’ between farm and shopping trolley makes the issues to do with food remote.  We are also extremely fortunate because for the most part our harvests and the production of other food are sufficiently reliable for us to barely notice changes from year to year.  Our harvest festivals have become a regular celebration of a bounty that is taken for granted, enabling us to be concerned for the poor and starving in remote places.  Of course, we should remain concerned for the hungry of the world, not least because poor harvest will affect them more than us, but our concern needs to be nearer at home too.  We are all inter-connected with each other, and however urban we may be, with the natural world.  It seems likely that at least some of the weather this year that has affected harvests is due to climate change so all of us who cause greenhouse gasses have a responsibility.

We reflect on our responsibility to care for the creation entrusted to us by God, on issues of justice and of economic power, care for our neighbour and the poor, and our inter-connectedness one with each other and with the creation.

Phillip Jones, Mission Development Officer - Economy

Rural Economic Growth

In my previous post I mentioned that the conference I attended was about rural economic growth.  Having tried to make some sense of the rural economy I will try to pick out the conclusions about where economic growth in rural areas might come from, the barriers and what might help.

The most important point is that rural firms are as likely to want to grow as their urban counterparts, though for various reasons fewer achieve growth.  However, businesses that don’t wish to grow must still innovate: they are a vital part of the total economy and standing still (by implication) can lead to decline.  Because they are a mature industry, land based firms (i.e. agriculture, etc.) could be a stronger force in local development, but not the primary engine for growth – innovation that causes a step-change in output, the primary source of significant growth, will be elsewhere.  This means that nurturing growth within the wider rural economy is key.

Challenges to growth will vary with sector and firm size, so although agriculture as a mature industry has low growth ambitions in the terms of DEFRA’s Rural Economic Growth Review, rural manufacturing is seen as having high growth ambitions, though challenged by inadequate sites and premises.  Although services firms were not specifically mentioned they make up at least a quarter of the rural economy (the push for super-fast broadband will be important to many of them) and will be important for growth.  Small and medium-sized and larger firms face difficulties in recruiting skilled staff and finding space and premises to expand.

There are a number of barriers to growth more generally that need to be overcome including:

·         Improving access to finance

·         Local planning that enables firms and communities to grow

·         Support with recruitment difficulties and skills gaps

·         Improving access to services, markets and networks

·         Better communications infrastructure (a lot of emphasis is being put on superfast broadband in rural areas).

As I mentioned in my previous blog, there are a higher proportion of sole-traders and partnerships and other small businesses in rural areas (referred to in the jargon as micro-businesses) and it is felt these often fall below the radar.  They may find it difficult to grow because of:

·         Limited in-house resources

·         Diverse goals and motivations

·         They may be family-based

·         Many are reluctant or unable to take on staff

·         Many are home-based

It was proposed this suggests the need to review of the needs, opportunities and support for rural micro-enterprises.

DEFRA’s response to the Growth Review, announced in the 2012 Budget, attempted to address some of these difficulties particularly around broadband and access to premises. It also provided a small amount of money for some pilot schemes (which had to be bid for).  These will have a network of physical rural enterprise hubs and act as focal points for other activity including business support e.g. Knowledge transfer, provide mentoring, training and skills and will test different mechanisms and models that can be used by local authorities & LEPs to stimulate sustainable rural economic growth.  The nearest one to Worcestershire is through the Coventry and Warwickshire Local enterprise Partnership and based on a rural technology and innovation centre at Stoneleigh.

 
Other government funding packages will support  rural renewable energy projects, farm, forestry (and horticulture improvement; rural tourism to encourage more visitors and longer stays; expanding the food and drink sector; and the new National Planning Policy Framework that includes a rural exceptions policy - which will encourage the delivery of affordable housing in rural areas, and the broadening of the context of the rural economy with references to the diversification of all rural business (not just agricultural) and a reference to retaining and developing rural services that will encourage and enable rural economic development.

The amounts of money involved in many of these government programmes seem quite small but one of the other features of the rural economy is a mentality of getting on and doing things.  if this can be linked to the government and other encouragemnt that is available this will encourage greater innovation and more opportunities to be taken. 

What do we Mean by Rural?

I went to a conference about rural economic growth some time ago and, whilst I will look at growth later (DEFRA is promoting a Rural Economy Growth Review), this is an attempt to understand the rural economy and its shape based on some of the statistics used at the conference.

There seem to be quite a number of competing voices and some seeming contradictions, but one of the key issues is to define what we are looking at and what we mean by rural.  When we measure the rural economy (or indeed any economy) we need to differentiate between number of enterprises in any sector, number of employees, and Gross value Added (GVA) as these will vary depending on the nature and efficiency of sector of the economy that we are looking at.

The DEFRA Rural Economy Growth Review showed that businesses in rural England make a substantial contribution to the national economy, with a 28.5% share of the enterprises generating around 22% of national employment and 19% of Gross Value Added (GVA), worth around £200bn. At first sight it also appears that the economic structure in rural areas is broadly similar to that in urban areas, though with a higher proportion of sole traders and partnerships, but this takes us to the question of how we define rural.

It seems an official definition is ‘settlements with a population under 10,000 including small market towns, villages, hamlets and isolated dwellings’.  Within this there are three groupings: R80 – local authority areas where at least 80% live in rural settlements, R50 – those where from 50% up to 80% do so and Significantly Rural – those where from 26% up to 50% do so.  There are 55 Rural 80 local authority areas, 48 Rural 50 authority areas and 55 Significantly Rural authority areas.

This can be divided up even further when it comes to analysing the breakdown of industries in different types of area.  Unfortunately it is not possible to cut and paste graphs into blogger/BlogSpot (or at least I haven’t found a way!) but it appears the information at the conference came from a DEFRA publication ‘Statistical Digest of Rural England’ and the graph I am referring to is on page 108.  This shows the percentage of enterprises by industry from less sparse urban through less sparse and sparse rural towns, then villages through to hamlets and isolated dwellings.

The graph shows that in sparse hamlets, more than half the enterprises are in agriculture, forestry and fishing.  These industries also feature highly in less sparse hamlets (25%) and sparse villages (33%) as well as less sparse villages (16%), despite the fact that they only account for 5% of businesses overall in England.  In the remaining four classifications they account for less that 10% of enterprises.  As the number of agricultural enterprises increases the largest group of other enterprises declines in proportion: this is wholesale & retail trade, repair of motor vehicles, which has the greatest number of businesses in England overall and around 25% of businesses in Sparse Urban and Sparse Rural Town and Fringe areas, but in the area of greatest sparsity (where agriculture is is over 50%) this has fallen to 8%.  Other types of enterprises are also compressed as agriculture grows but not so significantly.

What this is saying to me is that it really depends on what you call rural.  If rural means hamlets and isolated houses then farming is very significant in terms of the number of businesses – but even then only accounts for half of them.  If rural includes towns up to 10,000 in population (e.g. in Worcestershire what were classified as market towns under an earlier government initiative such as Pershore and Bewdley, though Evesham is too big) then the situation changes radically.  This was where the representative of the conference from the NFU got upset when a speaker using the definition of population up to 10,000 at the beginning of this blog said that agriculture only accounts for 2% of GVA even in predominently rural areas (in significantly rural areas it is only 1% of GVA).  Of course, as the man from the NFU pointed out when you include in transport and processing as a result of agriculture the proportion will be higher (6.8% of GVA for the Agri-Food sector in 2010 according to a RuSource briefing (no. 1552)) but it really does highlight the question of what you mean by rural.  Here is part of the table from p. 74 of the Defra report to illustrate the point:

Share of predominantly rural areas GVA
Public admin, health, education	23%
Distrib, transport, food, accomm	20%
Production	17%
Business services	10%
Construction	8%
Real estate	8%
Financial and insurance services	5%
Information, communications	4%
Other services	4%
Agriculture, forestry	2%
Total / all sectors	100%

Having mentioned employment earlier, just a few quick points:  As there are few large firms in rural areas this means that many more people will work in small firms or indeed as sole traders and partnerships.  One of the things that came out of the discussion of employment was the resilience of rural people who will often have a variety of small jobs or work for themselves in order to make sometimes a very modest living.  Another feature of rural areas, and this is so for Worcestershire, is the number of people who commute out to higher paid jobs in urban areas.  This means that average income based on residence is higher than average income based on place of employment.

All this shows that the rural economy is complex and multi-layered and that different sectors, particularly agriculture and related industries, will vary in importance according to the type of rural area within that broader definition.  One aspect that is not taken into account in the figures is the importance of agriculture to the landscape.  Even if the number of people employed is now low and the economic numbers perhaps surprisingly small overall, we still rely on farming to shape our landscape and to care for much of the countryside.  The effect of what many of us take for granted is hard to quantify, though there is a cost which comes out of farmers' incomes and is recognised to some extent in the support received from the EU.  Our rural areas are much more than we may at first imagine them to be. 

Unemployment in July 2012 - As Good as it Looks?

Unemployment increased in Worcestershire last month (by 87 to 10,585), which is in line with the trend in the West Midlands region though against the slight fall nationally.

There are a number of ways of expressing unemployment so one has to be very careful to compare like with like.  The headline figures normally quoted in the media are based on ILO (International Labour Organisation) methodology which is a large-scale survey of those available and actively looking for work.  This differs from the other main count, which is Job Seekers Allowance (JSA) claimants (a narrower group, as there will be people who are actively looking for work but who are, for a variety of reasons, ineligible for JSA).  At one time, nationally, these two figures were very similar but over the past couple of decades they have diverged to be around one million apart (ILO 2.56m, claimants 1.59m).

More details on the national figures can be found here.  In the West Midlands region unemployment rose by 7,000 to 235,000 on the ILO count and stands at 8.8%.  This still puts the region above the national level (8.0%) but it is now the fourth worst region in the country, having once been the highest.  A breakdown of regional figures to constituency level can be found here, including a more detailed explanation of the methodology of compiling the unemployment figures.  Despite the West Midlands not being at the top of the table for unemployment as a region it is striking that three of the five worst constituencies are in inner-city Birmingham.  What is also striking is the disparity with other parts of the region, including Worcestershire, where the figures are between 3% and 4%.  What is even more striking is that the figure for Stratford (upon Avon) is 1.3% and that there is a whole swathe of the country to the south east of there that is below 2%.

Of course, just as in Worcestershire, there will be pockets (larger or smaller) where unemployment is higher.  The question is how significant this is against a background where the issue is generally perceived not to be as pressing as it will be in poorer areas.  For it is clear that apart from when large-scale redundancies are made that unemployment affects poorer parts of areas more and that these will often be places where manufacturing or other older industries were prominent.

Turning to Worcestershire, that means our three more urban districts have higher unemployment – Redditch 4.6%, Worcester 4.8%, Wyre Forest 4.6% (Kidderminster 5.3%) – and they were places where manufacturing was, or still is, significant. That is not to deny that many other people suffer unemployment and that there are parts of our rural districts where it is a significant concern.  Figures for Worcestershire can be found in the monthly County Economic Summary prepared by the County Council’s Research and Intelligence section.  Their figures are JSA claimants, and for some reason they use to 2001 census data for calculating percentages, so these are not strictly comparable with ONS data for the region and the rest of the country) that are based on a more recent (2010) estimate of working-age population.

There may be some slight encouragement in the small fall in the long-term unemployed figures, i.e. over six and 12 months (see Figure 5 on p.18 of the County Economic Summary) and similarly for long-term youth unemployment (see pages 25 and 26).  It is difficult to tell if the figures for young people are related to the cycle of the academic year or whether other factors are also important (Figure 7).

There has also been much debate about how unemployment is falling when GDP is falling and we are in the third quarter of a recession.  This was reflected in the differing views of the man from HSBC and deputy regional agent of the Bank of England in my posts of 23 June and 10 July.  Stephanie Flanders (the BBC’s Economics Editor) in her blog weighs the various possibilities.  Unless some of the figures are wrong (and in some cases we are arguing about fractions of a percentage point) it seems there are a lot of people under-employed, either working part-time when they can’t get a full-time job, or who are self-employed doing sessional work but not actually working that much, or that there is quite a lot of labour hoarding going on.  This last possibility is supported by the Chartered Institute of Personnel andDevelopment’s Labour Market Outlook survey, which suggests that many employers are holding onto skilled staff but that if there is no economic improvement soon they will be forced to make redundancies.

On one level, we in Worcestershire might be thankful that we escape the worst of unemployment compared with some other parts of the country.  But neither should we be complacent for there are parts of our county that are more badly affected and questions need to be asked about what is being done about it (including by the churches).  The hugely uncertain economic outlook and a seeming inability to make much impression continues to raise the question about whether the debate and policy options are too much framed by more of the same.   Almost all of our political parties offer only variations of the same orthodoxy.  So far those asking questions about the wider purpose and future of our economic system are on the margins.  Perhaps when there is a crisis but it is not yet cataclysmic there is a tendency to turn inward rather than seeking the new thinking and step-change that may be necessary.  I will express my concern again that the church maybe too much bound up with its own internal crisis and therefore looking inward to contribute to this debate.

Young Bear the Brunt of the Down-turn

There seems to be more evidence that the distribution of work between the young and the rest of the population continues to get more unequal.  I wrote about this in an article called 'Sharing the Work Around' on 14 June, observing how difficult it seemed for many young people to break into decent employment, or any employment at all, and again on 20 July highlighting a report in 'Lessons from Northern Europe for the UK on Youth Unemployment'.  This looked at reasons why Germany and Scandinavian countries have lower levels of youth unemployment as a result of more commitment and better pathways from education to work.

Now I have come across two further (much shorter) reports, like the last one on the Chartered Institute of Personnel and Development website, that shows that more than a fifth of recent graduates are working part-time, working largely in sales and customer services jobs - probably not what they studied for.  It also says that overall only 63% have actually got a job.  Another article reports that staff aged 16-29 faced a 10 per cent wage fall from 2003 to 2011 and that their wages fell significantly in real terms compared to pay for the rest of the workforce, prompting fears for the health of the economy.  Gavin Kelly of the Resolution Foundation that carried out the research said, “Falling demand in key sectors may well have put downward pressure on young people’s wages as well as on employment levels. On top of this, it’s also likely to have eroded opportunities for career progression – with fewer ladders and more snakes – making it harder to get a promotion or an upward move to a new job (which may well affect earnings mobility over the longer term).”

The Church make a substantial investment in young people through the education system; this suggests it needs to continue that concern when they leave education and encounter an increasingly harsh world.