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The Co-op's Demise Has Serious Implications for British Farms

03/03/2014 11:38 GMT | Updated 01/05/2014 10:59 BST

The Co-op is in trouble again. Just months after its financial arm all but collapsed, the company has been forced to admit it's completely haemorrhaging cash. And facing some £2bn in losses, it only makes sense Co-op bosses have decided it's time to go into shutdown mode.

The first cost-cutting victim will be its sizeable farming operation - the biggest of any British company. Fifteen major farms and their satellite production complexes are set to go to auction, along with a handful packing facilities. Yet while it may be easy to peg the Co-op's farming conundrum down to little more than its characteristically poor management style, this embarrassingly large sell-off has far more sinister implications for the British farming industry as a whole.

Over the last decade, a myth has been allowed to persist that most farmers are stinkingly rich, thanks to overly-generous EU subsidies and a firm monetary grip on our biological sustenance. But the sad truth is that farming is hard work that pays insultingly little.

By and large, British farmers are perpetually surrounded by a tidal wave of industrial intensification - which is to say, they're constantly being pestered to increase productivity by growing in size. That's because the amount of money British farms are making drops by around 15% every year. In fact, the majority of smaller farmers now earn a meagre income that falls well below minimum wage - which is why it's hardly surprising over 5,000 farmers abandoned the profession last year alone.

So, with little else to stimulate agricultural growth, the industry now relies almost exclusively upon government subsidies in order to keep our tables bountiful. Yet the only sizeable subsidies on offer are reserved solely for the nation's super-farms (such as that of the Co-op) - meaning the majority of everyday farms receive as little as £5,000 per year. With that in mind, many British farmers are forced to make a serious choice: grow or die.

The catch-22 here is that the more farms produce, the cheaper food prices become. In turn, the market gets flooded with more food than we know what to do with - forcing wholesale prices down even further still. Not only do those low prices decimate a farm's bottom line, but they also make it impossible to pay back the big bucks owners have had to borrow just to increase production in the first place. Life for the independent farmer is a virtual lose-lose scenario.

That's why the Co-op's demise is particularly worrying. After all, its expansive farming operations had been one of the country's top agricultural success stories. The Co-op's highly-integrated network not only meant an ethically-sound chain of accountability from seedling to store shelf, but also illustrated the viable potential of domestic agricultural conglomeration. The collapse of that model leaves us with yet another conundrum: if large farms continue to prove just as volatile as small ones, where the hell is the industry headed?

Because we rely upon it so heavily, it's fair to say agriculture is somewhat buoyant - and even the Co-op's major collapse will prove little more than an uncomfortably large ripple in the already turbulent history of British farming. But it does present politicians with a new issue to address. Poorly allocated government subsidies and outlandish production expectations are leaving us with nothing but a flooded and wasteful market that does little to attract fresh blood - and if we don't get a grip on this boom and bust ideology soon, who knows what fate lies in store for country's disappearing farming community.