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UK: DEFRA figures reveal rises and falls in farm business income in 2013/14

06:00 02 November 2014

Combine going over the side of the hill  in a  a dust cloud.

Combine going over the side of the hill in a a dust cloud.

Latest statistics on farm business income have shown a dramatic drop in cereal farm income while dairy, pig and poultry producers have fared better.

The data from the Department for the Environment, Food and Rural Affairs (DEFRA), which focuses in income focus from March 2013 to February 2014, reveals volatility across the agricultural sectors, the National Farmers’ Union (NFU) said this week.

The NFU stressed that the snapshot did not reflect the current market and changes in recent months, including the dramatic downturn in the fortunes of dairy farmers.

Average Farm Business Income fell on cereals, general cropping, mixed and grazing livestock farms in 2013/14 but increased on dairy, specialist pig and specialist poultry farms, according to DEFRA.

On cereal farms, average Farm Business Income fell by 27% in 2013/14 to £49,500, primarily due to a 6% fall in agricultural output and a similar increase in costs.

Meanwhile, average incomes on general cropping farms fell by almost a quarter to £67,600. Agricultural output fell by 6% driven by the reduced output of winter crops combined with a fall in output from potatoes and field vegetables. Sugar beet output increased due to higher yields and prices. But despite higher yields for potato crops, a substantial fall in prices led to a lower output for the 2013 crop.

Average incomes fell on grazing livestock farms in both lowland and less favoured areas by 6% and 22% respectively to approximately £15,000. The

falls reflect the continuing impact of the wet weather in autumn 2012 followed by the prolonged winter in early 2013 which delayed grass growth and turnout.

But on dairy farms, average Farm Business Income increased by more than two thirds to £87,800, returning to 2011/12 levels. Agricultural output was around 20% higher driven by both increased milk prices and production - 8% higher than in 2012/13.

Average incomes on mixed farms fell by just over 20% between 2012/13 and 2013/14 to around £29,500. Overall, agricultural output increased by 5% on

these farms. Output from pig and broiler enterprises increased substantially but this was partially offset by lower output from the cropping enterprises.

The DEFRA report authors warned that results for pig and poultry farms should be treated with caution because of the small sample, but they found that on specialist pig farms, average farm business income increased by more than 50% in 2013/14 to £65,200 per farm, while specialist poultry farms average incomes increased by almost 75% compared to 2012/13.

The NFU pointed to the “significant swings” in farm profitability across different sectors.

NFU deputy president Minette Batters said: “Commodity markets and prices have seen considerable fluctuations since the last dataset released from February, on top of high levels of volatility in the UK and global markets. Wheat prices which have fallen by 30% per since this time last year. Global dairy commodities which are down 45% since their peak in February and UK beef prices fell to three year lows earlier this summer.

“The dynamics of agricultural commodity markets have shifted and this really is a new trading environment for all in the food chain. It’s essential that we have a long term approach in our farm businesses given the long production cycles involved, and we need to see a similar injection of longer term thinking from our partners in the supply chain.

“While the EU’s Common Agricultural Policy helps farming businesses manage volatility, we need to recognise this is changing and levels of support diminishing. This means the Government has a greater role to play.

“My belief is that extending tax averaging and fiscal measures like capital and infrastructure allowances can all help to lessen the turbulence in farm businesses and ensure consistent investment patterns. The long term prospects for agri-food are positive, but we can’t plan for tomorrow if we can’t survive today’s challenging conditions.”

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