Farmers suffered sharp fall in income in 2018 as weather volatility took its toll, DEFRA study finds
PUBLISHED: 18:20 16 May 2019
Stark figures showing a sharp drop in UK farm income serve as a stark reminder that farming is a 'risky business', an Essex-based farmers' leader says.
Guy Smith, who farms at St Osyth, near Clacton, and is deputy president of the National Farmers' Union (NFU), said government figures showing total farming profitability fell by 17% last year illustrated the kind of challenges farmers were up against, from price volatility to unpredictable weather.
"For most East Anglian farmers, 2018 will be remembered as a very difficult year partly redeemed by improved prices and better autumn weather," he said.
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"It was a year of empty reservoirs, three quarter full grain stores and parched summer grass. It should also serve as a reminder to policy makers that food supplies should never be taken for granted and that both market and weather volatility can make food production a risky business."
The government's first estimate of Total Income from Farming (TIFF) for the UK for 2018 - a year of UK weather extremes - including two months of sweltering heat and no rain - showed it fell from £5.6bn to £4.7bn. Agriculture contributed £9.6bn, or 0.51%, to the national economy (Gross Value Added), a decrease of £626m (6%) on the year as farmers were confronted with weather woes and higher costs.
Meanwhile, the sector provided 1.17% of UK jobs.
"The cold, wet spring followed by the dry, hot summer contributed to lower yields of key crops. However, better prices helped offset production falls," according to the Department for Environment, Food and Rural Affairs (DEFRA) report.
"The value of total livestock output rose by 3% to £14.8bn. Prices were generally higher, but the challenging weather conditions affected volumes.
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"The late cold spring disrupted lambing and the hot, dry summer led to poor grass growth and difficulties feeding livestock.The value of intermediate consumption is estimated to have risen by 8% to £17,065m. In general all costs were higher, particularly fuel, feed and fertiliser costs."
Total Income from Farming per annual work unit (AWU) of entrepreneurial labour (farmers and other unpaid labour) fell by 19% in real terms to £23,957, the report found.
Energy costs rose by £113m to £1,346m, as global oil prices continued to rise in 2018, pushing up energy costs. However, weather conditions and efficiency savings helped reduce usage on farm, the study found. Fertiliser costs rose by £116m to £1.3bn, a consequence of the higher oil price as usage was down. Other goods and service costs rose by £358m to £3.6bn reflecting the increased demand for straw by the livestock industry, while the employee wage bill was £2.7bn, a rise of £112m.
On the plus side, the value of farm subsidy the Basic Payment Scheme was just slightly up on 2017 at £2.75bn due to the exchange rate.
NFU president Minette Batters said the figures were "a stark reminder" of the impact last year's weather on British farming, showing just how exposed agriculture is to increasingly volatile weather.
"From the Beast from the East to the summer drought, farmers have seen reduced crop yields, tightening feed availability and increased input costs as a result. It is yet another example of how farm businesses are constantly dealing with volatility."
It was crucial that the Agriculture Bill is strengthened as it goes through parliament to include "robust measures that can give farmers the tools to deal with this", she said.
"Food and farming contributes £122bn to the economy, and this figure has risen steadily over the years. It clearly demonstrates the strategic importance of farm businesses to the country and the farmers and growers that provide food for the nation, all while caring for our countryside. This must be recognised by the government."