Farmers growing combinable crops at a loss – study

Farmers are losing money on their main crops, a study by Cambridge researchers has found.

Farmers are losing money on their main crops, a study by Cambridge researchers has found. - Credit: Archant � 2005

Three major UK crops were grown at a loss in 2013 - and the picture could look even worse this year, researchers predict.

Academics at Cambridge University’s Rural Business Unit found spring barley made the greatest losses at around -£265 a hectare (ha), followed closely by oilseed rape at -£257/ha, then winter wheat at -£115/ha.

The analysis, by Rural Business Research, underlines the importance of other income sources outside of mainstream crop growing to farmers.

Only including non-agricultural activities, including the Single Payment Scheme and agri-environment schemes, brought the average cereal farm business income up to £237/ha. However, this represented a fall of 31% from 2012.

Researchers analysed five year average yields and found the average cost of production for winter wheat was £179/tonne (t), leaving farmers, on average, £17/t out of pocket compared to the average 2013 price.

With 2015 prices looking lower than this, the net margin for combinable crops could be even worse this year.

The unit, which is part of the university’s Department of Land Economy, undertakes significant research for the Department for Environment, Food and Rural Affairs (DEFRA).

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Ben Lang, who works in the unit, said the point of the study was to flesh out some new information it had about three of the most widely grown crops, and the methodology used, across 600 farms in England, was “absolutely new”.

“The figures used are averaged across all farms in the survey, so there is obviously a range in types and levels of production.

“To help understand this, we split the farms into performance quartiles, based on gross margins per hectare of crop produced. Interestingly those farms in the lowest 25% category have the highest coss, both variable and fixed, per tonne of wheat produced.

“The lowest costs actually belong to the middle 50-75% category, which shows the farms receiving the highest gross margins are also likely to be receiving premium prices.”

The new methodology removed some of the estimations that previous net margins have relied on around fixed costws, such as labour and machinery. Instead, researchers used the complete farm account to break down costs on an enterprise level, he explained.

Mr Lang said that it was other forms of payment which helped keep farmers afloat - something the new study has been able to verify using accurate figures.

“I think we have always had a hunch and it does a little bit depend on how you divvy up the figures,” he said.

Researchers hope the latest data will focus futther attention towards costs of production and efficiency.

A full breakdown of the figures will appear in Crop Production, available from the University of Cambridge.