DEFRA sees massive boost to farm incomes

Farm incomes in the UK have climbed by a spectacular 25% in real terms this year, as falling input costs have more than compensated for falling output, according to first estimates from DEFRA.

The data reveal that Total Income From Farming – the government’s chosen way of calculating business profits plus income to farmers – has exceeded £4bn in 2009, the highest it’s been for over a decade.

And measured against each full-time worker employed in agriculture, income is believed to have climbed to about £23,000, an increase of 26% on 2008.

“In 2009, the value of agricultural output at current prices is estimated to have declined by 2.8%, mainly due to a fall in crop production,” said a DEFRA statement. “But agricultural input costs are estimated to have fallen by 4.9% primarily due to falls in fuel and oils, fertilisers, seeds and animal feeds.”

But perhaps the most significant change has been the increase in the 2009 single farm payment and agri-environment scheme payments, which have gone up by 17%, thanks mainly to a 15% increase in the value of the euro against sterling.

Last year these payments came to £3.2bn. This year they are expected to be valued at nearer £3.7bn.

Even though this year’s SFPs are not likely to be received by most English farmers until 2010, “payments to farmers are recorded in the year to which they become entitled, rather than when payment is received,” explained the statement

In more detail, DEFRA puts the decline in the value of crop production in 2009 at -9%, due mainly to the significantly lower prices paid for cereals, oilseeds and potatoes. These were partly offset by increases in the value of sugar beet and forage crops, reflecting higher yields.

DEFRA’s estimates also point to increased values for animal production in 2009, with beef cattle pigs and sheep all worth more. These gains more than offset the 11% decline in the value of milk production this year.

On the inputs side, the cost of fuel is marked down by 21%, fertiliser by 16%, seeds by 14% and animal feed by 13%.

How reliable are DEFRA’s estimates? See Phil Clarke’s Business Blog