13 October 2000

Arable farmers in south battling to even cover costs

By Robert Harris

ARABLE farmers in the south of England are struggling to break even, according to latest figures from accountant BKL Weeks Green.

A survey of clients farming 20,240ha (50,000 acres) in Hants and the surrounding counties to the year ending June 2000 showed they made an average net farm income of £183/ha (£74/acre).

The figure includes subsidy payments of about £250/ha (£100/acre), but excludes rent, finance and drawings. Rents in the area typically range from £60-70/acre, so after taking this and finance charges into account many tenants made a loss before deducting earnings, says agricultural manager Martin Rossiter.

Many farms in the survey relied on other income to boost profits. On average, earnings from sources such as rents, contracting, grazing and letting cottages totalled £165/ha (£67/acre).

Agricultural partner Chris Monnington warns that farmers will have to increase that non-farming income and challenge fixed costs.

Overheads averaged £654/ha (£265/acre) and, with fuel and contract charges rising, will be difficult to cut.

"With contracting agreements offering £70-80/acre to the landowner and possibly more to the contractor, this could be an option many will consider in light of the above results."

But farmers must reduce costs with care, warns Richard Sanders of midlands-based chartered surveyor Fisher German.

"They must ensure their yields are maximised to protect profits, and to protect contracted acres being lost to operators who can sustain higher yields."

Top operators can grow an 8.7t/ha (3.5t/acre) wheat crop for about £59/t, leaving the IACS payment to cover rent, finance and drawings, he says. If wheat yields fall to 7.4t/ha (3t/acre), then costs increase by about £10/t. &#42