24 August 2001

Core activities on arable units plunge into the red

By Robert Harris

RETURNS from core farming activities on arable farms in the south of England have plunged into the red, according to the latest survey from accountant and business adviser Tenon Rural Services.

The survey, which covered 20,240ha (50,000 acres) of mainly arable and arable and dairy enterprises in the year to June 2001, shows net farm income fell to -£36/ha (-£15/acre) before rent and finance, and slumped to -£150/ha (-£61/acre) when those charges were included in the accounts.

Diversification, including rental and contracting, earned an average of £157/ha (£64/acre), pulling the bottom line back into the black, but only just. Final net farm income was £7/ha (£3/acre) after rent and finance (see table).

"The figures clearly show other incomes are supporting traditional farming," said Tenon agriculture manager Martin Rossiter. "Achiev-ing a return is very difficult for those who have no alternative income and are paying finance and rent."

Arable gross margins in the survey averaged £455/ha (£184/acre) from the 2000 harvest, almost half the 1995 figure. Produce prices fell 10-20% over the past year, and variable costs have changed little at £255/ha (£103/acre).

Overheads have also remained at £551/ha (£223/acre). "Fuel and oil have increased by at least 20% on average. But savings have been made elsewhere, particularly on reinvestment, reducing depreciation charges," said Mr Rossiter.

Separating dairy and arable results shows those with milk income had a better year. Average net farm income before rent and finance was £150/ha (£61/acre) compared with a pure arable result of £103/ha (£42/acre). Extra cost cutting and an improved milk price helped.

Rising arable returns could boost performance this year, he believes. "Our clients are not farming the best cereal soils in the country, but they did better than most when it came to getting crops established last autumn. Given that, and firming prices, we would expect to see a bit of an upturn." &#42

2000 harvest year results

2000 1999

Arable gross margin 455 497

Livestock gross margin 782 959

Farm gross margin 515 570

Other income 157 166

672 736

Overheads

Labour 215 210

Power/mach 198 195

Property/admin 138 145

551 550

Net farm income before rent & finance) 121 186

Rent and finance 114 106

Net farm income 7 80

Figures in £/ha.