24 March 2000

Dairy incomes slashed again in last 12 months

By Robert Harris

BIG regional variations in earnings and the severe pressure experienced by all farming sectors in the year to February 2000 are highlighted in recently released provisional MAFF figures.

The publication, Farm Incomes in the UK, shows that earnings on UK dairy farms fell by 20% in the past 12 months, as substantial falls in farm-gate milk prices outweighed savings made on feed. This marks the fourth year in a row that milk producers incomes have fallen.

Ministry indices suggest English dairymen made a net farm income – the return to farmers and their spouses after family labour – of about £10,200 on average in the 1999/00 year. That is about £1500 less than the previous 12 months.

But Welsh dairy farmers saw incomes tumble almost 40% to just £8000 and their Scottish counterparts struggled to make about half that sum. Dairymen in Northern Ireland suffered a 36% drop to average just £3500.

That highlights the dependency of Welsh producers on Milk Marque, suspects Teresa Dent of Strutt and Parkers Salisbury Office. "It has left them particularly vulnerable on price.

"They also have a smaller average herd size – 62 cows compared with 80 in England. It is very difficult for smaller herds to generate scope to reduce costs, and to obtain general economies of scale."

All livestock farmers were affected by the strong £ sucking in imports. However, those in the lowlands increased net earnings by almost £2000, albeit from very low levels.

This reflects lower input costs, though the figure is also helped by less account being taken of valuation changes. English producers made about £2500; those in Wales still recorded a loss of about £800.

But farmers in the hills saw net farm incomes fall another 25% in 1999/00. English and Welsh producers made less than £4000, those in Scotland just above £3000 on average.

"Lowland producers sold heavier lambs and achieved a better price," says Lesley Green of the Meat and Livestock Commission. "Lambs started off well, then values fell away sharply in June, and only picked up gain towards the end of the year."

Weak world markets continued to affect cereal prices, though incomes climbed on average by 30%, again due to less account being taken of valuation changes and cheaper inputs. English growers should make about £9900 on average. However, farmers with roots, who come under the general cropping category, saw net earnings halve, reflecting the crash in this seasons potato values.

That means the average English producer made about £16,600. If, as seems likely, the trend is repeated in Scotland (no figures are included in the report), average net farm income will fall to about £9200. &#42