16 October 1998

Non-farm income vital

OVER half of farmer income now comes from non-farm sources, according to results from accountants Deloitte and Touche.

The figures, taken from over 200 sets of accounts spread across 108,000ha (267,000 acres) of mostly cereal land, show non-farm income climbed 10% to £141/ha (£57/acre) last season, as farmers turned to contracting, renting-out buildings and consultancy to help make ends meet.

Over the same period, (to June 30, 1998), actual income from farming slumped 56% to just £123/ha (£50/acre).

The figures also reveal that the bottom performing 25% lost £117/ha (£47/acre), tenant farmers on average made zero return on their capital and, without the help of area aid, over 80% of farmers would have been in the red.

According to the firms Simon Bennett, these figures are actually worse than anticipated. "This time last year we were predicting a 49% drop. The reason it was worse was that, after Christmas, cereal prices fell dramatically and unexpectedly."

This price fall accounted for most of the £62,000 loss of revenue suffered by a 400ha (1000 acre) grower from the 1997 harvest, though a 9% yield drop and a small cut in area aids due to green £ revaluations also played a part. Grain quality was also disappointing, added accountant Richard Crane, which led to higher cleaning costs.

&#8226 Dairy farmers suffered a 45% fall in net farm income last milk year, mainly the result of a 3p/litre drop in price. An average of 23p/litre compared with production costs of 18p/litre, leaving just 5p/litre to cover rent, finance, quota costs and private drawings.

And, while the top performing 25% managed to keep costs under 14p/litre, prospects for the current season are bleak, prices down another 3p/litre. &#42