30 June 1995

Support is lions share of eastern farm income

By Tim Relf

FARMERS are becoming increasingly dependent on subsidies, according to the annual report on farming in the eastern counties*, published this week.

Conducted by the University of Cambridge, and relating to the 1993 harvest year, it puts average support in the area at £155/ha (£63/acre), accounting for over two-thirds of net farm income.

Within the "mainly-cereal" section of the survey, the £185/ha (£75/acre) received in compensation on an "average" farm actually exceeded net farm income by £6/ha (£2.40/acre).

And for smaller farms within this group (less than 80ha or 200 acres), the situation is even more acute. Although net farm income at £172/ha (£70/acre) marginally exceeds aid payments, the total return to management and investment is particularly low at £13,400/farm.

This "small farm problem" becomes more apparent when allowance is made for unpaid labour. Income then falls below £5000 – less than a 4.5% return on tenant-type capital.

On mixed units, compensation contributed 60% of income; and even in the Fens, where cereals "could be said to be a break crop", half of the income came from this source.

Within the Fens, the net worth of tenanted farms (excluding the value of land and buildings) is estimated at just £23,000/holding – "little reward for a lifetime of toiling with sugar beet and potatoes", according to report author Prof Michael Murphy.

Elsewhere in the eastern counties the situation is less acute, although 8% of tenanted or mixed tenure holdings sampled had "very low or negative net worth".

Support payments have narrowed the range of gross margins between farms and reduced risk, says the study. But it points out that the results from the 1993/94 financial year are "unlikely to be sustainable".

Were it not for the devaluation of the green £, real output would have been even lower. And although a 2.9% decline in variable costs was seen on the previous year, fixed costs rose by 0.3%.

"The quest for making yet more economies to prepare for leaner times should not be slackened," concludes the report.

*Report on Farming in the Eastern Counties of England is available from Agricultural Economics Unit, Department of Land Economy, University of Cambridge, 19 Silver St, Cambridge CB3 9EP. Price £14.50, plus £1.50 p & p. &#42