14 September 2001

Survey consigns the image of barley baron to history

By Robert Harris

MANY East Anglian farmers are working for nothing and are living off borrowings, according to a survey carried out by chartered accountant Larking Gowen.

But most intend to carry on farming, although significant restructuring is taking place.

The gloomy news consigns the image of the barley baron to the bin. "There is no doubt that things are very hard and farmers are facing the toughest conditions since the 1930s," says Larking Gowen partner David Missen.

On average, farmers made a profit of just £63/ha (£25.50/acre) in the 2000 harvest year, according to the survey, which covered 87 mainly arable farms with about 20,240ha (50,000 acres).

That income is less than half the 1999 figure and about 25% of the level achieved in 1996, reflecting the continued weakness of the k on commodity prices and area aid payments.

Family farms in the 162-324ha (400-800 acre) bracket, almost all of which employ some labour, were hardest hit, losing about £5.70/ha (£2.30/acre).

Smaller farms, mainly using family labour, did better, making at least £150/ha (£61/acre), similar to 1999. And the largest farms achieved some economies of scale, making slightly above the survey average.

A typical farm of 214ha (530 acres) run by two partners on mainly arable land with 32ha (80 acres) of sugar beet and a small pig unit, made a profit of just £11,971 last year, compared with £27,202 in 1999, says Mr Missen. That is just £115/week for each partner.

Overheads, particularly fuel and finance, climbed sharply in farms taking part in the survey. Overall borrowings rose by about one-third.

Low yields on some farms this harvest, following one of the wettest winters on record and higher costs associated with it, means average profits in the current harvest year are unlikely to improve, although cereal prices are better, says Mr Missen.

Nevertheless, farmers are staying put. "There has not been the flight from the land that many have predicted."

However, more are reorganising their business, using contractors to carry out arable operations. Others are diversifying, but most schemes are related to the core farming activity, including specialised crop lets, contract work and holiday lettings. Part-time work away from the farm is also increasing.

More radical diversification such as farm shops and office lettings is unlikely to help much. It is capital intensive, and few farmers can afford it after five years of falling profits, says Mr Missen. Location is also a problem. &#42

Farm survey results*

2000 1999

Arable gross margin 269.8 312.1

Livestock gross margin 33.3 19.5

Other income 86.3 68.4

Total 389.4 400.0

Overheads

Labour 97.9 92.0

Machinery 134.4 121.4

Rent 33.1 39.7

Finance costs 22.0 15.7

Property 17.5 15.7

Other 59.0 57.4

Total 363.9 341.9

Net profit 25.5 58.1

* Figs in £/acre