Average arable performance will see losses from harvest 2024

Many average-performing arable farms will make a loss from the 2024 harvest, with a predicted net margin of £80/ha before rent and finance costs.

The figures come from Strutt & Parker and are based on a 131ha in-hand holding with an expected winter wheat yield of 7.5t/ha in 2024.  

The £80/ha margin is a drop of £119/ha compared with 2023 performance and assumes that growers have managed to drill spring crops on unplanted winter crop areas.

This gives a whole farm net margin of £10,480 to cover rent, finance, drawings and reinvestment.

Things look slightly better for harvest 2025, says the firm, assuming rotations and yields return to more normal levels.

However, the predicted average pre- rent and finance margin for that year is just about half the levels seen in 2021 and 2022.

See also: Farm business challenges highlighted by free advice scheme

Higher performers are predicted a net margin of £271/ha on a wheat yield of 8t/ha in 2024, about a third lower than in 2023.

Marked difference in fixed costs

For harvest 2025, the net margin for these farms rises to £449/ha, more than double that of the average farm. Lower fixed costs account for a large proportion of the difference between the two groups.  

The firm’s head of farming, Jonathan Armitage, highlights the wide range of risks requiring active management, including weather extremes, geopolitics, commodity price volatility, input availability and costs, alongside staff management and the increased requirement and cost of working capital.

On the Sustainable Farming Incentive (SFI) as part of risk management, he says: “While the return may not be as high as that produced by a really good crop, it does avoid the risk of costly losses.

“Taking this approach should also mean that growers can focus their efforts on the more profitable crops in the rotation.”

Efficient use of resources

The lower fixed costs of higher performing businesses are largely down to lower machinery costs. Labour, property and administration costs also tend to be lower because resources are being deployed more efficiently.

Businesses cutting their cropped area need to look for ways to reduce fixed costs, says Jonathan, for example, machinery sharing and greater use of contractors or alternative structures such as a joint venture or contract farming agreements.

“Motivating and rewarding staff and family members appropriately can have a big impact on efficiency and staff retention so that needs to be a priority,” he advises.

Estimated net margins, costs and receipts for average- and higher-performing arable farms (£/ha)


Average performing farms

Higher performing farms













Variable costs









Fixed costs





Net margin before rent and finance





Source: Strutt & Parker

Reconcile profit and cash to balance business

Banks are supportive of strong farming businesses, but are concerned with those consistently showing a deficit of funds, say advisors.

“In some cases banks are applying pressure to put hardcore overdraft borrowing onto a repayment loan, which will increase financial pressure,” says Laurence Gould director Mark Shepheard.

“In recent months the affordability of funding for new capital projects has been more difficult to justify.”

While a large number of farms are profitable, in a strong financial position and with long term plans, lower commodity prices in most sectors, rapidly reducing basic payments and adverse weather are taking their toll.

The increasing price of machinery means some have high monthly hire purchase repayments, draining cash. While the accounts might show a profit, the cash position is poor. 

It is important that the balance between expected profitability and capital expenditure is appropriate, says Mark.

This can be judged by examining the flow of funds statement reconciling profit to the change in bank position.

“There’s the profit and loss account and the cashflow projection – the flow of funds statement reconciles the two and brings the accounts alive.”

Some accountants provide this statement and it is important to understand it, as it helps to keep things in balance, says Mark.

When considering profitability he suggests looking at a farming business in three areas – farm enterprises, stewardship income and non-farm income. 

“While commodity prices are likely to remain volatile it is important to have a clear long-term strategy and short-term understanding of the cashflow.

“The uptake of the SFI scheme has been slower than we had expected, probably because of constantly changing options and its relative complexity.

“For some, this scheme offers an opportunity for a change in direction, but it is unclear how long it will operate.”

He reminds farmers that free business consultancy is available across England through Defra’s Future Farm Resilience Fund.