Defra figures show farm business incomes rose in tough year
© Tim Scrivener Farm business incomes in England rose for almost every sector in the year to February 2021, according to the latest figures from Defra.
The survey covered the 2020 harvest and the first year of the Covid-19 pandemic, as well as including the 2020 basic payment.
These updated results replace the forecast estimates released in April 2021, which suggested arable, dairy and pig sector incomes had declined sharply due to the challenges faced in that time period.
See also: Consumers must pay more for dairy, say costs analysts
It was a difficult year, including an extremely wet winter, very dry spring and the end of the EU exit transition.
Instead, average farm business income increased across all farm types except general cropping and specialist poultry, according to Defra.
The average basic payment across all farm types was £28,400, which was little changed from 2019.
What is farm business income?
Farm business income (FBI) represents the financial return to all unpaid labour (farmers and spouses, non-principal partners and their spouses, and family workers) and on all their capital invested in the farm business, including land and buildings.
In essence, FBI is the same as net profit, which as a standard financial accounting measure of income is used widely within and outside agriculture.
Arable
Cereals
Average income in cereal farms increased by 14% to £71,700, with firm prices helping to offset lower yields for some crops and higher fixed costs.
Overall, total crop output was 4% higher than the previous year. Fixed costs increased by 12%, driven by rises in labour, machinery, general farming costs and rent, while variable costs were largely unchanged.
General cropping
For general cropping farms, income fell by 21% to £66,900, with lower input costs insufficient to offset a 16% drop in crop output, the result of reduced yields and areas for crops such as potatoes, sugar beet and oilseed rape.
Fixed costs were broadly in line with 2019-20 but variable costs fell by 16%, notably for crop-specific costs (seed, fertiliser, crops protection and other crops costs), which dropped by 12%.
Livestock
Dairy
On dairy farms, average income increased by 9% to £92,500, with revenue from other cattle enterprises, which rose by 13%, a key driver.
Output from milk and milk products increased by 1%. The average milk price (29.6p/litre) was largely unchanged, while production was slightly higher overall, despite being lower than usual during the normal spring peak due to Covid-19 disruption.
The rise in output more than offset smaller increases to both fixed and variable costs.
Grazing livestock
For lowland grazing livestock farms, average income nearly doubled – albeit from a low base – to £18,400.
Output from sheep enterprises increased by just over one-quarter, driven by higher average prices for fat and store lambs across most of the year.
Cattle output also rose, with tight supplies leading to higher average prices for both finished and store cattle.
However, these increases were partially offset by a 17% fall in crop output.
Average incomes rose by a huge 46% to £33,400 for grazing livestock farms in less-favoured areas, primarily due to a rise in livestock output.
Both cattle and sheep enterprise output increased by about one-fifth, with similar drivers to those seen on lowland farms.
Fixed and variable costs rose by 3% and 1%, respectively.
Mixed farms
On mixed farms, average income increased by 39% to £40,200.
Both fixed and variable costs were 9% lower, due to decreases to feed and fodder, crop protection, labour and machinery running costs.
Agricultural output also fell, though to a lesser degree than costs, as particularly shown by a 79% decrease from broilers and other poultry enterprises.
Pigs
For specialist pig farms, average income increased 27% to £48,000, helped by a 16% rise in output.
Firmer prices at the start of the year helped to offset later price falls, influenced by the Covid-19 pandemic and the detection of African swine fever in Germany.
The increased output more than offset rises to both variable and fixed costs, particularly for purchased feed and fodder, labour and, to a lesser extent, machinery costs.
Poultry
Average incomes on specialist poultry farms fell 12% to £77,700.
Output from eggs rose by 3%, driven by an increase in price following strong retail demand during Covid-19 lockdowns, and a slight increase in quantity.
Bird output for poultrymeat fell by 7% – while prices rose slightly, throughput was lower.