Sharp fall in farm business incomes for cereals and dairy

Farm business incomes for arable, dairy, and mixed farms in England are all estimated to have dropped significantly during 2023-24.

Defra figures for the fiscal year to the end of February 2024 estimate a fall in incomes of more than £100,000 on average for both cereal and dairy farms.

Partly, this reflects the fact that farm business incomes during 2022-23 were elevated due to higher output prices for wheat and milk in the wake of the Ukraine crisis.

However, figures for 2023-24 have fallen back below even historic levels from years prior to this.

See also: What are the key traits of top-performing arable farms?

Farm business income is calculated as the total output generated by the farm business minus total farm costs, and is broadly interpreted as being a measure of farm profit.

Aside from agricultural incomes, payments through the Basic Payments Scheme continued to decline year after year for farm businesses in 2023-24, while average income through agri-environment activities have been increasing.

NFU president Tom Bradshaw said: “Defra’s estimated farm business income figures for 2023-24 paint a stark picture of the challenges facing many farmers, with rising input costs, significantly lower commodity prices, a reduction in direct payments, and one of the wettest winters in decades leaving many businesses worse off.”

Mr Bradshaw added that farmers need to know the government is creating policies that support them to build financial resilience into their businesses.

He said: “Profitable farm businesses are essential if we are to deliver what the country needs; food produced to world-leading standards and environmental protection.

“We need government to deliver on its promises and prioritise domestic food production with a clear commitment to a budget that can underpin food production and deliver for the environment.”

The NFU commissioned its own modelling with the Andersons Centre, which suggested an annual budget of £4bn is needed for government to deliver its policy effectively.

Arable

Cereal growers are estimated to have seen incomes fall by £116,400 to £34,000 in 2023-24.

This is due to a substantial fall in farmgate prices for wheat, barley and oilseed rape compared with the previous year when commodities markets were driven up by the war in Ukraine.

A reduced wheat area and lower yields have also played a role. Input costs such as seeds have remained fairly high, while other inputs, such as fertiliser, have dropped back.

For general cropping, average incomes are expected to have declined by 58% to £53,000 in 2023-24, with lower output prices once again the main driver for this change.

Potatoes had a reduced overall cropping area leading to a drop in overall output.

Output for peas and beans is forecast by Defra to remain fairly level year on year, with increases in yield and cropping area offset by lower prices.

Dairy

Average dairy incomes are estimated to have fallen from £229,200 in 2022-23 to £50,000 in 2023-24, driven by lower farmgate milk prices throughout most of 2023.

Meanwhile, input costs are expected to be fairly similar year on year, with lower feed costs offset by other cost rises.

Pigs

Reduced feed and input costs for the pig sector have led to a 34% increase in average farm business incomes, with incomes for specialist pig farms forecast at £91,000 in 2023-24.

Finished pig prices were estimated to be 15% higher, however total throughputs were back.

Livestock

Lowland grazing livestock farms are estimated to have had a 5% increase in farm business incomes for 2023-24 to £23,000 due to higher output values for sheep.

Defra has forecast that incomes for livestock farms in less favoured areas have increased by 1% to £26,000.