Farm incomes in 2008 were a one-off peak, says Sentry

Higher prices and improved yields last harvest contributed to a 31% rise in profits across Sentry farms, according to the firm’s latest benchmarking figures.

Average farm profits (pre-rent and finance) across 19,050ha of Sentry-managed land – predominantly arable units in eastern England – rose from £320/ha to £419/ha, with the top 25% achieving an increase from £370/ha to £501/ha.

Wheat yields were up 14%, although average prices were similar to the previous year at £113/t, after many growers suffered quality deductions caused by the wet harvest. Oilseed rape yields were similar to 2007, although prices were 40% up at £276/t. Pulses also did well, with average bean yields up 17% and prices 28% higher at £186/t.

That all helped return last harvest’s profitability to levels last seen in the mid-1990s, but was likely to be a one-off, the firm’s Trevor Atkinson said. “We’re unlikely to see those sorts of yields again this year, [commodity] prices have come down since last harvest and direct costs, especially fertiliser, have increased by at least 50%.

“Early ordering negated some of the price rise effects, but fertiliser costs will increase significantly again this year based on current prices. Compound has gone up fourfold and nitrogen has increased as well.”

There has also been some reinvestment, which increases costs in the short term, he said.

“I expect 2009 profits to come back down to 2005-06 levels, which were nearer the £200/ha mark.”