Farmers generate vital new cash with alternative enterprises

ALTERNATIVE ENTERPRISES are being used to boost static profits by an increasing number of farmers, the Institute of Chartered Accountants in England and Wales has said.

Over half the farms surveyed received income from non-core projects, up from a third a year ago and just 20% in 2003.

“Some of the outside income will have been generated by a partner working off the farm, or through inheritance,” said ICAEW spokesman, Bill Ballard

“Sadly, it seems that some farmers are propping up their core businesses with money from another source.

Farm Accounts

– Farm profits up 5% to £41,992
– Turnover up 4% to £328,335
– Drawings up 12% to £40,972
– Average machinery spend £40,690

“Where capital had been introduced from a farming source, it was thought to have been generated largely from the sale of land or buildings.”

The most popular alternatives were renting land or property and holiday accommodation, boosting farms’ average profits by £21,000 and turnover by 15%.

Average profit before owners’ remuneration for all farms was just shy of £42,000 per farming unit, 5% higher than last year.

The survey was based on 337 farms, averaging 365ha (900 acres) and covering 110,000ha (271,000 acres) in England and Wales.

Further investigation showed that most farmers were only able to make a profit because of the support they received.

Moreover, 75% of the farms in the survey were owner-occupied. Adding a notional rent would have cut the average profit figure still further, he said.

The survey showed a marked difference in profitability throughout England and Wales, and arable farms and larger holdings appeared more financially viable.

Producers in the east achieved significantly higher-than-average profit levels of £70,858, as did arable farms (£51,807), and farms with more than 300ha (£87,082).