Farming income falls 8.1%

A LOW QUALITY harvest and weaker market prices in the second half of 2004 have been blamed for a fall in the Total Income From Farming in 2004.

The TIFF figure, which calculates the income generated by production within agriculture, including subsidies, fell by 8.1% in real terms to 3.01bn in 2004 compared with 3.28bn in 2003.

The annual figures, released by the National Audit Office on Thursday, (Jan 27) also show the average contribution by full-time equivalent employee fell by 7.5% in real terms to 14,800 compared with 16,000 in the previous year.

However, the figure for 2004 was 472m higher than the five-year average of 2.5bn/year due to the record lows experienced in 2000, 2001 and 2002.

Put into context, the TIFF for 2004 is comparable with income levels last experienced in the years 1990 and 1991. But the figures remain well below the high levels sustained during the mid 1990s when TIFF reached a 19-year high of 6.6bn in 1995.

DEFRA has also released figures which show that 48% of full-time farms in England in 2003/04 have a diversified business generating an average output of diversified activity of 19,500.

The average income generated by all farms from diversification was 5000.This figure excludes all contract work, even non-agricultural contracting work.

In its analysis, DEFRA said that despite the wet weather creating poor harvesting conditions and hindering quality, prices as a whole were slightly higher than in 2003. The largest gains in value were seen in the potato sector where a 31% increase in value was attributed to sustained good prices and increased production.

The livestock sector suffered mixed results. The value of animals produced for meat grew by just 1% whereas animal products fared better. Milk value increased by 3.8% due to the introduction of the dairy premium and an increase in market prices balancing out a fall in volume.

Unfortunately, these marginal gains were eroded by the large cost increases in inputs with energy input costs rising by 19% and fertiliser by 8.6%. Other significant rises in costs were a 4.6% rise in labour costs and a 12% rise in interest payments.

Junior DEFRA minister Lord Whitty said: “The fall in income from farming since last year is disappointing.

“But these figures also show that diversification is an increasingly important earner for farmers – and diversification activities are becoming more and more successful.