Input costs slice into EU farm incomes

European farm incomes fell by an average 3.5% per person employed in 2008, as rising input costs cut deeply into producer earnings.

Latest figures from the EU Commission’s statistics agency Eurostat show that, overall, farm output actually increased in 2008.

In the arable sector this upturn came to 2.9% and was the result of the substantially bigger harvest more than outweighing the drop in world grain prices in the second half of the year.

In the livestock sector too, the value of output was also higher – up 5.5% – due to a strong recovery in pig prices (+9.1%), and further increases in cattle, sheep and milk prices.

But all these output gains were more than wiped out by the 10.3% increase in farm input costs. Across the EU-27, fertiliser prices were up 43%, energy prices were up 12.2% and feed prices were up 9.7%.

There was also an increase in depreciation of 2.5% in real terms across all member states.

There were, of course, mixed fortunes in the different member states.

Bulgaria and Romania topped the table, with a 28% increase in their real agricultural income per worker, though these were starting from a very low base, following accession to the EU in 2007. These two countries also suffered from drought.

At the other end of the table are Estonia and Denmark, which saw farm incomes drop 25% and 23% respectively.

The drop in farm incomes in Denmark is perhaps surprising, given the big increase in pig prices last year and the fact almost a third of agricultural output comes from this source. But the sector was particularly hard hit by the steep increases in feed costs in the first half of the year.