Defra figures see sharp fall in income for some farm sectors

Arable farms and lowland livestock units saw incomes fall sharply during 2019-20, according to the latest figures released by Defra.

The figures are based on 2019-20 up to 28 February 2020, so do not reflect the impact of Covid-19.

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Arable

Cereals

Cereal growers saw average incomes decrease by 7% in 2019-20 to £62,800.

The main driver was an increase in agricultural expenses, with variable costs up by 14% due to hikes in fertilisers and crop protection prices.

Fixed costs also rose by 7%, wiping out a 7% increase in crop output due to increased crop areas for wheat, barley, pulses and sugar beet and improved yields.

The extra output, however, put downward pressure on prices, contributing to the drop in incomes.

The Basic Payment Scheme (BPS) income increased by 5% accounting for just under two-thirds of total income on this type of farm.

General cropping

On general cropping farms, average income fell by just over one-fifth to £84,400, with a decrease in agricultural output being the main driver.

As with cereal farms, plentiful supplies following a more successful harvest contributed to lower prices which offset higher yields.

Oilseed rape was the exception with prices remaining firm, but yield and area decreased reflecting pest issues caused by the withdrawal of neonicotinoid pesticides.

Other crops, such as wheat, pulses and sugar beet, also saw reductions in average area. Agricultural costs rose marginally (1%) compared with 2018-19.

Output from agri-environment activities increased by almost 50%, but BPS income dropped by 4% to £43,400 due to smaller farm areas.

Livestock

Lowland livestock

Lowland livestock farms averaged incomes of just £9,400, down 25% on the previous year and the lowest since 2006.

On lowland grazing livestock farms, income declines were driven by a combination of lower prices and reduced throughput in both cattle and sheep sectors.

Cheaper forage and feed, produced after a strong growing season in the summer of 2019, failed to offset the losses through lower output.

Upland livestock

In contrast to their lowland counterparts, livestock farmers in less favourable areas saw a 47% increase in incomes to average £22,800.

Upland farmers were able to capitalise on cheap grass and concentrate with an increased output that boosted margins.

Dairy

Average dairy farm incomes increased by 6% to £84,800 in 2019-20 on the back of a 2% increase in output, reflecting a rise in dairy cow numbers.

While milk prices dropped by 2% compared with the previous 12 months, revenue from other cattle sales improved by 4%.

Lower costs also contributed to an upturn in fortunes, with feed and straw prices down by 2% as more milk was produced from grass.

The average BPS income was little changed on 2018-19, but income from agri-environment activities rose by about one-quarter to £4,100.

Pigs

Specialist pig farms saw average income increase by more than 25% to £37,700.

Pig prices were firm throughout 2019 against a backdrop of African swine fever creating a supply void in China and elsewhere in Asia.

Despite a 7% fall in output, a reduction in both fixed and variable costs, particularly feed, machinery, labour and land costs enabled the income rise.