Total Income From Farming could break £3.5bn in 2010

In November DEFRA published bullish figures for farm incomes in 2009 – almost 25% higher than in 2008 at more than £4bn.

This surprised more than a few farmers and Andersons’ specialists don’t share the department’s views, even though they were just provisional estimates.

The biggest driver behind these upbeat figures is thought to be the dramatic effect on the value of the single farm payment caused by sterling’s plunge against the euro – making SFP cheques worth 15% more for farmers.

In contrast, Andersons reckons Total Income From Farming (TIFF) will drop to £3.2bn for 2009 – an 8% fall on 2008. Principally this was driven by lower prices for grain and milk, which weren’t offset by stronger beef and sheep values.

But there is some good news. Andersons also reckons farmers can look forward to prospects of better profitability in 2010. “It is thought that market prices in both cereals and dairy sectors will firm, albeit perhaps only marginally,” says the firm’s Richard King.

“Prices in the meat production sectors are forecast to remain strong, based on reduced supplies and less import competition. Falling fertiliser costs will make production more profitable in many parts of UK farming, although other costs such as fuel may drift upwards. This means it is possible that TIFF could rebound above the £3.5bn mark in 2010.”

However, a TIFF figure of more than £4bn will be required to provide a realistic return to farmers for their time and capital employed. Fundamental changes to farm support in 2013 make the need for farm businesses to increase their productivity and profitability all the more pressing.