12 October 2000
Family farms ‘adapt better to crisis’
By FWi staff
FARMS using only family labour will find it easier to ride out the farming crisis than units with many workers, say accountants Deloitte & Touche.
Despite tightening belts and cutting costs, farm incomes have fallen 90% in the past five years, according to the company.
Incomes fell 28% last year compared with 1998, but the accountancy firms survey results show that merely going for ever more acres is not the answer.
“Many of the poorest-performing farms in this years survey are the largest,” said Mark Hill, partner in charge of the companys food and agriculture group.
Larger farms have often expanded through expensive options such as tenancy agreements. But the survey forecasts minimal extra returns at current rent levels.
Farmers are tightening their belts, said Mr Hill. But he added: “Farms which rely predominantly on family labour will be able to adapt more easily.”
At current levels of return, there is no scope to pay any premium for acquiring additional production capacity. Collaboration and merger is now a serious option.
“It is one that offers scope to reduce costs, particularly labour and machinery, but neither party has to make any extra investment and increase their risk.
“Across the various sectors analysed by the report, there are clear signals that farmers are recognising the serious financial pressure on the industry.”