Figures show another big slump in lowland income
Figures show another big slump in lowland income
By Andrew Shirley
LOWLAND farm incomes have slumped massively again, and farmers could be working for less than £1/hour, show new figures from accountant Deloitte & Touche.
The 12th annual study of the firms clients who run enterprises covering 100,000ha (250,000 acres) shows that the average 200ha farm made a profit of only £2500 for the year ending June 2001. This compares with £8000 for the previous season and is way down from the £80,000 recorded during peak farm incomes in 1995/96.
Combinable crop producers saw their net farm income tumble from £115/ha to £70/ha, while potato growers were hit with a yield drop of 14t/ha to just 32t/ha. Combined dairy and arable farmers suffered a loss of £28/ha.
Poor yields, lower prices and weakening support payments are all to blame, says Deloitte & Touche agriculture partner Richard Crane. "Typical arable area aid payments were £256/ha during the 1999 season, but these fell to £221/ha in 2000."
He says the results could have been even worse if producers had not cut overheads by 2%, despite a 28% rise in fuel costs and average inflation of 2%. "I think the industry should be proud of how it has tightened its belt again," says Mr Crane. "Most farmers are reducing the need for casual labour by putting in many more hours themselves."
An earlier survey conducted by the firm in conjunction with the Royal Agricultural Society of England revealed farmers work an average 70-hour week. Together with the drop in income this gives a meagre payment of only 70p/hour.
Lack of money to invest is also a cause for serious concern, notes the accountant. "In time equipment will deteriorate and businesses will become less competitive.
"People are having to use machinery depreciation values to live off and subsequently asset values are decreasing. They may be able to survive like this for a few years, but eventually it will lead to further rationalisation.
"At the moment the average set-up is not in a sustainable position and there must come a point when people will start to question putting good money after bad.
"There is some comfort for farmers who own their own farms as property values are holding up well, but I think tenant farmers will have increasingly nervous financiers."
But despite the gloomy scenario Deloitte & Touche believes there is scope for cautious optimism. "Having tracked the downturn for six years, we believe that farming is at the bottom of a deep tough and net farm incomes will increase in the next 12 months," predicts head of agriculture, Mark Hill.
Ian Gardiner, NFU deputy director general, says the figures are "no surprise".
"This shows the depth of crisis of lowland British agriculture." *