Lowland farms see income drop 130%

By FW staff

LOWLAND cattle and sheep farms across Wales saw net farm income (NFI) plummet by up to 130% in 1997/98.

The results of a study released this month by Aberystwyth University indicate that NFI on small, medium and large units in the lowland livestock sector fell by an average of 78%. Output fell by 19%, but costs by just 1.5%.

Medium-sized farms were hardest hit, with NFI plunging from £16,166 to a loss of £4865, a fall of £21,000.

However, as director Tim Jenkins points out, for comparison purposes all 625 farms in the survey are treated as tenanted, so rent is deducted. “In fact, about three-quarters of Welsh farms are owner-occupied.”

This explains why farmers are still surviving – add back rent, and fixed asset depreciation and cash income moves into the black. However, this sum takes no account of re-investment or other depreciation charges.

For medium-sized lowland stock farms, cash income amounts to £20,000, about average for all farms in this sector, though it still marks a drop of £14,000 on the year.

Output on all upland cattle and sheep units fell 13%, outstripping the 6% cost savings. This hit hard, pulling net farm income down by 56% on average. Average cash income for the year fell over £5000 to £12665.

Incomes on hill cattle and sheep farms dropped almost 38%, with all farm sizes experiencing a similar decline in fortunes.

Dairy farms came off best – relatively speaking. Average cash income for the lowland sector was almost £60,000.

However, on the hills, small dairy farms were the only group in the whole survey to see a positive change in NFI over the year – this rose by 7.5% to £6200. Actual cash income was just under £11,000 – well below the sector average of £36,700.