MAFFfigures show 7.3% fall in UK farm incomes for 1996
By Shelley Wright
UK FARM incomes fell 7.3% in 1996, or 9.5% when adjusted for inflation, and farming leaders have warned that 1997 could be worse.
Provisional figures for 1996, published by MAFF, showed a net income of £3.85bn, down from last years record £4.16bn. The fall was due to lower prices in the cereal, potato and beef sectors, coupled with a 7% rise in input costs.
But NFU chief economist, Sion Roberts, said the figures, an aggregate of total outputs and inputs, were based on the 1996 calendar year, so the full effects of the green £ revaluations late in the year were not reflected. The impact of the strong £ would be felt this year, which, combined with the weakness of the beef sector, would put further pressure on farm incomes.
Ian Gardiner, NFU policy director, said that while the past four years of steady growth in UK agriculture appeared to have ended, he did not believe the industry was about to be plunged back into the difficult conditions of the late 1980s. "But the warning light is certainly on amber," he said, and warned that cost cutting measures would be needed.
Provisional forecasts from the annual farm business survey, conducted by various universities and colleges for the 1996/97 year confirm prospects of a further deterioration. Net income on cereal farms and general cropping farms are set to fall by 16% and 39%, respectively, due to lower cereal and potato prices.
Incomes from LFA cattle and sheep farms are expected to be down 11%, while a fall of 23% is predicted for lowland sheep and beef producers. The NFU has asked government to recognise the plight of lowland suckler producers in its division of the UKs £50m share of the latest EU beef aid.
Farm minister, Douglas Hogg, said that despite 1996s downturn, farm incomes remained higher in real terms than in 1994 and the preceding 10 years.
The value of UK farmings gross output for 1996 rose to £18.1bn, a rise of 2.1% on 1995. The NFU attributed that to higher cereal output, which offset the fall in cereal prices, combined with the higher value in the sheep, pig and poultry sectors.
The biggest casualties were potatoes, where prices fell 45%, and beef. The overall output from the beef sector fell by £80.7m, after taking account of nearly £750m of government and EU aid pumped into the industry since Mar 20 last year.