Rural Business Research (RBR), the consortium of leading Agricultural Universities and Colleges that undertakes the Farm Business Survey in England for Defra, has recently published seven enterprise / farm type reports that chart the changing fortunes of agriculture and horticulture.
You may find these facts and figures interesting, particularly for Less Favoured Area (LFA) hill farms. This shows that the average farm loses heavily on livestock production, and only survives because of public payments (Single Payment Scheme (SPS) and agri-environment) and diversification. Even so, the average income of c £11K pa is pitifully low when this has to cover farmer time and any rent. How many non-farming families would be willing to work for a combined salary of £11K pa?
Below is a summery which provides an overview of each report. If you are interested the full reports can be found by following the link. The data is taken from actual farm accounts
Rural Business Research charts the changing fortunes of farming in England
Rural Business Research (RBR), the leading consortium of independent academic units undertaking the influential Farm Business Survey (FBS) in England, presents a series of reports highlighting the changing economic fortunes of farming.
Crop Production in England
Pig Production in England
Poultry Production in England
Hill Farming in England
Dairy Farming in England
Lowland Grazing Livestock Production in England
Horticulture Production in England (Horticultural Business Data)
Details and downloads available at http://www.ruralbusinessresearch.co.uk/
Crop Production in England shows that whilst arable fortunes started to improve in 2006/07, many producers had already committed their 2006 harvest to marketing contracts and spot sales, reducing the impact of price increases on the sector. General cropping farms returned a Farm Business Income (FBI) of £317 per hectare, whilst Cereal farms recorded an average FBI of £261 per hectare. The balance sheets of many cropping farms improved, with land value increases resulting in average net worth of cereals and general cropping farms increasing by 10%, to £5200 and £4700 per hectare, respectively. The financial year 2006/07 witnessed an increase in the number of farmers taking part in the Entry Level Stewardship (ELS) scheme with average total receipts from this revenue increasing by £10 per hectare on the previous year. With increasing fuel and fertiliser costs eroding increasing output prices, the wide variation in performance of cropping farms looks set to continue for the foreseeable future.
Pig Production in England charts the declining UK pig population with sow numbers having fallen to below 400,000 in the UK. Food security is now racing up the political agenda, and the report details how pork production as a percentage of supply has fallen from 116% in 1996-98 to 69% in 2007. The 54 Specialist Pig farms analysed in the report recorded an average feed bill of £120,000, accounting for some 77% of total variable costs and highlighting the plight of the sector as cereal prices continue to rise. The wide range in business performance, and the increasing costs of production, highlights the problems facing many producers – it is clear that the vast majority of producers are currently making substantial losses on their pig production. The rapid decline in the sector as at end of 2007 showed a 4.4% fall in total breeding pigs on the previous year; the fall in gilt numbers was even higher at 16%, reflecting the cut-backs that are occurring in the Industry.
Poultry Production in England identifies that 69% of broiler production takes place on the largest 400 holdings in the UK, with 100,000+ broiler units dominating supply in the sector. With farm gate sales of £1.66 billion in 2006, 90% of domestic demand for poultry meat was satisfied by home-grown production. Egg production is also dominated by a small number of suppliers with 1% of producers accounting for 78% of output by volume and satisfying 89% of the demand for eggs. Whilst egg prices recovered in 2006, gross output to the sector fell due a decline in laying hen numbers. Free range producers saw a slight fall in Farm Business Income (FBI), resulting from increased gross output that was more than offset by higher variable costs. Rising feed costs are likely to result in substantial changes in the fortunes of the poultry industry – profit in the sector is under extreme pressure as variable costs increase placing considerable pressure on the bottom line.
Hill Farming in England examines the costs and returns of farming in England’s “grazing livestock” Less Favoured Area (LFA) farm businesses – with LFAs accounting for 17% of the total farmed area, returns to production in the areas where poor climate, soils and terrain limit activities, have traditionally been lower than many other sectors. In England, 40% of beef cows and 45% of breeding sheep are in the LFAs and farming plays a crucial role in maintaining the distinctive landscape of such areas. LFA Grazing Livestock farms earn some 50% of their total revenue (output) from crop and livestock farming activities with 27% coming from the Single Farm Payment, and 15% from specific agri-environment payments. The balance of revenues is earned from nonfarm/ diversification activities. However, the average LFA farm is losing money to the tune of -£16,044 Farm Business Income (FBI) from crop and livestock production per farm in 2006/7. Revenues earned from the Single Farm Payments, agri-environment schemes and diversification more than offset the losses of the traditional farming enterprises to generate a headline FBI of £10,786 in 2006/7. LFA farms depend to a substantial extent on public payments accounting for more than 40% of their revenues. Total public spending on the LFA farms amounts to £148m per year, or £193/ha. This total spending compares favourably with recent estimates of the social value of upland environments.
Dairy Farming in England details the number challenges faced by the sector during 2006/07, including market conditions of declining milk output price and increasing input costs; average farm gate prices ranged from 16.8 to 19.0 pence per litre. Milk production fell to its lowest level for over a decade, driven by producer numbers falling by 5.4% and continuing the downward trend in the number of dairy farms. In 2006/07 the shortfall of total milk deliveries undershot total national quota by approximately 410 million litres, representing the largest recorded quota undershoot. Farm Business Income (FBI) was £321 per hectare, representing 17% of total farm output. The higher input-output system of the lowland farms returned an average FBI of £340/ha in comparison to the average FBI of £255/ha for LFA farms. Analysis of lowland herds by gross margin performance quartiles indicates that the upper quartile achieved yields of 8000 litres compared to 5700 litres for the lower quartile, and whilst concentrate costs were greater for the upper quartile, the respective gross margins are approximately £1000/cow and £400/cow. The report goes on to note that whilst reduced milk supplies have led retailers to recently increase the milk price, volatility and increases in input costs will erode a substantial element of the increased milk price.
Lowland Grazing Livestock Production in England details that Lowland Grazing Livestock farms account for 10% of the area of farmed land in England, and 17% of the holdings. Lowland grazing holdings typically produce the lowest incomes per farm, per hectare and per annual labour unit. In 2006/07, Farm Business Income (FBI) was £13,500 per business, although large variations in the returns to individual businesses exist, highlighting the negative returns recorded by many in this sector. 20% of businesses make a loss, and two-thirds make less than £20,000 – from which rental value of owned land and the value of farmer and spouse labour must be met. Farm Business Income was lower than private drawings for farms in the lowland grazing livestock production farm type, indicating that on average farmers in this group are eroding their business assets.
Horticulture Production in England (Horticultural Business Data) details that horticulture’s share of total agricultural output has increased by 4% over the last forty five years, and in 2006 was 14.3% of total agricultural output in the UK. In monetary terms, the latest figures for home produced horticultural crops produced in the UK came to £2,107 million. Just over one third of this output is made up of field scale vegetables, although they account for 72% of the total area of horticulture. Hardy nursery stock (22%) and other protected non-edibles (12%) are the next largest in value terms amongst the horticultural sectors. Horticulture Production in England considers the value of home-produced output, the regional importance of production and detailed financial results for horticulture businesses, all based upon the analysis of financial and physical returns from the 207 horticultural businesses within the Farm Business Survey.
Dr Paul Wilson, Chief Executive Elect of Rural Business Research, commented “this series of reports provides the industry with the most comprehensive examination of the economics of agriculture and horticulture in England ever produced – the changes and challenges facing the industry make these reports invaluable to anyone looking to identify key factors to improve profitability”
The data collection and analysis presented in the reports has been largely funded by Defra as a key part of the annual Farm Business Survey. Details or downloads of the reports can be found at http://www.ruralbusinessresearch.co.uk/