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costs, particularly as regards purchased feed, are projected to more than offset the increased value of output. Both prices and quantities of purchased feed are likely to rise due to the lower forage yields arising from unfavourable growing conditions in 2010. In addition, high straw prices for bedding are expected further to impact on dairy farms’ profi tability. This is in contrast with estimates of total Farm Business Income for dairy farms in Northern Ireland which is expected to more than double in 2010-11. DEFRA is also projecting a signifi cant decline in Farm Business

Incomes on grazing livestock farms in 2010-11. This refl ects rising input costs, particularly for purchased concentrates and forage as well as for fuels. DEFRA is expecting output from sheep enterprises to be higher but output from beef enterprises is expected to decline. On specialist pig and poultry farms, average Farm Business

Income is projected to decline in 2010-11 relative to 2009-10. Again, this refl ects higher feed costs and lower prices for eggs and pigmeat. Incomes on mixed farms are also expected to fall by around forty per cent in 2010-11. Although overall farm output is projected to increase slightly, largely as a result of substantial projected increases in output from the cereal and dairy parts of the enterprise, this will be counteracted by marked falls in output from cattle enterprises together with a lower single farm payment. However higher projected costs, notably for feed and fuel, are expected to more than offset this modest increase and lead to an overall fall in income compared to the previous year. This is particularly relevant in the context of those

who cite rising world food prices as proffering the possibility that farm subsidies and, in particular, direct payments to farmers can be reduced or, even, phased out. Prices may be on the way up but so are input costs and it is the margin between the two that is critical in the long term for keeping farmers in business. It is all-too-easy to remark, as one correspondent to Farmers

Weekly did in late January this year that ‘I am a twenty-nine year old dairy farmer who believes the Single Farm Payment should be abolished. Why should beef and lamb be only profi table with SFP whereas I produce milk profi tably without taking the SFP into account and still manage heavy investment in the business?’ The letter writer may, indeed probably is in the top fi ve per cent

of producers where overall performance is concerned. But he must realise that there are ninety-fi ve per cent of dairy farmers who do not, for whatever reason, measure up to his standards and, for one reason or another, have no realistic prospect of doing so [4]

. It is those dairy

farmers, and other livestock farmers in the lowlands or less favoured areas that need to be taken into account where the future of the Single Farm Payment is considered.

[3] On 30 September 2009, the Euro was worth approximately 91.4 pence; on 30 September 2010 it was worth approximately 86.6 pence.

[4] Grant Thornton’s latest arable farm business survey, using client accounts from the 2009-10 fi nancial year farming a total of more than 100,000 acres in central, eastern and southern England suggests that when the single farm payment is removed, only the top 25 per cent made a positive net farm income in 2009, and the same is likely to be true for 2011, despite the big rise in commodity values.


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