Table 1: Farm Business Income of English Farms in Year Ending 28 February 2016 Agriculture
£ per farm
Dairy
Grazing Livestock - Lowlands
Grazing Livestock - Less Favoured Areas
Specialist Pigs
Specialist Poultry Mixed Farms All Types
12,700 -10,900
-10,700 3,700
68,000 -19,200 -5,500
Percentage of Total Farm Business Income
30.1 -90.8
-56.0
16.9 63.7
-106.7 -17.5
Source: DEFRA (Publication Date 27 October 2016)
With respect to England and Wales, this provision equates to an ‘average’ Farm Business end-of-year of around 28 February. The second aspect concerns the treatment of monies received
under the basic Payment Scheme. This is converted into sterling at a rate determined at the end of September in the year in question. Thus, a fall in the value of sterling against the Euro will result in a correspondingly greater payment of sterling while an appreciation of the latter will result in the sterling equivalent of the payment being reduced. Thus, in 2015-16, across all farm types, the Basic Payment was around 5 per cent lower than the Single Payment of 2014-15 due to the appreciation of sterling against the euro. Table 1 shows a very broad-brush breakdown of Farm Business
Incomes for the farm sectors of most relevance to the compound feed industry including mixed farms, although the data includes that for farming as a whole. The three principal sectors missing from Table 1 are Cereals, General Cropping and Horticulture. Broad-brush as it is, it must be admitted that overall, the twelve
months under review were not ones which most farmers will look back upon with any fondness. Comparing 2015-16 against the previous year, average Farm Business Income for dairy farms fell by around half to £42,300, due almost entirely to reduced milk output driven by a 25 per cent fall in average price, although the latter was partially offset by a higher production volume. Average incomes fell by 35 per cent on lowland grazing livestock farms to a total of £12,000, the lowest average income for this type of farm since 2006-07. A fall in closing valuations for cattle almost entirely accounted for a 35 per cent reduction in output from beef enterprises while output of sheep enterprises also fell with average prices for fat and store lambs as well as cull ewes, lower than the previous year. These lower prices were due to plentiful supplies of domestically produced sheep meat while overall consumer and other demand remained relatively stable. While both fixed and variable agricultural costs fell, this was insufficient to offset the fall in output, resulting in a fall in the net contribution of agricultural activities to farm business income fell to a negative £10,900.
For grazing livestock farms in the Less Favoured Areas, farm
business output was slightly higher due to a moderate increase in output from both agricultural and agri-environment activities together with a 14 per cent increase in the average Basic Payment, the latter being driven by a higher payment rate for land in the Special Development Areas. Higher output from the beef enterprise was only partially offset by lower output from the sheep flock. These increases combined with very slightly lower costs led to a 30 per cent increase in average Farm Business Incomes to £19,100. Average incomes on mixed farms, not previously reviewed in this
publication, fell by 17 per cent between 2014-15 and 2015-16 to £17,900. Total farm business output was unchanged as a lower agricultural output was offset by an increase from diversified activities, particularly rental income. A fall in variable costs, driven by lower feed and fertiliser costs was more than cancelled out by higher fixed costs (labour, general farming and land and property costs) causing average incomes to fall. The average Basic Payment was around 13 per cent less than the Single Payment in 2014-15. DEFRA rightly point out that the samples for both specialist pigs
and specialist poultry farms are relatively small, meaning that individual farms can have a large influence on the results. On specialist pig farms, average Farm Business Income fell by 56
per cent in 2015-16 to £22,000 per farm. Total farm business output was higher driven by an increase from the cropping enterprises and from the Basic Payment as a result of a larger farm area. Pig enterprise output was similar to the previous year as higher throughput offset lower prices for store and finished pigs. These changes to output resulted in considerably higher variable and fixed costs, particularly purchased feed as well as contract charges, labour, machinery depreciation and general farming costs. For specialist poultry farms, average incomes fell by 16 per cent compared to 2014-15 as output from both the egg and broiler enterprises fell. The average price for eggs increased by 5 per cent on these farms but throughput was lower. This is in contrast to the trends seen in UK statistics that show a fall in egg prices but an increase in
Agri-Environmental Payments
£ per farm
3,700 4,200
9,800
2,500 1,600 6,000 5,500
Percentage of Total Farm Business Income
8.8 35.0 51.3
11.4 1.5
33.3 17.5
Diversified Income
£ per farm
5,500 5,800
2,300 5,300
30,100 9,800
10,300
Percentage of Total Farm Business Income
13.0 48.3
12.0
24.2 28.2 54.4 32.8
Basic payments Scheme
£ per farm
20,300 12,900
17,700
10,400 7,100
21,400 21,100
Percentage of Total Farm Business Income
48.1 107.5 92.7
47.5 6.6
118.9 67.2
PAGE 20 MAY/JUNE 2017 FEED COMPOUNDER
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