Tuesday 5 February 2013

Sobering figures from DEFRA

DEFRA released its provisional figures for the 2012/13 farm incomes which make sobering, although not altogether surprising reading. They demonstrate that despite relatively high commodity prices, the bad weather and high input prices have had a negative impact on farm incomes across the board.

The least badly affected have been arable farmers, who despite the wet weather, difficult harvest, low yields and poor quality crop, have only seen incomes fall by an estimated 11% in England. The reason they have fared relatively well is because of the high commodity prices on the world markets; it could have been an altogether different story if the rest of the world had had a good harvest.

The dairy sector had another difficult year with profits estimated to be down by approximately 42% while the livestock sector fared even worse with profits down 44%. This latter drop is probably in part due to the recent crash in lamb prices which means many farmers are receiving between £20 and £30 less per head for lambs this year as compared to last. This is a reflection of the increased level of New Zealand lamb imports as well as falling exports to continental Europe. However, with the pound weakening against the Euro in recent weeks there may be some hope for our export trade.

If one turns these percentages in to pounds and pence this means the average income of arable, dairy and livestock farmers throughout England was £84,000, £50,000 and £18,000 respectively. These figures are averages and I suspect the arable income in this area will be lower than the average because farms here in mid Somerset are generally smaller than they are as one goes east.

However, the figures for the dairy and livestock sectors are probably more representative of what is happening in this area and although at £50,000, the income for a dairy farm may look reasonable one has to remember this very often has to support at least two households, cutting the income to around the average wage. This of course then does not leave much spare income for re-investment which will be a big problem in the long term. In the case of the livestock sector the average income is significantly lower than the average wage which brings in to focus the importance of the support payments that livestock farmers in particular receive from Europe via the Common Agricultural Policy (CAP).

The whole of the CAP is under review at present and our politicians in general favour the abolition of such support payments but they should pay heed of the fact that without them, many livestock farmers simply could not exist. That is perhaps not a reason to maintain the payments in their current format but before politicians call for their complete withdrawal they must also assess the impact such an action would have one certain sectors of the UK farming industry.


   

James Stephen MRICS FAAV
Partner
Rural Practice Chartered Surveyor, Wells

T: 01749 683381
E: james.stephen@carterjonas.co.uk

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