Biggest Fall In Agricultural Productivity Since 1985

Total factor productivity figures from Defra suggest that the agricultural industry has seen a fall of 2.9% between 2011 and 2012 giving the lowest level since 2007 and it is the biggest single year fall since 1985. The poor levels of productivity reflect the poor weather conditions according to Defra.

The picture can be looked at over the longer period. Between 1986 and 2012 the volume of final output has remained fairly stable and the volume of all inputs and entrepreneurial labour has fallen by 19%. Looking at it that way total factor productivity has increased by 21%. This is he first Defra release to use 2010 as the base year for total factor productivity.

Agricultural Output Prices Increase 14.5% Over The Year

The agricultural price index (API) for all outputs increased by 3.2% in March and by 14.5% on last year. The price index for all inputs fell by 0.1% in March but is up 9.7% on last year.

Crop outputs prices increased 2.8% on March and 27% on last year. Potato output prices continue to rise by another 14% in March and are more than twice the price of last year with an increase of 125%. Price rises were offset by a fall in cereals prices of 3.4% in March but over the year they are still 25% higher than last year. Animal and animal products prices increased by 4% in March and are 5.6% up on last year. Animal slaughter prices increased by 7.4% largely due to a 20% rise in sheep prices. They are however still 12% below last year's prices.

Prices for agricultural inputs have not changed much in March. The overall index changed only by a 0.1% fall. Over the year prices generally are up by 12%. The increase is due mainly to a 46% rise in the price of seeds and feed price increases of 16% both sets of prices being affected by the poor cereal harvest of 2012.

Farm Workers Wages Have Gone Up Across Europe

Real agricultural income per worker across the EU27 has gone up by 1% in 2012 compared with an increase of 8% in 2011 according to estimates from Eurostat. The increase results from an increase in real agricultural income of -0.5% and a reduction in agricultural labour input of -0.5%. EU27 real agricultural income per worker has increased by 29.7% between 2005 and 2012 while agricultural labour input has fallen by 20%. The main reasons for the rise in real agricultural income is a rise in the value of output of the agricultural sector at producer prices in real terms of 1.8% and input costs growing by 1.6%. The increase in the value of output at producer prices of 1.8% is due to an increase in the value of crop production of 0.5%, due to an increase in real prices of 6.3% offset by a decrease in volume of 5.4%, and a larger increase for animal production of 3.8% due to an increase in prices (3.9%) and a slight fall in volume (-0.2%).

Headline GDP Down By 0.2%

UK gross domestic product fell by 0.2% in volume terms in the fourth quarter of 2011 according to a statistical bulletin from the ONS.

Of the output components of GDP output in the production industries fell by 1.4% within which manufacturing fell by 0.8%. Services remained unchanged but the construction sector fell by 0.5%. Agricultural output decreased by 1.5% in Q4 compared with a decrease of 0.6% in Q3 2011. Output of business services and finance increased by 0.1%. Government and other increased by 0.3%.

Household expenditure increased by 0.5% quarter on quarter while gross capital formation fell by 7.6%. The income components of growth and contributions to growth show that employee compensation fell by 0.3%.

GDP Growth Unrevised At 0.5%

The most recent quarterly national accounts show that GDP rose by 0.5% in Q1 2011. In volume terms GDP rose by 1.4%. The household saving ratio fell from 5.1% to 4.6% while household disposable income fell by 0.8%. Agricultural output increased by 0.1%.