Farm Business Income Up By 15%

Average farm business income increased across all farm types in England in 2010-11 by 15% mainly due to higher prices for cereals, oilseed rape and milk.

Farm business income is the main income measure used in the Farm Accounts of England which is the most important publication from the Farm Business Survey. It comprises 4 different segments or cost centres: agriculture, agri-environment, diversification and the single payment scheme. The agriculture and Single Payment Scheme cost centres contribute about 40% each to total farm business income. Agri-environment and diversification contribute smaller average amounts.

Average farm business income per farm results by broad farm types shows that cereal farms income was £94,6000 and increased by 12% mainly due to increases from the oilseed rape crop partly offset by increases in costs for fertiliser and soil improvement. General cropping farms suffered a decrease of 10% to £100,900. Potato output was considerably lower due to a fall in prices. Mixed farms farm business income increased by 30% in 2011-12 to £66,000 due to improved prices in both livestock and cropping enterprises. Horticultural-type farms covering fruit, vegetables and non-edibles increased by 15% to £55,300 even though total output was 3% lower than 2011-12. Fall in outputs was affected by the cold weather.

On livestock farms dairy farms' farm business income was up over 30% to £86,700 in 2011-12. Milk prices were 12% higher than in 2010-11 at over 28p/litre with average production costs of 26.2p/litre and better prices for dairy beef also helped increase total farm business output. Higher costs fro concentrates offset the increase in income. Lowland grazing livestock farms increased their income by around 50% to £32,200, still low in comparison to other farms. LFA grazing livestock farms increased their farm business income by about 37% to £29,200. Average farm business income on specialist pig farms was down by 15% at £38,000 compared to 2010-11. Prices and output were higher but were offset by higher feed costs.

Many farm businesses are responding to the changes faced by agriculture in the economy by trying to increase their incomes by diversification into non-agricultural work of an entrepreneurial nature on or off the farm but using the farms resources. Over 50% of farms in England fit this definition and have some diversified activity. This figure has been more or less stable for 5 years. The main one has traditionally been letting out buildings for non-agricultural use. Outside of this diversified activity the proportion of farms with diversified activity falls to 27%. Diversified farm activity accounts for up to a quarter of total farm income for 30% of businesses. For 16% of businesses diversified income accounts for more than the rest of the farm business. The 29,500 farms diversifying generated £380m of diversified income. The half of all farms diversifying generated only 4% (£730m) of total farm business output of £16,360m. The largest enterprises by value of output are those involved in the processing and retailing of farm produce (£31,500) and tourist accomodation and catering (£21,300) compared with sport and recreation (£11,900).

Farm Business Income 2009/10

Average farm business income (net profit) per farm of all types annual percentage change was down 15% at current prices at £43,400 and in real terms at 2009/10 prices they were also down 15%. Cereals were down 34% at £46,000 and general cropping down 31% on 2008/9 and 2007/8 at £66,000. Dairying fell by 19% to £56,100. Net farm income (return to farmer) for all types was down by 24% at current prices and in real terms at 2009/10 prices at £31,500. Cereals saw a 47% fall to £27,900 and general cropping a 40% fall to £48,900. Dairying fell 32% at current prices and 31% in real terms to £40,500. Cash income (revenue less expenses) however increased by 4% across all types of farming to £63,400. Cereals increased cash income by 4% to £78,700, general cropping fell 15% to £104,300, lowland grazing livestock increased by 20% to £27,900, LFA grazing livestock by 24% to £29,300 specialst pigs by 19% to £86,300 and mixed farming by 20% to £55,300 in 2009/10 over 2008/9. Dairying cash income fell 4% to £75,000 at current prices.

Farm Household Incomes Up

Results from the Defra Farm Business Survey 2008-9 on farm household income and household composition show that there were 57,000 farms in England of a size to occupy a farmer for at least half their time while they only account for half the total number of farms in England the farms in the survey account for 91% of total area farmed and 96% of agricultural production.

A total of 73% of the total income of principal farmers households in 2008-9 came from farm business income. The mean household income of principal farmers households was £55,600/household (£53,900/household in 2007-8) and mean off farm income of the farmer and spouse was £13,800 (£13,200 2007-8). Mean income of other household members was £15,200 (£16,000 2007-8). 4,100 principal farmers households had no other income (c7%). Mean farm household income after adjustments for size of household is £45,900 (£45,400 in 2007-8)

The region with the highest average farm household income was the East of England with £83,100 and lowest was the North West with £43,800. Proft exceeded drawings on 56% of farms. A total of 39,600 (69%) farm businesses comprise a single household.

In terms of net worth there is a similar median level of profit and household income for the first three quartiles. Median net worth ranged from £131,000 in the lowest quartile to almost £1.5m in the top quartile. Overall median net worth was £587,000. Median household income for tenanted farms in this population was £42,700 compared with £38,300 for all farms. Over the last three years with an identical sample according to the household income of the principal farmer the bottom quartile had an average income of below £20,000 but the median net worth of the bottom quartile was £409,000.

Fall In Farm Incomes In 2009

Farm incomes are estimated to have fallen in 2009 according to the most recent statistics from Defra. Total income from farming (TIFF) fell by 5.7% in 2009 to £4.07bn. There was a decrease in the value of output, a fall in input costs and an increase in the Single Payment. Farm business income (FBI) on specialist pig, specialist poultry, LFA and lowland grazing livestock farms is expected to increase in 2009/10. On general cropping and specialist cereal farms FBI is expected to fall.

The value of output fell by 3.2%, though there was a significant variation between sectors. Cereals (-25%), oilseeds (-23%), potatoes (-16%) and milk (-9.7%) fell in value, whereas cattle (6.4%), sheep (21%) and pigs (17%) increased in value. The total value of output at market prices fell by 3.1% to £19.3bn. The value of intermediate consumption, items like maintenance, services, feed, fuel, fertilisers and sprays, fell 1.1% and the Gross Value Added (GVA) for the industry fell 6.2% to £7.1bn. Input costs fell by 2.2%. The cost of fuel and animal feed fell by 17% and 7.3% respectively but that was partly offset by increases in other costs.