Total Farm Incomes Up 13%

Defra released the first estimates of total income from farming (TIFF) recently and it is reported to have risen by £708m or 13% in real terms between 2012 and 2013 to £5,464m. In terms of annual work units (AWU) of entrepreneurial labour the increase was 15% in real terms to £28,426 in 2013. The difference is due to a decline in the numbers of farmers and other unpaid workers.

Key contributors to the increase were milk by £505m, potatoes by £210m, and barley by £199m. The increases were offset by a decrease in value of oilseeds of £245m and an increase in the cost of animal feed of £740m.

Agriculture's contribution to GDP measures as gross value added at basic price increased by 7% or £604m to £9,222m. Intermediate consumption increased by £892m to £16,492m mainly due to an increase in the price of animal feed an additional increase in the value of seed. There was a reduction in the number of employees but a small increase in pay of £23m to compensate. The total compensation of employees in 2013 was £2,379m.

Compared to 1994 total income from farming per AWU of entrepreneurial labour has increased by 10% compared to a 15% fall in total income from farming.

Farm Incomes Down By 13%

Defra released the second estimate of the total income from farming (TIFF) statistics for 2012 recently and the figures suggest that farm incomes fell by 13% (£721m) between 2011 and 2012 to £4,810m (real terms after allowing for inflation). RPI inflation increased by 3.2% during 2012.

Two main factors were given for the fall in total income and they were the weather and the resulting increased cost values; and a fall in the value of direct payments to farmers due to adverse changes in the Pound/Euro exchange rate. Poor weather affected the volume and quality of the harvest and increased the value of inputs used.

The income of farmers per annual work unit (AWU) was estimated to have fallen by 14% in real terms to £24,570 in 2012.

Gross output at basic prices at November 2013 was £24,089m and total intermediate consumption was £15,464m. There was a small decrease in Gross Value Added (GVA) of £51m to £8,625m because the increase in the value of intermediate consumption (goods and services used in production) was greater that the increase in the value of output.

Longer term trends show that total income from farming has remained at a higher level than the late 1990s and early 2000s but below a peak in the mid-1990s. Entrepreneurial labour income has performed better than TIFF mainly due to a decrease in the number of farmers and other unpaid workers.

Farm Gate Prices Down In December

The prices farmers received for their products fell by 0.4% in December on November but is still 11.8% higher than last year. Farmers were also having to pay on average 3.2% more on the monthly comparison and 5.4% on the annual comparison for their goods and services. Main crop potatoes have almost doubled in price since December 2012 due to low yields and low quality. Cereal prices have grown by 10% from November and 38% on the annual comparison. Dessert apples' prices have increased by 9% on the month and 25% on the year. Sheep prices fell by 28% over the year due to higher volumes and cheap imports of sheep meat.

Agricultural Prices Down In October

In the Defra API outputs monthly series for October 2012 the total outputs index was 178.6 from 180.1 in September, a fall of 0.8% in the month but there was an increase of 8.7% over the year. In the inputs monthly series the index was 153 from 153.6 the previous month giving a -0.4% change in prices but an increase of 1.2% over the year. There was 0.7% fall in costs of goods and services currently consumed in production from 159.7 to 158.6 over the month.

The agricultural prices index (API) output prices are divided into major crops prices which increased 0.9% over the month giving an index of 201.7 (199.9=2011) and an increase of 0.9% (16.7%) and livestock and livestock products which increased to 162.3 (161.8) or 0.3% (2.5%). These prices reflect what farmers receive for their products.

Animal feed prices, which are a key indicator, showed a 6.3% change in the price of these inputs whereas prices for animal and animal products showed only a 2.5% change in the output price.

Input prices are divided into goods and services currently consumed (eg. fertiliser and seed) which had an index of 158.6 (159.7) or -0.7% (1.3%) and goods and services contributing to investment (eg. tractors and buildings) which had an index of 123.3 (123.1) an increase of 0.2% (0.6%). These are a reflection of the prices farmers have to pay for goods and services.

The outputs annual series index stood at 165.6 in 2011 (145.9 - 2010) with crop products at 152.3 (133.3) and livestock and livestock products at 154.7 (141.4). The inputs annual series stood at 151.2 in 2011 (135.6 - 2010) with goods and services currently consumed at 157.1 (139.1) and goods and services contributing to investment at 122.5 (118.9).

New Directions Suggested For Upland Communities

Current support for hill farming is inadequate to sustain the wealth of natural and cultural assets of the English uplands according to the findings of the inquiry into the future of the English uplands by the Commission for Rural Communities (CRC). The CRC suggests new funding mechanisms are required to reward farmers for managing national assets in harmony with a developing business sector. The CRC say the suggested reforms could be part of the Common Agricultural Policy from 2013. They say there is a need to strike a balance between the needs of the environment and maximising the economic potential of the uplands. Thriving communities are an essential part of sustaining natural resources, they say, supporting farmers is not enough.

The report calls an integrated approach to realising the potential of the diverse natural resources of the uplands. It says too many well-intentioned intentions have had negative consequences for communities, farmers and land owners. It also the appointment of someone accountable to ministers to lead the implementation of the new strategy.

Other recommendations include a long-term land managemnt policy to mitigate carbon loss, completion of an audit of opportunities for renewable energy to stimulate new enterprise and opportunities for value addition, taking proper account of upland communities when developing and delivering the Goverment's 'Big Society' programme replacing voluntary and community efforts with committed and reliable measures, development of Next Generation Access in upland areas and guidance on affordable homes.

The uplands are home to over 2 million people with an above average proportion of over 40s, 25% of all woodland and 70% of drinking water comes from the uplands, 75% of the uplands are designated National Park or Area of Outstanding Natural Beauty (AONB), 53% of England's Sites of Special Scientific Interest (SSSI) are in the uplands and 82% of common land. The 40 million visitors to the upland National Parks spend £1.78bn there every year.

Farm Business Management Practices 2007-8

More results from the Farm Business Practices survey of 2007-08 have been published by Defra. The main highlights are given on the first page. They show that the more educated farmers are more likely to perform better. A lot of farmers have no qualifications and do not practice basic business management skills. LFA grazing livestock farmers are less likely to have had any further/higher education. Arable farmers are more likely to have had a further/higher education and along with dairy farmers are more likely to consider improvements. Skills used by the top performers include risk management, IT, business planning, marketing and management accounting. Of these skills, 72% of high performers are likely to have at least 4 key business skills compared to 40% of low performers.

The measures of economic performance for the farms is the ratio between economic output and inputs and are divided into low, medium and high performance percentiles. The low performers make up the bottom 25%, medium the middle 50% and high the top 25%.

The results show that 60% of farmers have a further or higher educational qualification of some kind. Fewer, about 20%, have had business management training. Farmers with further or higher education or business management training are more likely to be top performers. At 29% it is more than in the 25% high performance percentile. More than 50% of LFA grazing livestock farmers have no qualifications at all. Nearly 50% of dairy farmers have a diploma/certificate in agriculture. Cereals farmers are more likely to have degree in agriculture and/or a business management qualification. There were a lot of farmers who had considered education and training but decided against it. The main reason given was than they were not sure of it's benefits to the business.

As far as skills and knowledge are concerned, farmers with skills and knowledge of management accounting are more likely to be high performers. Farmers not applying management accounting knowledge and skills (49%) are more likely to be low performers. Some farmers use more than one skill. The main management accounting skill used is reviewing the profit and loss account. Cereal farms are more likely to use all skills (except benchmarking) included in the survey. LFA grazing livestock farmers are least likely to use any management accounting skills.

Farmers using marketing skills are more likely to be high performers (32%). It is the same with IT (28%). Cereal farmers are most likely to have computing equipment. The least likely are the LFA grazing livestock farmers with up to 25% having no business computer. Some have computer equipment but do not use it for business. Of those who do not have a computer or do not use it for business, 45% are low performers and 20% are high performers. Broadband is widespread particular among cereal farmers and they are more likely to have computer literate business users.

Most farms don't acknowledge any knowledge or skills gap. Farms that do recognize a skills or knowledge gap are more likely to be high performers. The highest proportion were the LFA grazing livestock farmers (>70%) the lowest the cereal farmers (>50%). A risk management strategy was used by 70% of farms. A range of crops or enterprises was the most common. The farms with a risk management strategy were more likely to be high performers.

The uptake of technical advice seems to be an important factor in running farms with 98% of high performers and 93% of low performers saying they take technical advice. Business skills seem to give a certain edge. Diversification seems to require and provide more skills.

Formal or informal business plans were made by farms in all performance groups. The most common method used was to measure the farm's performance by the annual profit and loss account. The results showed that those that do not plan ahead are more likely to be low performers.

The survey also gives profiles of high and low performers who carry out at least one business management practice skill. The most common business management practice skills used by the high performance percentile include management accounting, IT, business planning and risk management. Of the high performers, 72% are using 4 key business management practice skills whereas only 40% of low performers are carrying them out. Of the high performers only 1% are using no skills whereas for low performers the figure is 11%. The high business performers have an average of £574/hectare farm business income and the low performers -£78/hectare.

The distribution of farms beween high and low performance showed that 50% of cereal farms were high performers and 19% of general croppers. Only 6% of cereal farms were low performers and 5% of general croppers. The low performers included lowland grazing livestock farms with 37% and LFA grazing livestock with 20%.

Earlier results published last March show that 24% of low performers did not identify any of the management accounting practices compared with 9% of medium and 8% of high performers. Most farmers with further or higher educational qualifications also had a diploma/certificate in an agricultural or related subject. The number of farmers with a diploma/certificate in agriculture have an inverse relationship with age group.

The survey was based on a sample of around 1,900 farm businesses from all regions and types of farming. The sample for management practices was reduced to 1,450 farm businesses but it remains a representative sample.

Final June Agricultural Survey Results, England 2009

The final June Survey results for England were released by DEFRA and ONS on 19 November 2009. Some of the key results were that the total area of agricultural holdings in England has increased to 9.4m hectares since 2008. The total croppable area is estimated at 4.9m hectares. The area cropped has fallen to 3.99m hectares but the total land out of arable production stands at 231,000 hectares. Fruit and vegetables grown outdoors account for 140,000 hectares, up 2% on 2008. Common rough grazing stands at 427,900 ha. The total agricultural area has increased in size again this year to 9.8m ha.

Owner occupied land is largely the same as 2008 at 6.3m ha. Land rented for more than a year is also unchanged at 3.3m ha. The area under Full Agricultural Tenancy agreements (FAT) continued to decrease, by 2.9%, to 1,680,900 ha and Farm Business Tenancies have increased 3.8% to 1,094,400 ha. Other agreements have risen to 497,800 ha, up 2.2%.

The national herd of cattle remained at around 5.5m according to the Cattle Tracing Scheme. There were 3.9m pigs, up 0.5%. These included 444,000 breeding pigs. The national sheep flock was 14,984,000 sheep and lambs, down 3.5% on June 2008. The female breeding flock of 6,672,000, down 5.1% on last year, included 5,550,000 ewes for further breeding and 797,00 first time breeding ewes. 326,000 ewes were intended for slaughter. Rams totalled 171,000, down 5.4% on 2008.

The total number of people employed in agricultural was 363,000 up nearly 3,000 from last year. These included 223,000 farmers, business partners, directors and spouses of which 127,200 were part-time, 11,900 salaried managers and 127,800 other workers, 49,400 of which were full-time, the rest part-time or seasonal/casual or gang workers.