API Prices Lower Than Last Year

The agricultural price index (API) for all outputs increased by 0.8% while the API for all inputs decreased by 0.4% in April. Prices overall are lower than last year. At the same time last year the price index was 7% higher than this yea for output while inputs were 4.2% higher.

On the outputs side all price indices for crops this year are lower mainly due to a supply shortage due to the poor harvest of 2012. Energy prices fell again. Feed prices increased by 0.7% over the month but are still 11% lower than last year. Fertiliser prices also fell by 2.2% in April but are still 9.1% lower than last year.

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.

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.

Lower Farm Incomes Expected In 2012-13

Provisional estimates for average farm business income for 2012-13 suggest that it will fall across the board due to the poor growing season and harvest. Higher output prices in the cropping sector are expected to only partially offset lower yields and quality. Higher costs are also expected to lower incomes especially in the livestock sector. The single payment was 10% lower on average than the previous year due to the strengthening of the pound against the euro.

An Increase In Agricultural Price Indices In September

The index of prices received by producers for the total of all agricultural products for September 2011 was 165.7, up from 159.2 in August.

The index of prices paid by producers for the total of all means of agricultural production for September 2011 was 153.1, up from 153.0 in August. The slight increase in purchase prices being covered by the larger increase in production prices. There was an increase in the price of fuel. Confidence is returning to cereals markets after fears of bad harvest weather subsided and prices retruned to normal after increasing earlier in the year. Potato prices started well this year as bad weather reduced availability. News of adequate harvests reduced fears and prices came down again.

Milk prices have increased steadily over the last 18 months with good demand and supply ensuring a good market. Good market conditions also apply to the beef market. Sheep and lamb prices have been sustained but prime prices are beginning to tail off.

UK Harvest Data 2009

The NFU recently released data concerning the UK 2009 harvest reporting that production is down on the 5-year average by over a million tonnes. It is estimated that this year's wheat harvest will be around 13.9 million tonnes, 3.4 million tonnes lower than last year. The 5-year average for wheat is 15,106 million tonnes, from 1,921 hectares at 7.9 tonnes/hectare. The decrease is due to both lower sowing and lower yields. Farmers planted less cereals and oilseed rape and planted more lower input crops because of difficult autumn planting conditions, high input prices and declining forward prices. Together with drought affecting cereals in England, cereals output was down by 14%. Winter barley is down 300,000 tonnes to 2.5 million tonnes, spring barley is up 440,000 tonnes on last year to 3.8 million tonnes due to lower yields but a significant increase in sowing for 2009. Oilseed rape sowing decreased compared with 2008, but yields increased to give very similar results to last year.