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.

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).