Farmers see lowest average profit since 2003

Farmers are being warned they need to find cost savings
Farmers are being warned they need to find cost savings

It’s time for farmers to ride out the financial climate and look at costs and efficiencies, say leading chartered accountants Duncan & Toplis.

Duncan & Toplis Director Mark Chatterton, the firm’s agriculture specialist, suggests that although similar conditions have prevailed before, the profit in farming as a whole is currently flat.

Mark said: "The levels of profit we have seen back in 2011 and 2012 are gone.

"Operating costs and general commodity prices are proving to be a challenge for many, but farmers will be used to this."

Duncan & Toplis has analysed harvest data for 2015 and found that net farm incomes (NFI) among its clients have fallen by £11 per acre from £62 to £51 since 2014.

This is the lowest average profit since 2003.

This is a significant reduction from the harvests in 2011 and 2012 when the average NFI exceeded £150 per acre.

"The NFI needs to cover drawings, tax and reinvestment which often exceeds £50 per acre.

"The average farm balance sheet will therefore be seeing a decline this year.

"But although times might seem tough, farmers are taking heed of the warning to tighten their belts and address efficiencies across the board as well as cost control.”

Mark says all farm businesses have some form of other income – storage, let property rents and diversification income.

He added: "We’ve been here before, and farmers are resilient."