New Defra farm figures 'underline volatility'

New farm business income data from Defra, which focus on income from March 2013 to February 2014, show some significant swings in farm profitability across different sectors.

Average Farm Business Income fell on cereals, general cropping, mixed and grazing livestock farms in 2013/14 but increased on dairy, specialist pig and specialist poultry farms.

On dairy farms, average Farm Business Income increased by more than two thirds to £87,800, returning to 2011/12 levels. Agricultural output was around 20 percent higher driven by both increased milk prices and production.

This was partially offset by increased input costs, particularly for feed due to increased levels of production and the prolonged winter. The upward trend in average herd size continued and the average milk yield per cow increased by approximately 4 percent to just over 7,900 litres.

However, the NFU says this snapshot does not reflect the current market or changes in recent months, most notably the dramatic downturn in the fortune of the UK’s dairy industry.

NFU Deputy President Minette Batters said: “Commodity markets and prices have seen considerable fluctuations since the last dataset released from February, on top of high levels of volatility in the UK and global markets. Wheat prices which have fallen by 30 per cent per since this time last year; global dairy commodities which are down 45 per cent since their peak in February and UK beef prices fell to three year lows earlier this summer.

“The dynamics of agricultural commodity markets have shifted and this really is a new trading environment for all in the food chain. It’s essential that we have a long term approach in our farm businesses given the long production cycles involved, and we need to see a similar injection of longer term thinking from our partners in the supply chain.

“While the EU’s Common Agricultural Policy helps farming businesses manage volatility, we need to recognise this is changing and levels of support diminishing. This means the Government has a greater role to play.

“My belief is that extending tax averaging and fiscal measures like capital and infrastructure allowances can all help to lessen the turbulence in farm businesses and ensure consistent investment patterns. The long term prospects for agri-food are positive, but we can’t plan for tomorrow if we can’t survive today’s challenging conditions.”