Cereal farm incomes forecast to plunge two-thirds as support payments fall

Farm incomes across England are forecast to drop sharply for most sectors in 2025/26, as lower crop prices, volatile yields and further cuts to support payments squeeze farm profits.

New figures from Defra, published on 12 March, suggest earnings will decline across much of the industry, with cereal farm income expected to plunge by around two-thirds to £17,000.

Farm Business Income (FBI) — defined as the total output generated by the farm business minus total farm costs — is widely used as the main measure of farm profitability. It represents the return to unpaid labour, management and capital invested in the farm.

The forecasts, based on data available in early February 2026, provide an early indication of how farm incomes may change compared with 2024/25. Final survey results for the period will not be published until December 2026.

Defra cautioned that the forecasts should be treated carefully. Because farm income is calculated as the relatively small difference between total output and total input costs, “small percentage changes in either of these can result in large percentage changes in income”.

Officials also noted that income levels vary widely between individual farms, meaning averages can mask significant differences across businesses.

Across the sector, falling cereal prices combined with “extremely variable yields in 2025” are expected to be a major driver of lower incomes. Cuts to the delinked Basic Payment and, in some cases, lower agri-environment payments are also forecast to weigh on farm finances, alongside modest increases in input costs.

The delinked Basic Payment replaced the EU-era Basic Payment Scheme following Brexit and is gradually being reduced as the government transitions support towards environmental land management schemes.

Cereal farms are forecast to see the sharpest decline. Average Farm Business Income is expected to fall by around two-thirds to £17,000, reflecting lower cereal output and reductions to the delinked payment.

General cropping farms are also predicted to face a significant drop. Average income is forecast to halve to £54,000 compared with 2024/25, with reduced crop output a key factor behind the fall.

Specialist pig farms are also expected to struggle, with income forecast to drop by around 41% to £75,000. The decline is largely linked to weaker prices for finished and store pigs.

In contrast, dairy farms are forecast to see strong income growth. Average FBI is expected to rise by 45% to £224,000, primarily driven by increased milk production during the survey year from March 2025 to February 2026.

Milk prices themselves saw a downward trend towards the end of the period, meaning the income increase is largely due to higher production rather than stronger farmgate prices.

Lowland grazing livestock farms are also expected to see modest gains. Average income is forecast to rise by 9% to £45,000, supported by exceptionally strong cattle prices which boosted livestock output.

However, grazing livestock farms in Less Favoured Areas (LFAs) are forecast to see income fall. Average FBI is predicted to decline by 8% to £37,000, as reduced delinked payments and lower agri-environment income outweigh increases in livestock output.

No income forecasts have been produced for specialist poultry or horticulture farms, with Defra saying estimates would be subject to “a considerable degree of uncertainty” due to the structure of those sectors and the relatively small number of farms surveyed.

Across all farm types, the 2025 delinked Basic Payment is expected to fall by just over two-thirds. Meanwhile, average net income from agri-environment payments is forecast to be around 5% lower, following significant increases for some sectors in 2024/25.

The figures underline the continued volatility in farm incomes as the industry navigates shifting markets, unpredictable weather and the gradual removal of traditional subsidy support.