Rising costs leave farm incomes at a standstill

A combination of rising costs and stalled farm gate prices have eroded farm earnings according to the latest Total Income From Farming (TIFF) figures, leaving farmers out of pocket despite improved efficiency.

The figures, released by Defra today, reveal that in 2005 farm incomes dropped by 11.4% in real terms as a result of rising costs over the past 12 months with farmers and growers unable to pass these increases up the supply chain*.

Energy costs are the main area of concern with expenditure on energy inputs rising, despite increased efficiency, by almost 20% in the past 12 months. Above average increases were also recorded on fertilizers, labour and the costs relating to servicing debts and bank transactions. The figures reveal that farmers and growers were unable to recoup these increases through the market as farm gate prices either remained steady or fell over the past 12 months.

NFU President Tim Bennett said: "What these figures reveal is that we're farming better than ever before. In most areas – poultry, livestock, dairy, horticulture, arable – farmers and growers have actually increased efficiency and production but sadly these efficiencies are going largely unrewarded as a result of rising costs and a food chain which fails to respond. It's like being stuck on a treadmill, as an industry we've upped the tempo but we're still not being allowed to move forward."

"At a time of relative financial growth in other sectors farmers are being denied a fair return and it is high time the retailers, processors and competition authorities recognised that farmers, like anyone else in business, must be allowed to pass on increases in the cost of production. We will be pushing for this situation to be rectified and will take any signs of downward price pressure from those further up the supply chain extremely seriously. "