Dairy farm incomes may have fallen by as much as 78% in the year to February 2024, with cereals businesses seeing a 77% drop, provisional figures show.
High input costs, decreases in output prices and farm support as well as weather volatility are all factored in the new Farm Business Income (FBI) projections.
The data, published by Defra on 14 March, suggests general cropping enterprises (incomes down 58%) and mixed farms (-46%) also suffered a testing year.
However, there were small increases for those grazing livestock in the lowlands (up 6%) and in upland less favoured areas (2%).
Specialist pig enterprises saw a 34% increase in incomes, albeit off the back of a torrid past few years.
Lower prices for key outputs, such as wheat and milk, are expected to be one of the main factors influencing farm incomes.
The impact of lower output prices is also predicted to be compounded by continued increases to some input costs.
The FBI projections are not only low year-on-year - following exceptional highs in 2022/23 - but low in comparison to recent years, including the pre-Covid period.
The NFU warned that the figures painted a "stark picture of the challenges facing farmers".
“Across all sectors, farmers need to know that government is creating policies that support them to build financial resilience into their businesses," said president Tom Bradshaw.
“Profitable farm businesses are essential if we are to deliver what the country needs; food produced to world leading standards and environmental protection.
"We need government to deliver on its promises and prioritise domestic food production with a clear commitment to a budget that can underpin food production and deliver for the environment."
He said independent modelling from the Andersons Centre suggested an annual budget of £4 billion is needed to support the government’s statutory environmental ambitions, and a balanced agri policy.
He said: “Under current support arrangements the sector will receive £720m of stability funding and maintaining this level of funding is vital to strengthen the resilience of a sector already facing significant economic challenges."
The FBI are only forecasts, with final results due later in the year.
