The first estimates for 2017 show total income in farming rose by 41 percent, thanks to increased productivity and higher farm gate prices.
Productivity levels are also estimated to have increased by 2.9% between 2016 and 2017, to the highest level recorded.
Total income from farming is the profit from all UK farms in a calendar year, measuring the return to all businesses for their management, labour and capital invested.
The first estimates by Defra published on Thursday (3 May) show total income from farming rose by £1,683 million from 2016 to 2017 to £5,742 million, an increase of 41%.
The increased productivity recorded in 2017 also shows farmers are producing more with less, which suggests they are using smarter more efficient methods and embracing innovation.
The volume of all outputs increased by 3.6% compared to 2016 whilst the volume of all inputs increased by just 0.7.
A strong harvest in 2017 helped to drive productivity higher for 2017, with a 7.3% increase in the volume of all crops estimated.
Livestock outputs for meat and other products also rose by 1.8% from 2016. More productive farming across all sectors is directly benefitting farmers’ bank balances as the total income from farming per person engaged in entrepreneurial labour in the sector rose by 41% in real terms to £29,794 a year.
Farming Minister George Eustice said applauded the figures: “Estimates show 2017 was a good year for the farming industry, in particular those in the arable and livestock sectors. Whilst the increase in farm gate prices has helped, it’s also encouraging to see signs that productivity is on the up.
“Farming is a volatile business and individual businesses will face many different challenges in a year, but these estimates show an industry that is ready to make the most of the opportunities leaving the EU will present.”
NFU Deputy President Guy Smith said the figures show positive news for the industry and demonstrates the significant contribution agriculture makes to the wider economy.
However, he said the NFU are concerned whether this performance can be sustained in the years ahead.
“The increased profitability of our sector is particularly good news, as farmers have experienced a full year of higher commodity prices due to the devaluation of the pound which occurred after the EU referendum,” he said.
“It is important to remember that this rise comes after three years of falling profits and margins, and increased price volatility for many across the industry. However, the NFU is concerned whether this performance can be sustained in future years.
“In addition to the effects of the recent wet weather, the cost base of the industry has been rising. Some farm commodity sectors are also witnessing falls from the recent historic highs seen in 2017. Milk price, for example, has fallen nearly 8% in the past three months.
“Lower farm gate prices will feed through to a lower bottom line for 2018 and it would be reckless to draw from these figures that farming is entering a period of sustained profitability.
Mr Smith added: “In order to put farmers in the best position to continue producing food for the nation, this sort of volatility needs to be addressed in future agricultural policies. The NFU believes that with the right government policies, Britain’s farmers can continue this impressive performance.”