Decline in farm incomes forecast
21 Mar 2019
DEFRA has released its latest Forecasts of Farm Business Income by type of farm, England for 2018-19, in which it predicts a decline in every type of farm income, except cereals.
Martyn Dobinson, a Director at Saffery Champness, based in Manchester, comments:
“The forecast of farm business income/net profitability makes interesting reading and the detail tells a familiar story, consistent with what we are hearing from our farming clients. Previous data for the years 2015-2018 had shown a steady increase in farm incomes across all farm types, except pigs and poultry (which had fluctuated), but this latest forecast sees all sectors except cereals down.
“The weather, particularly during the late spring and summer last year, has had a significant impact on crop yields, but crop prices were generally up for many, particularly cereal prices. Conversely, that has meant higher feed prices for livestock farmers, who have also had to purchase greater quantities of feed due to the cold spring and dry summer in 2018.
“The forecast for the pig sector, at – 95% when compared to 2017-18, is particularly challenging although the survey recognises that this number may be distorted due to the small sample size. However, every farm type, barring cereals, is now showing a forecast decrease in farm income, largely due to increasing input costs for livestock farmers and reduced yields for arable farmers.”
The headline figures in the forecast at current prices, compared to 2017-18 figures, are:
Martyn Dobinson continues:
“It will be interesting to compare these forecasts to actuals as full year financials for English farm businesses for 2018-19 filter through over the coming months.
“Farmers are undoubtedly facing challenging times. Although these forecasts are for England only, they will provide an indication for farm businesses across the UK. Future farm incomes are also likely to be significantly affected by the continuing uncertainty around trade deals which are dependent on the outcome of the Brexit negotiations, the impact of which will not be reflected in this latest dataset.”