The latest figures from the Department for the Environment, Food and Rural Affairs (Defra) show that UK farmers’ income decreased by 17 per cent last year and the sector’s contribution to the economy fell by six per cent to £9.6 billion. Moreover, Total Income From Farming (TIFF) decreased by 17 per cent to £4.6 billion.
According to Defra’s report, the main contributors to the decrease in TIFF were a £509 million increase in the price of animal feed, a £358 million increase in the costs of goods and services, a £116 million increase in fertiliser costs and £110 million increase in energy and labour costs.
The report said that the cold, wet spring followed by the dry, hot summer contributed to lower yields of key crops. However, better prices helped offset production falls, and the value of total livestock output rose by three per cent to £14.8 billion. Prices were generally higher, but the challenging weather conditions affected volumes.
Meanwhile, the report found that TIFF per annual work unit (AWU) of entrepreneurial labour, which is farmers and other unpaid labour, fell by 19 per cent in real terms to £23,957.
Moreover, as global oil prices continued to rise, energy costs rose by £113 million to £1,346 million. However, weather conditions and efficiency savings helped reduce usage on farms.
Fertiliser costs also rose by £116 million to £1.3 billion, while other goods and service costs rose by £358 million to £3.6 billion, which reflected the increased demand for straw by the livestock industry. Meanwhile, the employee wage bill was £2.7 billion, which was a rise of £112 million. However, the value of farm subsidy the Basic Payment Scheme (BPS) was just slightly up on 2017’s figures, at £2.75 billion, due to the exchange rate.
Martin Johnson, Manager at Milsted Langdon said: “With changeable weather patterns and rising costs effecting the income for farmers it is important that they think about areas of their business that they can make more efficient. It is important that you seek specialist advice to discuss and identify opportunities to maximise the farm income in testing times.”