Farm Business Income report highlights a volatile year for farming

The Department of Environment, Food and Rural Affairs (Defra) has released the provisional figures for the 2020/2021 Farm Business Income report, which demonstrate the volatility farmers faced in a year defined by the Covid-19 pandemic.

The forecasts for 2020/21, which are derived from information available in early March 2021 for prices, livestock populations, marketings, crop areas, yields and input costs, are intended as a broad indication of how incomes for each farm type are expected to move compared with 2019/20.

While some farmers are expected to see an increase in income, particularly within the livestock and poultry sectors, Defra anticipates a drop in income of 43% for cereals businesses, 35% for crop businesses and 10% for dairy businesses.

Year-on-year results for each farm type

Cereals: -43%
Lower crop output reflected challenging weather conditions of a wet 2019 winter and a dry Spring 2020 accounts for much of the decrease

General cropping: -35%
Lower yields due to planting disruption, water logging of winter crops, and the spring drought are predicted to result in a fall in crop output.

Dairy: -10%
Output from milk is predicted to rise by 1 per cent with milk prices relatively stable while production is up slightly on 2019/20

Grazing livestock (lowland): +78%
Output from both sheep and cattle is expected to rise due to higher average prices for finished and store cattle, and fat and store lambs.

Grazing Livestock (LFA): +42%
Increased output with similar trends for cattle and sheep enterprises as those in lowland farms

Pigs: -87% Higher feed costs will be compounded by fall in output from pig enterprises where a rise in revenue from pig sales will fail to offset change in livestock valuation

Poultry: +48%
Increases to input costs (primarily feed) predicted to be more than offset by a rise in enterprise output for both the egg and poultry meat sectors.

Mixed: +8% Overall output is forecast to be little changed on 2019.20 with a rise in output from livestock enterprises (notably bee) largely offsetting a fall in crop output. Input costs are also predicted to change little while the Basic Payment is expected to rise around 2 per cent.

“The decreases in income that many farmers are currently experiencing, while expected after such a difficult year, will be a huge blow as farmers become increasingly concerned about their bottom line, especially as they also face reductions in BPS farm support payments later this year,” said NFU Vice President Tom Bradshaw.

“We all know that income can vary from sector to sector, region to region and year to year. Volatility is something farmers are well versed in managing but it doesn’t make it any easier to deal with, especially while there is so much uncertainty about the future and how farm support schemes will operate.

“It’s therefore crucial that the Agricultural Transition Plan not only supports farming in the move from BPS to ELMs, but also provides the productivity improving measures, such as grants and investment in R&D, it has promised so we can build resilience, profitability and sustainability across all sectors.”

Read the full Farm Business Income forecast here.

The final farm business income results are due to come out in October 2021.

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