Fall in sterling helps boost farm incomes
UK farm incomes rose to £3.963bn last year, a 1.5% increase on 2015, according to the latest statistical report from Defra.
Farmers benefited from higher direct payments as a result of the fall in the value of sterling following the Brexit vote, the UK-wide figures show.
The figures contrast with Welsh Government statistics released in December which showed farm incomes in Wales falling 23% to an average £22,000 in the 2015-16 financial year.
Direct payments under the Basic Payment Scheme are set in euros and converted to sterling each year using the exchange rate set by the European Central Bank every September. In 2016, 1 was worth 85.2p compared to 73.1p in 2015.
Milk decreased in value by £401m to £3,263m, driven by lower production and price. A combination of poorer grass quality due to variable weather and dairy farmers’ attempts to reduce key costs such as the use of supplementary feeds left production 4% lower than 2015.
The average price of milk in 2016 was 22.6p per litre (ppl) compared to 24.5 ppl in 2015, 7% lower.
The value of livestock primarily for meat rose by £86m, with increases seen in all sectors. Higher slaughterings and heavier calf and adult cattle weights resulted in a 2.5% increase in volumes, while prices are 1.3% lower.
The value of sheep meat increased by £33m to £1,153m, with production 3.4% lower and price 6.5% higher on 2015. The value of poultry meat rose by £23m to £2,243m, chiefly production-driven as prices fell by 2.5%. Eggs fell by £74m to £607m, entirely pricedriven as volume of throughput at egg-packing stations rose by 5%, pushing prices down by 15%.
In 2016 the cost of animal feed fell by £157m to £4,574m, a combination of reduced volumes and feed price. Depressed cereal prices in the first half of the year, combined with reduced use as farmers strived to make efficiencies, helped keep the annual average price lower.
The amount paid in agricultural wages rose to £2,541m, a £39m increase resulting from higher rates of pay which offset the slight decline in numbers employed.
Overall cereal production was down, with the exception of oats, driven by a return to more typical yields following the record yields of 2015. Despite market prices strengthening in the latter part of the year, cereal prices for the year as a whole were lower.
The cost of intermediate consumption fell by 4.2%, due to lower prices and a general fall in volumes used. This led to a 1.9% (£165m) fall in gross value added at basic price to £8.5bn.
The latest December survey results released by Defra show that the total number of sheep and lambs in the UK on December 1, 2016 stood at 23.8 million, an increase of 3.1% on the 2015 figure.
This is the biggest national flock at this time of year for over a decade.
The breeding flock increased by less than 1% to 14.8 million, while other sheep and lambs increased by 6.7% (or 570,000 head) to 9.05 million. This highlights the higher carryover of lambs this year when compared to last.
HCC’s industry information executive John Richards said: “Reasonable lambing conditions contributed to an increase in lambs in 2016 within Wales and the UK as a whole. However, the sheep sector was also faced with unfavourable weather at certain stages during the year. As a result, some producers reported difficulties in finishing their lambs.”
Defra slaughter figures for the first quarter of 2017 show that a similar number of lambs, around 2.9 million, have been brought forward this year compared to 2016.
Mr Richards said: “The figures suggest a possibility of a high number of old-season lambs on UK farms, although it is unclear how many of these will be kept for further breeding. It is also expected that, given the later Easter this year, we will see higher throughput numbers by the end of this month.
“Looking at the breeding ewe numbers, it is encouraging that the national flock seems to be in gradual growth. This hopefully suggests a greater sense of confidence and optimism within the sector, despite the political uncertainty that currently exists.”