‘Huge blow’ as incomes slump

ARABLE and pig producers are among those forecast to see hefty income falls due to the challenges they faced in 2020/21, new figures have revealed.

The Department for Environment, Food and Rural Affairs (Defra) has this week released the provisional Farm Business Income estimates for 2020/21, which demonstrate the level of volatility farmers continue to face industry-wide.

While some are expected to see an increase in their average incomes, particularly within the livestock and poultry sectors, Defra anticipates a sharp drop of 87% for pigs, 43% for cereals, 35% for general cropping and 10% for dairy businesses.

Challenging weather conditions, namely the extremely wet autumn and winter of 2019 and the spring drought of 2020, are expected to be the key drivers influencing income with the effects of the coronavirus pandemic also a contributing factor.

Tom Bradshaw, vice president of the National Farmers’ Union (NFU), said the decreases will come as a “huge blow”, at a time when farmers are “increasingly concerned” about their businesses’ bottom line. He commented: “The decreases in income that many UK 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.

“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.”

According to Defra, cereal growers are expected to see a 43% drop in 2020/21 average incomes to £36,000. Despite prices remaining firm, areas and yields are predicted to be lower for many crops as a result of the wet planting conditions experienced the previous autumn and a dry spring.

Moves to grow alternative crops such as spring barley (where crop area increased by about a quarter), oats and pulses are “not expected to compensate for losses of output from other crops”, the report adds, chiefly wheat and oilseed rape.

On general cropping farms, incomes are forecast to fall by just over a third (35%) to £55,000. As with cereal farms, lower crop output is predicted to be the key driver with a fall in wheat output thought to be a major influencing factor.

Despite price rises for peas, beans, oilseed rape and sugar beet, yields are expected to be heavily impacted by the adverse weather conditions.

Mixed farms also experienced lower crop yields, but the improved livestock prices – notably beef – are expected to offset this, with average

incomes rising 8% to £31,000.

In marked contrast to the cereals sector, both lowland and upland livestock farms should expect to see a rise in average incomes, due to higher cattle and sheep prices. Defra figures suggest an increase of 78% for lowland grazing livestock farms to £17,000, while incomes for Less Favoured Area (LFA) farms will be up by 42% to £32,000.

While output from milk looks set to rise, average dairy incomes will be held back by higher feed prices dropping by 10% on the year to £76,000. Defra says the major factor here was the significant drop in demand through the food service sector during the first lockdown.

Specialist pig farms have faced extreme trade difficulties in 2020/21, with export bans enforced by China in Europe due to African Swine Fever (ASF) outbreaks in Germany and Covid-19 hitting processing plants in the UK. As a result, there was a huge increase in supply and prices fell sharply, with average incomes now expected to fall by 87% to just £5,000 - down from £37,700 in 2019/20.

Meanwhile, average incomes for poultry farms are forecast to be around £130,000, an increase of 48% compared to 2019/20. Increased egg prices following strong retail demand during the Covid-19 lockdowns are expected to be a major driver increasing poultry output by 7%,” the report predicts.

“Output from poultry meat is also forecast to rise. In comparison, input costs are expected to go up by 2%. The biggest cost increase will be for feed costs.”

The final Farm Business Income results will be published by Defra in November.