UK farm incomes fall again
NEW figures from DEFRA show the farming industry made a healthy contribution to stabilising the UK economy last year, but for a second year running farmers have seen their income fall.
The NFU has warned that while farming’s importance to the economy should not be underestimated, the bottom line for farm incomes is not so positive. Aggregate figures for 2010 show a 4.3 per cent drop in total farm incomes.
Rising input costs and a lower level of direct support (due to exchange rates), are blamed for more than offsetting the increases in the value from agricultural production.
- UK farming contributed £7.2bn to the economy in 2010 – up 6.2 per cent
- Total value of UK agricultural production £20.7 billion - up 5.3 per cent
- Increased value of oilseeds, poultry and milk contributed to output growth
However, NFU chief economist Phil Bicknell said in real terms, TIFF was some 12 per cent down on the recent high of 2008.
“The TIFF is a widely-recognised indicator of industry performance but for the second year in a row we’ve seen the TIFF fall.
“Agriculture has been inevitably linked with the headlines focusing on booming global commodity prices and rapid food inflation. However, with the total value of UK farm output rising just 5.3 per cent year-on-year, these latest statistics show that the world market peaks aren’t being seen at a UK farm level.”
There were he said, a number of reasons. A significant proportion of the 2010 harvest was sold forward at prices far from the current market highs and the farm gate price paid to dairy farmers for their milk has been very slow at reflecting commodity market returns.
“Even now there have only been marginal improvements, and from unacceptably low levels. Prices for livestock also remained under pressure through much of the last year.
More importantly, said Mr Bicknell, the Defra figures rising costs for feed, fuel and fertiliser were continuing into 2011.
“Many farmers will remain extremely cautious about the year ahead. In particular, the scale and speed of higher feed costs will have hit pig, poultry and dairy producers last year. Although the TIFF data looks at the performance of the farming industry as a whole it is not representative of trends across all agricultural sectors.
“The reality is if the single payment was removed completely, a large proportion of farming businesses would not be financially viable despite the strong commodity prices seen in global markets,” he said.