Following harvest 2024, we have updated the figures for our Loam Farm model. This shows low profits from the previous cropping year. In addition, the outlook for 2025 is not great.
Loam Farm is a notional 600 hectare business that has been used since 1991 to track the fortunes of British combinable cropping farms. It is partly owned and partly rented and is based on real-life data. It has one full-time worker and employs harvest casual labour. It grows a range of cereals crops and has entered into an SFI agreement. The table below provides a summary of the last three harvest years, and a budget for harvest 2025.
The farm is completing its grain sales from harvest 2024. It has less to sell than average due to reduced yields – a result of the wet weather through the autumn of 2023 and spring of 2024. Coupled with unexciting prices this means the output of the farm is reduced – some 35% on the 2022 harvest year – although it must be noted that this was an unusually good year. Although variable costs have fallen, overheads have climbed. This has resulted in a loss from production. This year’s residual Basic Payment and the SFI the farm has entered offset this shortfall, but there is a low level of overall farm profitability.
We have commented before about the variability of results from harvest 2024. Loam Farm is simply an illustration. Some businesses will have had an ‘OK’ year (although very few are likely to have had a ‘good’ year). But, equally, some combinable cropping farms will have fared worse than Loam Farm and are facing significant losses for the past year.
Turning to the budget for harvest 2025, output is forecast to recover somewhat. This is largely due to yields reverting to average rather than any firming in prices. Loam Farm has managed to establish its crops this autumn despite some testing conditions. With costs not changing greatly, profitabilty from production improves so that there is a positive return. The sharp drop in the Basic Payment for 2025 can be seen – this is a result of payments being capped at £7,200 per farm. Previously, Loam Farm was budgeting on BPS income of £58 per hectare. The SFI income has risen as the farm has added some new SFI2024 options. It shows how important this income stream has become to overall profitability.
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