This May sees a milestone for the Agricultural Budgeting and Costing Book. The famous ‘green book’ has reached its 100th edition.
The 50 years since the first edition was published have seen enormous change in UK farming. In 1975, the industry was dealing with the implications of joining the EEC and the country was undertaking a referendum on whether to stay ‘in Europe’ (perhaps things do not change so much after all…). Our ongoing membership of what became the EU saw a period of rapid modernisation and growth in the farming sector. This, however, came at some cost to the environment.
An anniversary is always a good time to take stock and look back. The table below sets out prices back in 1975. In March 1975 the RPI index was 124. This March it was 1,560 – thus prices have gone up by 12.6 times over the 50 years. The table below sets out some key farming prices and costs back in 1975. It adjusts those prices to 2025 levels and then compares them to what we are actually seeing today.
Table 1: UK Farming Then and Now: 1975 vs 2025 in Numbers
Notes: All prices are averages for the previous 12 months where possible to reduce effects of volatility.
* average horsepower approx. 70Hp in 1975; 170Hp in 2025
Generally speaking output prices have not gone up as fast as inflation. Commodity-type inputs such as fertiliser and fuel have also not, generally, kept pace with inflation. However, overheads such as labour and machinery have gone up by more than the general price level. This pattern is often seen in commodity industries and creates long-term pressure for businesses to be more productive and also to grow in size – if there is less profit per unit of production then the business needs to be bigger to produce the same returns.
During the past half-century the Common Agricultural Policy (CAP) provided a significant level of support to farming, but the sector also became very managed – first by Brussels and then, more latterly, by Whitehall and the devolved Governments. This, perhaps, has led to an attitude that it is Government’s job to fix the problems of farming.
It seems clear the current UK administration does not regard farming and food production as a high political priority. Whilst this is no different from many previous UK Governments, being outside the CAP the effects are now more noticeable. A series of policy decisions over the past few months on issues such as employment costs, Inheritance Tax and the sudden closure of support schemes such as SFI & capital grants has indicated that the Government is ‘tone deaf’ to the concerns of farming.
It seems that farming, as a sector, should not expect any special treatment and food production is to be treated as a business like any other. Whilst there may be some support for the environmental actions the Government wants farming to deliver, the budget for this is likely to be constrained.
This brings us back to a point made many times in this Book over the past five decades. Farmers should not look to external sources to provide financial success. The most profitable farms focus on the things they can control – namely running an efficient and productive business with an eye on the long-term. Budgeting, good business management and regular benchmarking are integral to this.
The 100th book is available from Agro Business Consultants for £57. For a limited time only, those who purchase an ABC Book via our website, will receive a complimentary copy of the ABC Professional Update bulletin (worth £40). If both the 100th and 101st Editions are ordered, the discounted price for the two is £100, with a complimentary Professional Update bulletin again available.
The 2024/25 year, just finishing, shows an improvement in output once more. Meadow Farm sells its finished stock in the autumn, so will not have experienced the significant rise in cattle prices since the turn of the year. Some of the higher variable costs are due to the farm entering the SFI (i.e. herbal ley establishment). The extra income from the SFI offsets the decline of the BPS and the business profitability improves.
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.
