Farm Profits Fall

Most sectors of agriculture saw profits fall in 2014/15 compared to the previous year. This is according to the latest Farm Business Survey (FBS) results released by DEFRA.  These results relate to England and update the provisional ones released earlier in the year (see January article).  The FBS works on February/March year ends so the period being reported covers harvest 2014.  The full release can be found at – www.gov.uk/government/statistics/farm-business-income

Farm Business Income (FBI) can be thought of as the average farm profitability for the sector.  As shown on the chart below, most sectors saw a fall in returns in 2014/15 compared to 2013/14 (these years are the multi-coloured oneson the chart).  The only farm type to buck the trend was Lowland Grazing Livestock.  Declining output prices, coupled with stubbornly high costs, contributed to the falls in other sectors. 

Looking ahead, the figures for the current 2015/16 year are Andersons estimates.  These show some further drops, most notably in the dairy sector.  The first DEFRA estimates for 2015/16 will be published in January.

The chart shows a breakdown of where the profit comes from for the years 2013/14 and 2014/15, based on four ‘profit centres’.  For Cereals, General Cropping and the two Grazing Livestock farm types it can be seen that the return from agriculture was negative in 2014/15.  It took part of the Single Payment to return these farms to profit.  Of course, FBI is only an average for the sector.  The range in performance across farms is vast, and the more efficient units are likely to have made a positive return from farming even in the 2014/15 year. 

 FARM BUSINESS INCOME (ENGLAND) – Source: Farm Business Survey