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Average farm business income forecast to fall for dairy sector
Thursday, 22 April 2021
By Bronwyn Magee
Average farm business incomes* for dairy farms in England is expected to fall 10%, according to Defra’s latest farm business income forecast. For 2020/21, farm business incomes are expected to average £76,000, £8,800 less than the previous year.
The report outlines that input costs are expected to increase 1% year-on-year, driven by rises in feed prices, as well as machinery and other livestock costs. However, these increases are anticipated to be partially offset by a decrease in crop costs, in particular the cost of fertiliser.
Meanwhile, the value of output from milk and milk products is expected to increase 1%. This comes as milk prices remained fairly stable through the year, while milk production looks set to increase slightly year-on-year, despite COVID-19 related pressures seen during the spring peak in 2020.
However, a decline in crop outputs, particularly from cereals, means overall output on dairy farms is expected to remain steady on last years levels.
Despite the year-on-year decline in average farm incomes, dairy continues to have the highest average farm business income of the livestock sectors outside of poultry. However, it should be noted the due to the large variation in milk price received among farms, in addition to COVID-19 impacting some farms more severely than others, the forecast should be treated with some caution at this stage.
*Farm Business Income represents the financial return to all unpaid labour (farmers and spouses, non-principal partners and their spouses and family workers) and on all their capital invested in the farm business, including land and buildings. In essence, Farm Business Income is the same as Net Profit.
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