Reductions in average farm business incomes for the dairy sector

Tuesday, 5 November 2019

By Charlie Reeve

Defra has now released the most recent set of accounts for Farm Business Income in England. These have shown a considerable decline in profitability across the dairy and red meat sectors.

The report outlines the significant reliance on BPS payments for many farm businesses. As well as a variety of economic factors, challenging weather conditions has also contributed towards the general decline across livestock sectors that we have seen.

Dairy has seen a significant decrease in average farm business incomes, dropping by 38% on the previous year to £73,700 for 2018/19. Both fixed costs and variable costs increased year-on-year.

Direct agricultural income for the dairy sector accounted for £30,300 of the total farm income, BPS and agri-environment schemes accounted for £34,000 and diversified income averaged £9,400.

The average milk price rose by 2% in 2018/19 and output rose by 7%. Despite these small rises in both price and production for the dairy industry, the more notable increases in on-farm costs outweighed this improvement. Increases in the cost of feed, labour and machinery have all contributed towards the significant drop in incomes, with feed costs alone increasing by 22%.

Despite the notable decrease in average farm incomes year-on-year, dairy remains the sector with the highest percentage of farmers making a profit of over £75,000 per annum. Dairy also continues to have the highest average farm business income out of the livestock sectors outside of poultry.

Charlie Reeve

Trainee Analyst

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