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

Sign up for regular updates

You can subscribe to receive Dairy market news straight to your inbox. Simply fill in your contact details on our online form and select the information you wish to receive.

Visit the Keep in touch page

More Dairy market news

Sectors:

Tags: