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Bleak outlook over hill-farm finances
AN average upland farmer in northern England, who made £18,400 profit two years ago, may be heading for a loss of nearly £2,000 over the current financial year, according to a specialist accountancy firm.
That would be before wages – and at least two people would be involved in most of the businesses concerned.
The figures were produced by the Carlisle branch of the agricultural consultancy Armstrong Watson, based on the circumstances of 30 clients running sheep and cattle in the hills of Cumberland and Northumberland.
The firm also works out of Skipton and Northallerton and the consultant who did the sums, Stephen Melville, told the Yorkshire Post: "I would expect it to be much the same in your uplands."
His calculations were based on an average core holding of 686 sheep and 84 cattle on land eligible for hill farm allowances.
Those allowances were taken into account, along with Defra compensation for problems caused by foot and mouth; the average reduction in Single Farm Payments (SFPs), caused by adjustments to the formula; and the hefty extra loss of grant caused by an increase in the amount shaved off by the UK government for "modulation" – diversion into other rural support schemes.
The average profit over 2005-2006 was 18,402 – although that was thanks to an SFP of 35,518. Without the SFP, in other words, the farmer would have lost more than 17,000 even in that relatively good year.
Now the average SFP is down to 31,966 and costs are up and profits are down. Assuming a farmer has earned an average 5 a head less for his lambs than he would have in 2006, his predicted "profit" for this year is 6,643. If he has earned 10 a head less, it will be just 2,355. If he is 15 a head down – and some are – he will be declaring a loss of 1,932.
Armstrong Watson produced the figures in December, at the request of the Bishop of Carlisle, Graham Dow, who wanted them for his maiden speech in the House of Lords.
Since then, the outlook has become clearer and Mr Melville said yesterday: "I would think that a number of those farmers will have averaged 15 a head down and the majority would be 10-15 a head down. Prices are picking up a bit now, it's true, but it's too late for the hill farmers. They had to sell their lambs at just the wrong time because they don't have the pasture to keep them through the winter."
Bishop Dow said in his House of Lords speech: "The Cumbrian farmer finds it hard to see why we do not have clearer policies to support food production."
Subsidy income averaging 45,000 per farm now represents 97 per cent of farming profit, according to the Institute of Chartered Accountants' Farming and Rural Business Group.
The survey of agricultural accountants revealed the average farm turnover for 2006-2007 was 312,600, yielding an average net profit of 46,300 – little more than the average receipt from subsidies and not enough to cover more than wages and costs for the families involved.
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