Defra figures reveal surprise rise in profits for dairy farm sector

LATEST farm business income figures from Defra include some surprises.

The summary of the figures for England, for the year up to March 2011, is that cereals and field vegetable growers did quite well over the 12 months, with incomes doubled in some cases. But more specialist horticulture – including glasshouse tomatoes and garden nursery supply – took a hit. And so did almost all livestock production.

Pig profits were down by a full third, after two years of upswing, because of the feed costs explosion. But grazing livestock farms, both lowland and upland, were also down, in spite of a year of healthy prices for lamb. Beef prices were less good in comparison and Mervyn Lewis of Askham Bryan College, who feeds a lot of the north of England figures into Defra’s national Farm Business Survey, said he thought feed costs and store animal costs for beef were part of the explanation for the overall drop in sector profits, along with changes in farm support.

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Another surprise, in view of the controversy over milk prices, was the finding of an overall rise in dairy farm profits – around 12 per cent after allowing for costs and seven per cent even after allowing for inflation too.

David Shaw, of Elvington, a dairy farmers’ representative in the NFU, said he was baffled by the finding ... “I had my worst year ever up to April.”

The figures are sometimes misleading because farms are categorised on the basis of their main source of income, so a dairy farm which also sold crops might be subsidising itself. But that is probably a relatively small factor.

Another weakness in the figures is that they do not always include all labour costs. Wages formally paid out of the business would be deducted from ‘farm income’. But for many farm owners, the overall margin and family wages are the same thing.

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Finally, as Defra stresses, there are big variations within all sectors and what might be true on average might not be true on small-to-middling farms.

But Andrew Thompson, managing director of Promar International, which monitors dairy costs for Tesco and others, told the Yorkshire Post the Defra figures looked about right. He said advance purchasing meant the surge in input costs did not hit home fully until about this April.

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