Bloomberg News

U.K. Farm Income Slid as Rain Cut Yields, Boosted Costs

January 31, 2013

Farm income slid in the past season in much of the U.K. after the second-wettest year on record slashed crop yields and boosted feed costs for livestock producers, government figures show.

Business income for the average grain farmer in England in the 2012-13 season probably will be 11 percent lower than a year earlier, while dairy farms made 42 percent less, the Department for Environment, Food & Rural Affairs said today in a report on its website. Total farm income in Scotland slid 15 percent in 2012, the Scottish Government said in a separate statement, while Northern Ireland’s Department for Agriculture and Rural Development reported agricultural income plunged by 51 percent.

The U.K. received 1330.7 millimeters (4.4 feet) of rain last year on average, just 6.6 millimeters below the all-time high set in 2000, while England, the country’s biggest wheat- growing area, had its wettest year on record, Met Office data show. Feed-wheat futures for May delivery rallied to a record 230 pounds ($363) a metric ton in November on NYSE Liffe in London, increasing costs for livestock farmers as rain also reduced grass and hay supplies.

“Wheat yield and quality were hit by the weather, while it’s been well documented that rising costs outstripped farm gate price changes for dairy and pork producers at times over the last year,” Phil Bicknell, chief economist for the National Farmers Union, said in an e-mailed statement. “More recently, we can add the plummeting lamb price to the list of challenges the industry faces.”

Wheat Output

U.K. production of wheat, the country’s largest arable crop, declined 13 percent from a year earlier to 13.26 million tons, Defra said in December. The country may be a net-importer of the grain this year for the first time in 11 years. Defra raised its forecast for wheat purchases yesterday by 7 percent.

English grain farmer income may be about 84,000 pounds ($133,000) on average in the 2012-13 season that began July 1, down from 94,500 pounds a year earlier, Defra said in its provisional report. Dairy farmer income was estimated at 50,000 pounds on average, compared with 86,500 pounds in the previous season. Income for farmers raising grazing livestock fell 44 percent to 52 percent, depending on the region, while pig farm returns may drop by 50 percent.

Scotland Incomes

In Scotland, total income from farming was about 635 million pounds last year, compared with 746 million pounds in 2011, the government said. Costs increased by about 2 percent to 2.71 billion pounds, while direct payments and subsidies slid by 8 percent to 557 pounds in 2012. Subsidies from the European Commission are denominated in euros and were affected as the pound strengthened last year, according to the report.

“These figures illustrate the impact on incomes that have resulted from poor weather, rocketing input costs and a decline from last year’s often record livestock prices,” Richard Lochhead, Scottish rural affairs secretary, said in a statement. “The change in the exchange rate also reduced the value of CAP payments,” he said, referring to the EU’s Common Agricultural Policy.

In Northern Ireland, total income from farming may be 143 million pounds, down from 290 million pounds a year earlier, the region’s agriculture department said. Farmer costs rose by about 8.5 percent to 1.4 billion pounds, including a 13 percent jump in feed prices for livestock producers.

To contact the reporter on this story: Whitney McFerron in London at wmcferron1@bloomberg.net

To contact the editor responsible for this story: Claudia Carpenter at ccarpenter2@bloomberg.net


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