UK farmers suffered 7.5% drop in income in 2016

Total income from farming in the UK plummeted 7.5% in real terms between 2015 and 2016, according to revised figures from the Department for Environment, Food and Rural Affairs (DEFRA).

This was a substantial change from a previously-estimated drop in total income of 1.5%, with the latest estimate suggesting it was down by £292 million (€335 million) on an inflation-adjusted basis to £3,610 million.

However, the weakening of sterling against the euro helped to offset this loss by raising the value of payments under the Basic Payment Scheme (BPS) by 18% last year.

The data also showed that total income from farming per annual work unit (AWU) of farmers and other unpaid labour fell 6.9% in real terms to £18,816. AWU refers to the input of one agricultural worker on a full-time basis for one year.

Falls in the current price value of wheat by £426 million; milk by £395 million; and rapeseed by £170 million, all contributed to the revised drop in farming income.

In contrast, direct payments were £309 million higher due to currency volatility, and reductions in fertiliser and animal feed costs of £250 million and £204 million, respectively, helped to soften the blow.

This meant that agriculture’s contribution to UK GDP was £8,196 million last year: 4.3%, or £366 million, lower than in 2015.

Last month, Northern Ireland Grain Trade Association President Keith Agnew warned that total income from farming in Northern Ireland was higher than direct support payments “in only three of the last 20 years”.

We are often told that red-meat prices in the UK are among the highest in the world. Yet we have a sector that relies so heavily on support payments.

“We need a future agricultural policy that has an efficient, competitive and sustainable farming sector at its core; one that is properly supported and given adequate time to adapt and invest for the future,” Agnew said.