'Drastic decline in income' forecast for farm businesses
With the wettest year on record driving down farm profit, new Government forecasts for farm income predict a drastic decline.
The figures underline the importance of the EU's Common Agricultural Policy to the farming industry, according to the National Farmers' Union.
The Government's farm business income forecasts for the financial year ending February 2013 predict a decline in the profitability of farming across the majority of farming sectors.
Weather-impacted output, coupled with increased input costs, have hit the industry hard over the last year, particularly in the South West, with its high numbers of hill farmers.
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The NFU says the figures serve as a timely reminder that Single Farm Payments subsidies act as a lifeline for many farm businesses and play a vital role when it comes to adapting to increasingly-volatile markets.
Livestock producers have been among the hardest hit, with higher feed costs and an increased feed use hitting profit margins.
The forecasts show profitability for the pig and dairy sectors falling by 50% and 42% respectively. For beef and sheep producers, falls of 44% are predicted for lowland producers, while their uplands counterparts have fared worse with income falling by 52%.
Average farm income for pig enterprises are forecast to fall to £19,000 in 2012/13 from £38,000 in 2011/12.
On dairy farms, average income is predicted to fall to £50,000 from £86,500.
Lowland-grazing livestock farms are expected to see a fall in average incomes to £18,000 from £32,000, with upland grazing to £14,000 from £29,000.
Only the poultry sector remains unchanged, according to the forecast.
Melanie Squires, the South West regional director of the NFU said: "The figures make sobering reading, but will be no surprise for many in the industry. 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.
"More recently, we can add the plummeting lamb price to the list of challenges the industry faces."
The weather caused chaos across the board during the past year and laid bare the importance of Common Agricultural Policy payments, she said. With profits squeezed, a larger number of farmers would again be forced to rely on direct payments to underpin their business in the year ahead.
She added: "Farmers cannot produce at little or no profit indefinitely. They need to turn a profit and they need to re-invest. The reality is that price volatility, low profitability and falling confidence does not provide a secure framework for a sustainable food industry.
"These figures should be a wake-up call for us all."