Sunday, September 23, 2018

Farming profitable again – but still relies on subsidies

April 3, 2018 by  
Filed under News & Business

Farmers are back in the black after a better harvest, but profits are still propped up by subsidies, according to the latest figures from accountants Duncan & Toplis.

Growers and livestock producers have bounced back from the worst arable harvest in a decade with a return to profit in 2017, although too many still rely entirely on subsidies, according to an analysis of anonymised accounts from 150 farms.

Of the 150 businesses analysed, the average farm size was 280ha. Average net farm income increased from £65 to £115/ha for harvest 2017, due primarily to higher average crop prices and the reduction in depreciation.

But  half of those in profit last year would have turned a loss were it not for the direct payment – which face being phased out once the UK leaves the European Union. The new system will require farmers to undertake additional environmental measures in return for support.

Mark Chatterton, Duncan & Toplis head of agriculture and author of the research, gave a stark assessment of the agricultural market – but with grounds for optimism for those farms which take steps now to ready their finances for Brexit.

“The figures for harvest 2017 are certainly an improvement on the previous year, but the industry’s over-reliance on the direct payment is evident inside farms of all types and sizes. Many are still not turning a profit without it, even before drawings. This subsidy addiction must be addressed.

“All indications from government suggest that landowners can’t rely on the current subsidy system of payments based on farm size beyond any Brexit transition period. Those that will thrive outside the EU will be those that are starting to plan now.”

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