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LAMMA 2021

LAMMA 2021

Characteristics of high performing cereal farms identified

The characteristics that make up the best performing cereal farms in England have been explored using data from Defra’s Farm Business Survey.

The survey examines how economic performance varies between cereal farms using data from 2010/11-2016/17.

 

It found that while there is a great deal of variation in performance for cereal farms, less than 0.1% of the variation in farm business performance is related to geographic factors such as soil or climate, while around 44% is attributed to temporal variation, such as adverse weather events and price fluctuations.

 

Fifty-six per cent of variation is contributed by the characteristics of the farm business itself, such as differences in management ability and local geographic effects.

 

Larger farms tended to be better performers in both the farm business overall and the agricultural portion, suggesting that economies of scale may be at play.


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Diversification

 

Greater diversification was associated with lower agricultural performance, but greater farm business performance, which Defra says might be expected as time and resources diverted away from agriculture might be expected to reduce the outputs from agriculture.

 

However, this loss of agricultural output is then more than compensated for such that the overall farm business performance is greater.

 

Farms which received a greater proportion of their income from agri-environment schemes tended to have poorer farm business and agriculture performance.

 

This suggests that agri-environment scheme payments received do not compensate for the loss in agricultural output for an average cereals farm, Defra says.

 

Dairy and grazing livestock farms also saw a negative relationship between agri-environment payments and agricultural performance, but no relationship was found for dairy farms at the farm business level, and a positive relationship was found for grazing livestock at the farm business level.

 

This suggests that the impact of agri-environment scheme payments on overall farm business performance is quite different across different sectors of agriculture.

Unpaid labour

 

Farm businesses which utilise large proportions of unpaid labour such as from the farmer and family members, tended to have better performance in the agricultural portion of the business.

 

In the study this was costed using the market rate to remove the inherent advantage of receiving labour at no cost.

 

It suggests that there is some added value which unpaid labour contributes to the agricultural portion of farm business. Defra says this is because unpaid labour may be more productive; it usually comes from the family, who are likely to be more personally invested in the business and might be more dedicated than hired labour.

 

The use of equipment and machinery on a contract basis was also associated with increased farm business and agricultural performance and farms which had a greater proportion of their machinery related costs associated with renting rather than buying and repairs tended to be better performers.

 

Click here to read the full report.

Key points

  • Farms with greater debt tended to have reduced agricultural and farm business performance
  • Farms which devoted more resources to diversified enterprises tended to perform less well in the agricultural portion of the business, but better at the farm business level
  • Farms which received a greater proportion of their income from agri-environment schemes tended to have poorer farm business and agriculture performance
  • When including an imputed cost for unpaid labour, farm businesses which utilise large proportions of unpaid labour tended to have better performance in the agricultural portion of the business, while this had no impact on the farm business performance
  • Those farms which used and/or engaged with more contracting work tended to have better agricultural performance and farm business performance
  • Owner occupied farms tend to perform slightly better than tenanted farms
  • Larger farms tended to be better performers in both the farm business overall and the agricultural portion
  • There is not a clear pattern to the impact of the education level of the principal farmer on business performance

Source: Defra

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