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Contract farming agreement incomes fall 23 per cent

Big yields failed to offset lower commodity prices as Contract Farming Agreement incomes fell by 23 per cent in 2015.


Alex   Black

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Alex   Black
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Contract #farming agreement incomes fall 23%

Strutt & Parker’s annual contract farming survey showed incomes have fallen to their lowest level since the survey began in 2007.

 

Variable costs fell by 8 per cent but are still nearly £100/ha (£40/acre) higher than five years ago.

 

The findings were due to be represented as part of a seminar on farm profitability at Cereals on Wednesday.


Robert Gazely, partner in the farming department at Strutt & Parker, said it was not unexpected but contract farming agreements remained a good option for many.


He said: “In a good year, a farmer has made more from a contract farming agreement than renting out the land and even in what has proved to be a bad year, the farmer made £328/ha which is more than many others will have made elsewhere.”


Mr Gazely highlighted other benefits such as more control over how the land is managed which can protect the land’s value.


Farmers can also benefit from needing lower working capital, paying an average income of £412/ha (£172/acre) to contractors since 2007 compared to the typical costs of power, machinery and labour of £575/ha (£240/acre) for a cereal farm.

 

  • The average Income for the contractor was £319/ha (£130/acre) which is the lowest since the survey began
  • The average Income for the farmer was £328/ha (£133/acre) which is the lowest since the survey began
  • Commodity prices fell by 19 per cent which caused gross income per hectare to fall by 17 per cent to £1,175/ha (£476/acre).
  • Farmers have paid an average income to their contractor of £412/ha (£172/acre) since 2007, which is compared to typical power, machinery and labour cost of £575/ha (£240/acre) for a cereal farm.

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