More than 90 per cent of growers failed to make a profit on their 2015 winter wheat crop, according to the latest figures released by the Farm Business Survey, carried out by Rural Business Research, a group of universities and colleges across England.
The average cost of production was £143/tonne, meaning that farmers were, on average, losing £29 on every tonne of wheat they produced, based on the average wheat sale price in 2015-16 of £114/t.
However, about 3 per cent of growers achieved a cost of production of less than £100/t, showing that low cost production in England is viable. Ben Lang from the Rural Business Unit at the University of Cambridge said it is likely that the lowest cost producers achieved some of the highest yields in the country.
But although 2015 was a year of high yields, with winter wheat averaging 9.8t/ha, Mr Lang said yield is not the only factor. “Yes, many cereals farms in the North East achieved excellent yields but this was achieved from a lower than average cost base. These businesses have tight cost controls, which is vital in the face of different pest and disease pressures.”
Almost five per cent of growers spent £250 or more to produce a tonne of winter wheat, according to the survey. A further 10 per cent had a cost of production between £200 and £250/t. “There are a lot of farms out there achieving 8t/ha yields but running costs that you would expect from 12t/ha crops,” said Mr Lang.
“Running such losses on the agricultural side of the business turned 2015 into a loss-making year for many arable producers. In the 2015-16 financial year, more than 3,000 arable farms in England failed to make a profit, even after subsidies, environmental stewardship and non-farming income.”
The average cereals farm business income fell by 20 per cent to £35,500, but those in the top 25 per cent group achieved an income of more than £100,000 per farm. This top quarter of arable farms turned an average profit of £114/ha from agriculture alone, said Mr Lang.
“These top performing businesses show that even in tough years, arable farming in England can be profitable. Benchmarking your cost of production figures against such businesses can highlight valuable cost saving measures for your farm.”
Benchmark your business online at www.farmbusinesssurvey.co.uk/benchmarking