Total farm incomes have fallen by 14 per cent year on year, with overall income falling by £737 million (after adjustment for inflation) to £4.4 billion between 2011 and 2012.

The national statistics were released by DEFRA on 30 April and show the first estimate of the total income of UK farmers for 2012.

It is thought that the fall is due to an increase in the value of inputs as well as falling direct payments due to the euro-sterling exchange rate.

Total income per annual work unit - work carried out by growers and farmers themselves plus other unpaid labour - is also estimated to have fallen by 14 per cent to £25,175 in 2012.

National Farmers Union chief economist Phil Bicknell said the statistics were expected after last year's poor weather and its impact on farm production.

He explained: “The overall fall in farm profitability will not be a surprise for anyone in the industry. The UK recorded its second-wettest year ever in 2012, and no farming sector was immune from the weather. I also expect these headline figures to hide tremendous variation between regions.”

Bicknell believes that inclement weather is likely to continue to hit farm finances hard in 2013. He added: “On top of delayed planting last autumn, crop development has been slow and spring planting is behind schedule in many parts. We may only be four months into the year, but the pointers are for UK farming profitability to be further squeezed in 2013.”

The wider concern is that this squeeze will hit reinvestment and therefore viability for many growers.
NFU president Peter Kendall concluded: “Falling farm profitability shatters the myth that high commodity prices would mean high profits. It is vital that farmers turn a profit and that they reinvest. The reality is that low profitability and falling confidence does not provide a secure framework for a sustainable food industry.”