Cost increases and price pressure blamed for a 27% slump in farm business income

Rising costs and retail price pressure are being blamed for a drastic 27 per cent fall in farm business income - or net profit - among horticulture businesses in England.

The fall is outlined in the latest Defra Farm Business Survey, which also found 24 per cent of horticulture businesses made no money at all in the year to February.

The average net profit in horticulture was £48,000, with less than £30,000 of that made up of farm-gate revenue. The rest was accounted for by the Single Payment Scheme, agri-environment and other grant programmes and by "diversification out of agriculture" - a category where horticulture ranked highest among sectors.

Explaining the slump, the NFU pointed to "significant rises in input costs", with the cost of fertiliser increasing by nearly 30 per cent. Its chief economist Phil Bicknell said: "While prices in some sectors have increased slightly this year, few growers will have received enough to cover the escalating cost of production or to allow for reinvestment. There is also mounting price pressure from customers, which is eroding margins."

Average farm output was lower due to a fall in output for both field and protected vegetables that was only partially offset by a higher output for soft and top fruit, said Defra.

The annual survey, published last week, compares farm business income across sectors. Further data on performance within sectors will be available from December.

Defra's horticulture category includes fruit and vegetables grown under glass, specialist fruit providers, hardy nursery stock and growers of field vegetables with no arable land.

Growers of both field vegetables and arable crops fall under general cropping, which saw an increase in average income due to higher prices for cereals, oilseed rape and potatoes.

Industry View

"There's a lot of pressure on growers - energy and fertiliser are two big costs. But pressure on prices in the retail and food-service sectors is the main problem and the buck usually stops with growers."

Tim Mudge, commercial manager, Processed Vegetables Growers' Association.

KeyStat

The proportion of production horticulture businesses that were unprofitable in the year to February - 24%.


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