Farm business income survey warns of Brexit pros and cons

The latest Farm Business Survey (FBS) on horticulture production in England says following Brexit "ensuring farm businesses are profitable is of even greater importance given the uncertainty that now exists in the industry".

In 2015, the output from horticulture was £3,101m, 13% of the total agricultural output.

During the last decade there has been an average annual increase of 4% in output, based on current prices, for total horticultural production.

The research, from Rural Business Research (RBR) at University of Reading, by Richard Crane, David Deans and Thomas Wedd, found vegetable production accounts for 41% of UK output and 76% of total productive horticultural area but has reduced from 56% in 1985-94, with output from non-edibles (37%) and fruit (22%) increasing in 2015.

RBR chief executive Professor Paul Wilson said: "Brexit will also bring opportunities, and those seeking to make the most of the opportunities that arise will need independent data to support effective decision making. Businesses need to understand the impact of exchange rate movement on the costs incurred, and a greater focus on budgeting and cost management will be the order of the day in order to capitalise on the exchange rate benefit."

In 2015, the UK was 38% self-sufficient in veg, 18% in fruit and 51% in ornamentals, all in terms of value. For ornamentals, this is up 7% on 2006, with the annual 10-year average at 48%. The value of imports and exports fell year-on-year in 2015 by 4%. The value of home production in actual prices increased between 2006-15 by 56%, to £1,148m.

The FBS represents 3,491 eligible businesses. Total horticulture output in 2015 was up 3% or £92m on 2014.

For ornamentals, outdoor area has shown "negligible change" since 2007. Hardy nursery stock (HNS) was 27% of total output, with protected non-edibles at 11%.

Average FBI income across all agriculture decreased by 21% to £31,500 per farm in 2015/16, though horticulture recorded an increase of 9% to £34,350 per business. Specialist glass profitability was up 25% and specialist HNS profitability was down 4%.

Defra said in February it had been unable to forecast horticulture figures for 2016/17 yet because of lack of data.

#Horticulture accounted for 13% of the UK’s total agricultural output last year.
#Horticulture businesses generated a total revenue of £3,101 million, which was a 3% increase on the previous year.
#Horticulture business profitability increased by 9% in 2016, to average £34,350 per business.
#Incomes were 9% higher than the average farm.

Edible Glasshouse Production profitability remained relatively stable for those glasshouses growing mainly edible crops, at nearly £25,000 per business. This was despite a significant increase in output of 18%; the average business generated revenue of £293,000. Labour costs increased 31% over the year, whilst seeds and young plants went up by an average of £11,000 per business.

Salad crop producers saw incomes increase by £4,000 to average £28,982 per business.

Non-edible Glasshouse Production incomes increased by 32% to average £58,000 per business. Input costs remained relatively stable year on year

Fruit Producers' revenue dropped by 10% for specialist fruit growers, and despite savings on packaging, marketing and labour costs, incomes fell back by 8% to average just over £13,000 per business.

Orchard businesses suffered from falling farm gate prices, in particular those growing dessert apples, where prices fell by an average of 27%. On the other hand, cider apple growers suffered the smallest fall in profitability out of the top fruit sector, with prices for the crop barely changing on the previous year.

Outdoor Vegetable Growers' profits rose by 27% for outdoor vegetable producers to average £40,300 per business in 2016.

Ornamental Hardy Nursery Stock Growers' incomes dropped back by 4% to average £38,000 per business in 2016. Although output fell across the group, growers responded by cutting back on spending, on both direct inputs and fixed costs. This helped to prevent a greater hit to income as output shrunk by 26% to average just over £260,000 per business.


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