England's fresh-produce sector is in relatively good financial health overall but much of its increasing productivity is overshadowed by ongoing low prices, according to an authoritative new report. The profitability of production horticulture businesses increased by 9% in 2016 to average £34,350 per business, outperforming most other farming sectors, the Farm Business Survey by the University of Reading's Rural Business Research team found.
Described as the country's most comprehensive and independent survey of farm incomes, the annual research is conducted by a consortium of universities and colleges on behalf of, and financed by, Defra. The surveyed sample of 193 businesses represents 5.5% of the nearly 3,500 registered horticulture businesses in England.
For edible glasshouse production, profitability remained "relatively stable" at nearly £25,000 per business, it found. A significant increase in output of 18% was countered by "significant rises to costs", particularly labour and seeds. Businesses specialising in salad crops averaged £29,000 profit on turnover of more than £350,000.
Fruit growers, however, managed to make savings on labour as well as on packaging and marketing. Yet incomes fell back by 8% to average just over £13,000 per business. The area of glasshouse fruit has increased the most among the categories recorded since 2007, up 32%, "albeit from a low base", the report notes.
The area of orchard fruit has grown gradually but steadily since 2007, now at 19,700ha, a 9% increase over the period. But this was the branch of horticulture that had the poorest year, particularly cooking apples, which saw the value of production per hectare down more than half on the 2014-15 figure, due to both lower tonnage per hectare (down 32%) and lower value per tonne (down 35%).
For dessert apples, a rise in yield of 27% was offset by a similar drop in value, an outcome that was also seen, in a less pronounced way, in pears. Only in cider apples did modest rises in both yield and value lead to an overall improvement in returns per hectare, of 8%.
In outdoor vegetables, by contrast, profits rose by 27% to average £40,300 per business in 2016, helped by small savings in fuel and property costs, while "more benign" weather conditions than in the previous year led to higher yields, though generally poorer prices.
Falling oil prices on the world market in 2015 and 2016 reversed the rising fuel price trend of previous years, and contributed to a 12% fall in variable costs, alongside an 8% drop in fixed costs. This was also reflected in the lower cost of fertilisers and soil improvers, which stood at 83% of the 2010 value. Perhaps surprisingly, labour costs, which increased from 2012 to 2014, have shown "only negligible change" since.
- See also How did ornamentals production fare in 2016?.
Key facts Farm Business Survey by Rural Business Research team
- In 2015-16, the output from horticulture was £3.101bn, up 3% on the previous financial year.
- Profitability for all horticultural businesses rose by 9% to an average of £34,350.
- Over the past decade there has been an average increase of just over 4% each year in the value of horticultural production, based on current prices.
- The UK was 37% self-sufficient in all vegetables in value terms in 2015, and 18% self-sufficient in fruit.
- Vegetable production was worth £1.277bn in the last financial year, up 27% since 2006, while fruit was worth £624m, up 84%.
- A total of 174,120ha was used for growing horticultural crops in 2015, up 6% on the previous year.
- Vegetable production remains the largest horticultural sector in both land use and output, accounting for 41% of total UK horticultural output and 76% of the total productive area.
- Average horticultural output in the 10-year period from 2006 to 2015 was 43% higher than the average for the previous 10 years.