Last year's generally good weather led to high yields across farming but these were more than outweighed by falling prices and other returns to farmers, Defra's latest Total Income form Farming figures reveal.
Income from farming in 2014 fell by 4.4 per cent to £5.4bn - a lower value "driven by increased production offset by lower prices and reduced payments resulting from the less favourable euro/sterling exchange rate", Defra said.
This affected Single Farm Payments, denominated in euros, which fell by 14 per cent. Income per annual work unit also fell by 4.4 per cent, even as farming's "gross value added" rose by 3.2 per cent in real terms, contributing nearly £10bn to the UK economy.
Total income from fresh vegetables was the lowest since 2010, at £1.22bn, more than 10 per cent down on 2013.
Income from potatoes was down a sharp 29 per cent at £684m, though this was comparable to 2012. "Potato prices fell by 27 per cent in 2014, and despite a smaller crop area, the favourable weather conditions led to higher yields," Defra said.
Fruit bucked the trend slightly, with income rising 1.5 per cent to £622m, though this was still below the sector's 2011 high.
On inputs, cheaper fertilisers, down 6.3 per cent, were offset by the higher cost of plant protection products, up 8.6 per cent. Farming's energy bill fell 7 per cent on the back of low world oil prices, while the value of seed sales dropped 20 per cent, as unlike in 2013 there was no need to re-sow in either spring or autumn.
The cost of labour remained broadly stable for the fourth year in a row.
Sectors - Price falls
NFU President Meurig Raymond said: "We have seen a roller-coaster ride in terms price falls across the various farming sectors over the past year and this trend has continued into 2015. The stronger pound has also exerted downward pressure on the sector's profitability in 2014. Yet with the right conditions British farmers can continue this long-term impressive performance."