Over 90 per cent of growers failed to make a profit on their 2015 winter wheat crop, show the latest figures released by the Farm Business Survey, carried out by Rural Business Research, a group of universities and colleges across England.
The average cost of production was £143/t, meaning that farmers were on average loosing £29 on every tonne of wheat they produced, based on the average wheat sales price in 2015-16 of £114/t.
However, around 3 per cent of growers achieved a cost of production of less than £100/t, showing that low cost production in England is viable. Ben Lang from the Rural Business Unit at the University of Cambridge explains it is likely that the lowest cost producers achieved some of the higher yields in the country.
2015 was a year of fantastic yields, the average winter wheat yield was 9.8t/ha, the highest national yield on record. In fact, yields exceeded 10t/ha in many counties, with the East Riding of Yorkshire topping the county table at 10.7t/ha. But as Mr Lang explains, it’s not just about yields. “Yes, many cereals farms in the North East achieved excellent yields but this was achieved from a lower than average cost base. These businesses have tight cost controls, which is vital in the face of different pest and disease pressures.”
Perhaps more worrying is that almost 5 per cent of growers spent £250 or more to produce a single tonne of winter wheat. A further 10 per cent had a cost of production between £200 and £250 per tonne. It is noticeable that farms with higher costs of production seem to be spending more but achieving less “there are a lot of farms out there achieving 8t/ha yields but running costs that you would expect from 12t/ha crops” says Mr Lang.
“Running such losses on the agricultural side of the business turned 2015 into a loss-making year for many arable producers. In the 2015-16 financial year, more than 3,000 arable farms in England failed to make a profit, even after subsidies, environmental stewardship and non-farming income.”
The average cereals farm business income fell by 20 per cent to £35,500, but those in the top 25 per cent group still achieved an income of over £100,000 per farm. This top quarter of arable farms turned an average profit of £114/ha from agriculture alone. “These top performing businesses show that even in tough years, arable farming in England can be profitable. Benchmarking your cost of production figures against such businesses can highlight valuable cost saving measures for your farm.”