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Farm Business Data 2006 - Report on Farm Incomes in the Reading Province* – University of Reading

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Farm Business Data 2006 - Report on Farm Incomes in the Reading Province*

Release Date 12 December 2005

wheatThe University of Reading's Agriculture and Food Investigation Team (AFIT) is publishing its results from the annual Farm Business Survey for the 2004 harvest year on Monday, 12 December. The results relate to an identical sample of 190 farms with a total of 33,500 hectares and an average of 176 hectares per farm. The results cover the two harvest years of 2003 and 2004 and are shown according to the main farming type groups encountered in the Reading Province, together with an 'All- Farms' summary. Compared with the previous year, the main points to emerge from the survey were: • Profitability1 per farm fell from £15,242 to £5,521. • Total farm output at £208,000 per farm was at a very similar level to 2003. • There was some evidence of an increase in revenue from diversification, particularly on the arable farms in the survey. • Total costs increased by over 5%, with above average increases in the cost of seed (+13%), fertiliser (+10%) and fuel (+17%). By contrast, rents were at a very similar level to the previous year. • Over 60% of the farms in the survey recorded a negative margin when the value of unpaid labour was allowed for. The average loss on these farms was £16,625. As usual, the results reveal some wide ranging differences between farm types2. Among the dairy farms in the survey, the group of small specialist producers incurred an average loss of £7,000 per farm. By contrast, the larger specialist milk producers generated a positive margin of £43,000. The lower prices associated with most arable crops harvested in 2004 led to a significant fall in profitability on the arable farms in the survey. The small predominantly cereal farms recorded average losses of over £10,000 per farm compared with an average margin of just over £12,500 achieved by their larger neighbours. Poor results were again evident on the lowland cattle and sheep farms in the survey with an average loss of almost £11,000 per farm. The cattle and sheep farms in the Less Favoured Area fared even worse and average losses of £13,700 were recorded. Rod Vaughan, Head of AFIT, said: "Whilst a prolonged period of poor profitability since the 1998/99 survey was halted in 2003/04, the latest results show this was very temporary with profits falling once more." John Wright, a senior investigation officer, added: "A large proportion of farms are failing to make any profit at all. The latest results show that 62% of the farms in the whole sample fall into this category and among the cattle and sheep farms, this figure rises to over 80%. Even among the dairy farms in the sample, over 40% recorded a negative margin and 60% of the farms in the two predominantly cereal groups incurred losses." ____________________________________________________________________ * The Reading Province covers the counties, unitary authorities and metropolitan counties of Berkshire, Buckinghamshire, Gloucestershire, Hampshire, Herefordshire, the Isle of Wight, North Somerset and South Gloucestershire, Oxfordshire, Shropshire, Warwickshire, the West Midlands, Wiltshire and Worcestershire. 1 The measure of profitability used is Management and Investment Income which is defined as, "total farm output less all costs (including the value of unpaid manual labour), other than salaried management", and it represents "the reward to management and use of tenant's capital, whether the capital is borrowed or not". 2 Definitions of the Reading FARM TYPE GROUPS are noted below: FARM TYPE GROUPS MILK PRODUCERS 1 Specialist milk producers with 75 ha or less - less than 20% arable1 2 Specialist milk producers with more than 75 ha - less than 20% arable 3 Predominantly milk with arable - more than 20% arable NON MILK PRODUCERS 4 Lowland cattle and sheep - less than 50% arable 5 LFA cattle and sheep - less than 50% arable 6 Arable cash crops - more than 5% of total arable area under non-combinable cash crops 7 Predominantly cereal farms with 200 ha or less - more than 50% arable 8 Predominantly cereal farms with more than 200 ha - more than 50% arable 1 All arable is defined as the area under cereals and cash crops including set aside and fallow The Agriculture & Food Investigation Team (AFIT), Department of Agricultural and Food Economics The School of Agriculture, Policy and Development, The University of Reading. http://www.apd.rdg.ac.uk/AgEcon/research/afit/index.htm NOTES FOR EDITORS The Farm Business Survey is commissioned by the Department for Environment, Food & Rural Affairs and conducted by a consortium of seven University Departments and one College of Agriculture, which is led by the University of Nottingham. Farm Business Data 2006 (incorporating Farm Business Survey results for the Reading Province) price £20.00 is due for publication on 12 December 2005 and can be obtained from: PUBLICATION INFORMATION PLEASE CONTACT: Mrs Christine Bradshaw, Department of Agricultural and Food Economics, The University of Reading, 4 Early Gate, Whiteknights, PO Box 237, Reading RG6 6AR, E-mail: c.m.bradshaw@reading.ac.uk Telephone number 0118 378 7426 PRESS INFORMATION PLEASE CONTACT EITHER: Mr Rod Vaughan Head of Agriculture and Food Investigation Team The University of Reading E-mail: r.l.vaughan@reading.ac.uk Telephone number 0118 378 8960 OR Mr John Wright Senior Investigation Officer The University of Reading E-mail: j.wright@reading.ac.uk Telephone number 0118 378 8961

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