Increased feed and machinery costs along with challenging weather conditions have contributed to a decline in the profitability across the red meat and dairy sectors with incomes the lowest seen since 2014/15 in some areas.

Going by the most recent set of accounts for Farm Business Income in England, farm incomes are the lowest since 2015/16 on lowland grazing units with less favoured areas (LFA) down to 2014/15 levels.

The figures from Defra also point to grazing livestock farms having seen the biggest drops in average farm business incomes, with lowland areas falling 39% and less favoured (LFA) areas dropping 42% compared to the previous year. During 2018/19 lowland grazing livestock farm incomes averaged £12,500, with grazing livestock units in less favoured areas bringing in £15,500.

Average BPS payments across all farming sectors levelled at £27,300 per farm, meaning a larger proportion of farms would not have been profitable without these subsidies. Over the year, LFA grazing livestock farms were shown to be more reliant on such payments and agri-environment subsidies than lowland farms. Based on agricultural output earnings alone, livestock grazing farms would on average make a loss.

Agri-environmental schemes accounted for 66% (£10,300) of total farm income for grazing livestock farms in LFA areas.

The biggest factor affecting both lowland and LFA farm incomes were rising machinery and feed costs, with the 5% increase in agricultural output on lowland farms only marginally helping to offset these cost increases.

In contrast, agricultural output for LFA farms decreased year-on-year by 5%, which only exacerbated the reduction in year-on year average farm incomes further.

Income from diversification for grazing livestock farms in lowland areas increased by 14% as many farms look to new revenue channels. LFA farms also increased the amount of income generated through diversification.

In contrast, average farm business incomes for the pig industry have remained relatively stable for 2018/19 with a 1% reduction overall.

Year-on-year growth in pig output has been offset by rises in on-farm costs and in particular feed costs. Fixed costs also increased for pig farms, with increases in property, labour and machinery costs.

Variable costs rose by around 40%, however output has also increased at a similar rate so the impact of this has only been negligible.

The size of the sample group for the average farm income for pigs is very small so it is hard to reliably break down the relevant costs. The Defra report does comment on the fact that the data may also be slightly inaccurate as the farms that were part of both this year and last year’s data have seen a more sizeable decrease in income levels than the 1% stated.