Total farm incomes fell by £800m in 2023, according to the latest figures from Defra, representing a 10% drop on the previous year.
Across the UK, farm incomes totalled £7.2bn last year, down from £8bn in 2022.
According to Defra, lower commodity prices were a large driver of the drop, as well as reduced cropping and lower yields.
Livestock accounted for just over half (51%) of total output, while crops accounted for 31.8%.
The remainder was made up of subsidies (7.8%), diversification (4.9%) and other agricultural inputs (4.3%).
Ian Parker, agricultural tax expert and director at Whitely Stimpson, said the issue was having ‘real consequences’ for farmers and their families in all parts of the country.
He added that with rain blighting last year’s autumn drill and most of this year, 2024’s figures could be equally bleak.
Ian said:
“Defra release the big figures but what they don’t show is the human cost of this drop in income. Farms right across the UK are seeing a downturn in their earnings, due to external factors, and that is having a real impact on farm businesses, individual farmers, and their families. Commodity prices hit a high in 2022 and that shielded some of the farming sector against the large hikes in input costs. But now, with commodity prices falling and input costs still high, the picture is very different. Managing a farm business during difficult times such as this is not easy and farmers should not be afraid to ask for help.”
Cash flow, tax planning and efficiencies
Ian added planning and managing cash flow was an extremely important element of ensuring a farm business remains viable, as well as effective tax planning and finding efficiencies within the business.
He said:
“Guiding any business through challenging times is always difficult, but this is especially so in farming because of all the external factors that impact on the sector. But with proper planning and advice, farmers and farm managers should be able to take the decisions they need to, to ensure the long-term health of the enterprise. As well as ensuring the core business is run efficiently, there are many ways to diversify a farm business nowadays to create new streams of revenue, which can have a transformative impact on the business finances. Any farmers who are worried about the impact tumbling incomes are having on their farm should seek advice sooner rather than later, to ensure a robust plan is put in place to help them through what could be for some challenging times.”
Contact us
To speak to Ian on tax planning, cash flow management, or diversification, get in touch on (01295) 270200 or email ianp@whitleystimpson.co.uk.