Pig farming income up

UK - Two sets of statistics relating to farming incomes have been published by Defra. (1) First forecast of Total Income from Farming in the UK 2003, and (2) Net Farm Income and Cash Income by types of farm in England.
calendar icon 28 November 2003
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Note: These two sets of results should not be compared directly with each other: (1) should be used to assess UK agriculture as a whole and covers the calendar year 2003; (2) should be used to compare between different types of farms and covers the twelve month period from March 2002 to February 2003. There are also differences in the definitions of the two income measures.

(1) First forecast of Total Income from Farming in the UK in 2003

Total Income from Farming in the UK is forecast to rise in 2003 by 34 per cent, or by 30 per cent in real terms, to 33.23 billion. Total Income from Farming per full time person equivalent is forecast to increase by 39 per cent, or by 35 per cent in real terms to 315,786, as the long-term downward trend in the number of farmers continues in 2003.

Total Income from Farming is income generated by production within the agriculture industry, including subsidies. It represents business profits plus remuneration for work done by owners and other unpaid workers.

The long term trend in aggregate income has been downwards although it rose and fell dramatically in the nineties due to changes in the exchange rates, world commodity prices and the impact of BSE.

In 2003 we have seen a recovery in the Euro resulting in a rise in prices across a range of commodities and higher direct subsidy payments. In real terms Total Income from Farming is now at a level more in line with levels of the late eighties; it is 77 per cent above the low point in 2000 and 50 per cent below the peak in 1995.

The cereal sector contributed significantly to the increase in Total Income from Farming. A weather related poor harvest in continental Europe resulted in increased demand for good quality UK wheat, and strong prices. Strong prices and export opportunities were also seen for oilseeds.

The horticulture sector saw a smaller increase in the value of production, again driven by higher prices, but for potatoes, decreases in yields and planted area are expected to offset higher prices. Prices have also increased across the range of livestock and livestock products.

(2) Net Farm Income and Cash Income by types of farm in England

Net Farm Income and Cash Income by type of farm are shown at Tables 1 and 2 below. The incomes are based on results from the Farm Business Survey. The latest data relates to the twelve-month period ending February 2003, largely prior to the strengthening of the Euro, which drives the upswing in Total Income from Farming discussed above. In 2001/02 and 2002/03, the Farm Business Survey results exclude farms that were subject to compulsory culling for control of Foot and Mouth Disease (FMD). Income forecasts by farm type for the year ending February 2004 will be published in January.

Table 1: Net Farm Income by Type of Farm in England
Average net farm income per farm ( 3/farm)
Farm Type 1996/97 1997/98 1998/99 1999/00 2000/01 2001/02(a) 2002/03(a) Annual % Change
At current prices
Pigs and poultry 49,800 16,300 -13,600 -4,400 32,600 21,500 48,200 124%
In real terms at 2002/03 prices
Pigs and poultry 57,400 18,200 -14,700 -4,700 33,800 21,900 48,200 120%
Years ending in end-February
(a) Excluding farms subjected to compulsory FMD cull:

Net Farm Income represents the return to the principal farmer and spouse for their manual and managerial labour and on the tenant-type capital of the business. It assumes all farms are tenanted by including an imputed rent on owner occupied land, thus allowing incomes of farms of different tenure to be presented on the same basis.

Cash Income is revenue less total cash costs. The costs therefore exclude any imputed costs and depreciation charges. Cash income also excludes valuation changes. As it excludes certain costs it is the widest measure of income and provides a better indication than Net Farm Income of the shortterm income position.

In 2002/03 strong market prices for finished lambs and store sheep and cattle and increased headage payments resulted in higher incomes on cattle and sheep farms both in lowland and Less Favoured Areas (LFA). Cereal farms benefited from higher yields and increased cropping areas following the poor harvest of 2001. On general cropping farms however, higher cereal output was offset by low potato prices leaving income little changed on the year. Pig and poultry farms have benefited from higher pigmeat and egg prices and reduced feed costs due to cheaper cereals. The fall in incomes on dairy farms is mainly a reflection of a fall in milk prices between 2001/02 and 2002/03.

Further Information

  1. Forecasts of UK farm income are produced using information from the Department for Environment, Food and Rural Affairs, the National Assembly for Wales, the Scottish Executive Environment Rural Affairs Department and the Department of Agriculture and Rural Development (Northern Ireland)

  2. Total Income from Farming is income generated by production within the agriculture industry, including subsidies. It represents business profits plus remuneration for work done by owners and other unpaid workers. It excludes changes in the values of assets, including stocks, due to price changes. It includes non-agricultural activities such as further processing or tourist activities where these can’t be separated from the agricultural business. It is the preferred measure of aggregate income, conforming to internationally agreed national accounting principles, required by both UK National Accounts and by Eurostat.

  3. The figures for past years have been revised to incorporate up-to-date information. Whilst impacting on the absolute level, these have a smaller effect on previously published trends in income.

  4. In accordance with National Accounts rules, compensation payments for animals culled due to Foot and Mouth Disease (FMD), including payments through the welfare scheme, did not count towards Total Income from Farming in 2001. These payments, which are estimated to have been 31.3 billion in 2001, enter the accounts as capital transfers and affect the net worth of the industry.

  5. Comprehensive and revised estimates, based on more up-to-date information, will be published on 29 January 2004. Income figures for Scotland, Wales and Northern Ireland will be published by the respective agricultural departments on the same date.

  6. Agriculture in the United Kingdom: 2003 will be published on 16 March 2004 (also available on the Internet). It will highlight the main events of the year, include balance sheets for each of the main commodities and provide full details of the aggregate agricultural account. Farm Incomes in the United Kingdom 2002/03 will be published on the same day on the Internet only, as last year.

  7. Eurostat (the Statistical Office of the European Commission) will publish agricultural income forecasts in mid-December for all member states. Their headline measure of aggregate income is slightly different but is based on the same underlying data as used in compiling Total Income from Farming.

  8. Defra publishes all of its statistics and news releases on its internet site at http://statistics.defra.gov.uk/esg

To read the full report, including tables, please click here. (PDF Format)

Source: Defra - 28th November 2003

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