Farm business incomes increasingly reliant on direct payments


By Charlie Reeve, Agriculture and Horticulture Development Board (UK)

7 January 2021


Defra’s latest set of Farm Business Income accounts have now been released. The figures are based on 2019/20 with an accounting year ending February 2020.


Farms in Less Favourable Areas saw in increase in incomes, but lowland grazing livestock farms had a decrease in income compared to the previous year.


A heavy reliance on BPS and agri-environment payments remained across all sectors. Defra calculated that the average basic payment received by businesses totalled £27,800 across all types of farming enterprises.


Lowland grazing livestock farms averaged a farm business income of £9,400, down 25% on the previous year. In contrast, grazing livestock in less favourable areas had a farm business income of £22,800, an increase of 47% year-on-year. Farm business incomes for lowland grazing livestock farms during 2019/20 were at their lowest average levels for the sector since 2006/07.


One of key drivers leading to the decline in income year-on-year for lowland grazing enterprises during 2019/20, was low cattle prices throughout the 2019 autumn and winter. Farmgate sheep prices were also a contributing factor, with prices down slightly on the previous year. Despite many farming businesses benefitting from decreased input costs year-on-year, this was not enough to offset the loss earning due to the low farmgate prices for beef and lamb.


Grazing livestock farms in less favourable areas also benefitted from reduced input costs during 2019/20, with reduced feed costs helping to drive this down. Higher prices for breeding ewes helped to support some businesses, although as in lowland areas, cattle prices dropped back on the previous year. The major driver for increased income in less favourable areas was an increase in direct payments. Agri-environmental schemes and basic payment schemes increased by 9% and 6% respectively year-on-year in less favourable areas.


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