The overall report for the 2023 calendar year shows farm profits down by some £1.1bn or 19%. Since they take no account of inflation running at about 7.1% in the year, this equates to a real drop in income of over 25% and is the worst result since 2020.

Virtually the whole of the reduction was borne by the arable sector. Turnover from the key cereal crops fell by almost £2bn and, although there were reductions in input cost (fertiliser prices having spiked in the previous year), arable outputs were down by some £1.5bn. In detail, weather conditions meant that the area of wheat fell by 5.3% and yield also reduced slightly. The impact of this was compounded by a price reduction of 21.6% for feed wheat. Oilseed rape also produced disappointing margins with reductions of 18.8% and 38.2% in yield and price respectively. Only sugar beet bucked the trend with increases in yield (up 22.5%), acreage (up 13.4%) and price (up 31%).

Livestock farms fared slightly better, with static turnover but some reduction in feed costs (reflecting the lower output prices in the arable sector). The global figures mask some variances, with milk revenues falling by about £350m but contributions from poultry rising by a similar amount.

These figures will reinforce the circumstantial evidence which had already become apparent from the Spring of 2023 or earlier. It has been a fairly poor year in productivity terms, the weather has been unhelpful and the high prices seen following the invasion of Ukraine have reverted to a more normal pattern. As ever, there will be winners and losers, and, whilst we can see a broad pattern of “up horn/down corn”, there will be struggling milk producers but happier poultry farmers, and contrasting arable result between East and West as the sugar beet crops in East Anglia go some way towards covering the loss of cereal income.

Drilling further beyond the main report, is one trend which doesn’t make it to the headlines. Farm subsidy income shows a steady decline over the last few years. Up to 2020, subsidy income was running at a fairly steady average of about £2.15bn. It then dropped by £50m in 2021, by a further £407m in 2022, and £23m in the current year. This movement reflects, of course, the withdrawal of the flat rate subsidy payments, but it is clear that the newer SFI payments are failing to replace them in full, notwithstanding promises that the overall amount of support to the sector would not change. In part, this probably reflects the delay from DEFRA in implementing the SFI schemes, the reluctance of businesses to commit until the new schemes are properly in place and maybe the fact that two years of good prices and yields have enabled many farmers to defer thinking about the changes in too much detail while cash flow remains strong. It will be interesting to see what TIFF shows in this area next year.