3 June 2012

9 minute read

Total Income from Farming per annual work unit of entrepreneurial labour is estimated to have increased by 24 per cent in real terms to £30,900.

In the longer term, this represents the best performance for the agricultural industry in the United Kingdom since the mid-1990s.

The dramatic rise in farming's profitability in the early nineties followed the decline in the euro/sterling exchange rate after the United Kingdom left the Exchange Rate Mechanism.

The equally rapid reverse in the second half of the decade was caused by increases in the exchange rate, lower world commodity prices and the impact of BSE.

The increase in 2008 reflected a decline in the euro/sterling exchange rate as the United Kingdom entered into recession and increases in commodity prices.

The average producer price of agricultural products in the UK rose by 13 per cent last year with the average price of cereals rising by 43 per cent, due to tight global stocks and strong demand.

The average price of forage crops rose 18 per cent, which were adversely affected by a Europe wide drought during spring that reduced hay and straw volumes.

The average producer price of fresh vegetables fell 9.0 per cent.

The average producer price of milk rose by 11 per cent, reflecting continued strengthening demand.

The average price of agricultural inputs rose 12 per cent.

The average price of livestock feeding stuffs rose by 21 per cent as a result of higher cereal prices.

The average price of energy and lubricants rose 17 per cent.

The average price of fertilisers and soil improvers rose by 26 per cent due to higher energy costs and relatively fixed fertiliser supplies.

Utilised Agricultural Area

At June 2011, the Utilised Agricultural Area (UAA) was 17.2 million hectares, making up 70 per cent of the total UK land area.

UAA is made up of arable and horticultural crops, uncropped arable land, common rough grazing, temporary and permanent grassland and land used for outdoor pigs. It does not include woodland and other non-agricultural land.

Almost 36 per cent of UAA was considered to be croppable land, i.e. land currently under crops, bare fallow or temporary grassland.

In all, 50 per cent of this croppable area is occupied by cereal crops and of these cereals wheat is the predominant crop, with an area of 2.0 million hectares.

The area of oilseed rape rose by 9.8 per cent to 705 thousand hectares, the largest area on record. Prices have proved attractive for growers with increased demand for biofuel.

In 2011 the total area of cereal crops planted increased by 2.1 per cent to 3.1 million hectares, largely due to better prices for cereals. Wheat and barley both saw increases of 1.6 per cent and 5.3 per cent respectively.

The value of production of wheat and barley increased by 37 and 60 per cent respectively to reach £2.2 billion and £860 million respectively.

The volume of production of oilseed rape reached a record 2.8 million tonnes and the value of production increased by 65 per cent to reach £1.1 billion.

The total cost of all purchased animal feed rose by 9.4 per cent to £4.1 billion.

Production of sugar beet returned to 2009 levels at 8.5 million tonnes following crop losses due to the weather conditions in 2010. The value of production was £251 million, slightly higher than 2009.

The area of wheat increased by 1.6 per cent and for barley the increase was 5.3 per cent. Overall wheat yields were 1.0 per cent higher than 2010 whereas barley yields were 0.7 per cent lower but in both cases were lower than the five year average.

Yields varied widely across the country, with the drought in spring and early summer having greater effect on the drier and lighter soils in the south and east whereas yields in crops grown on the heavier soils of the north and west were less affected.

However, a combination of average rainfall and cooler temperatures helped extend the grain fill period by seven to10 days, therefore, reducing the potential yield impacts of the earlier spring drought.

Wheat and Barley

Harvest progressed well and the production of wheat and barley in 2011 was 15.3 and 5.5 million tonnes respectively, up 2.5 and 4.6 per cent respectively on 2010.

The overall quality of the crops was also very good and has been reflected in a higher proportion of the domestic wheat crop being used for milling which reduced imports.

The recovery of the United Kingdom brewing and malting sector also increased demand for barley in particular but also wheat. Use of both wheat and barley for animal feed was lower in 2011.

Feed use of barley from the 2011 crop in particular declined markedly due to the strong demand for the high quality malting barley which meant that the price differential between feed wheat and feed barley favoured use of wheat in feed rations over barley.

Cereal prices showed some week on week variation throughout the year due to a combination of factors including conflicting reports over weather related events in the main grain producing areas, the world economic situation and political unrest.

However the underlying tight supply situation meant prices remained firm.

The price data is sourced from the Corn Returns and includes both spot and forward buying.

These prices are used to derive the valuation estimates. For this reason the prices quoted in the tables (for example milling wheat at £175 per tonne and feed wheat at £150 per tonne) will not directly correlate with spot market prices.

The value of production of wheat increased by 37 per cent to £2.2 billion whilst that for barley increased by 60 per cent to £860 million.

The annual average price of milling wheat, feed wheat, malting barley and feed barley all showed significant increases compared to 2010 and hence the increase in the value of production for both crops.

Oil Seed Rape

Planting conditions for oilseed rape in August/September 2010 were excellent and with strong markets, the area of oilseed rape planted increased again in 2011, up 9.8 per cent on 2010 to 705,000 hectares.

With high yields, production was at a record 2.8 million tonnes, an increase of 24 per cent on 2010. Oil content was good also.

Prices for oilseed rape also have been strong, particularly at the start of the year.

Although they declined gradually during the course of the year, the overall annual average price for 2011 was around 50 per cent higher than in 2010.

Consequently the value of production increased by 65 per cent to £1.1 billion.

The high prices, especially in the first half of the year were as a result of a tight EU supply and demand situation and low stocks over the last two years.

In 2010, EU rapeseed production was lower than anticipated due to disruptive rains at harvest time in Central Europe.

For the 2011 harvest, poor planting conditions in much of Central Europe, then a harsh winter followed by a dry spring resulted in lower yields, particularly in Germany and Poland.

EU demand has been strong, supported by biodiesel mandates so raw seed prices had to rise disproportionately in order to keep adequate stock levels.

With the high UK production in 2011, exports to the EU and especially Germany, where there was a deficit, more than doubled to 681 thousand tonnes.

The price increases for cereals and oilseed rape in particular are reflected in the valuation of production of animal feed although there is a lag between price increases in the raw ingredients and the compound feed.

Sugar Beet

The yield for sugar beet recovered in 2011 after the 2010 crop was badly impacted by the weather conditions at the end of 2010 and early 2011, which resulted in yield losses through damage and rotting of late lifted crop.

The yield for the 2011 crop at 75.2 tonnes per hectare exceeded the previous high achieved in 2009 and production reached 8.5 million tonnes.

The value of production at £251 million is up 28 per cent on 2010 but similar to that achieved in 2009.

Across the livestock sector values have risen in 2011, with the exception of eggs where there was little change.

High production costs, especially higher feed and fuel prices, continued to impact on profit margins.

Cattle and Calves: Beef and Veal

The significant increase in the value of production at market prices of beef and veal was partly due to increased home production, especially for cows and adult bulls due to the high demand for manufacturing beef and strong prices due to limited supplies.

In general, carcase weights were lower this year as high feed prices led to producers finishing animals earlier.

Pigs and Pig Meat

The total number of pigs remained almost unchanged in 2011 at 4.4 million.

Despite increased feeding costs, there was virtually no change seen in the number of fattening pigs which remained at 3.9 million. The number of breeding pigs increased by 1.0 per cent and now stands at 52,000.

Despite high feed prices leading to the early marketing of pigs resulting in slightly lighter weights, pig meat production increased in 2011.

Strong cull prices encouraged producers to replace unproductive sows leading to improved herd performance.

The value of home-fed production of pig meat increased in 2011 with prices improving throughout the year.

However, feed prices continue to impact on profit margins.

Sheep and Lamb

Sheep numbers increased in 2011 and the total figure now stands at almost 32 million animals.

There have been increases of 0.9 and 3.6 per cent in both the number of ewes and shearlings and number of lambs respectively.

Mutton and lamb home fed production rose in 2011, as breeding flock growth and favourable weather conditions led to an increased lamb crop and good grazing conditions helped increase weights.

Record farmgate prices, due to the tight supplies at home and globally, contributed to the significant rise in the value of production at market prices.

Poultry and Poultry Meat

Total poultry numbers decreased by 0.8 per cent in 2011, largely due to the 2.7 per cent decrease in the number of table chickens which now stands at 102 million.

This decrease could be due to increased input costs, especially feed prices.

The value of production of poultrymeat rose in 2011 with prices remaining good, despite a small reduction in overall production due to fewer broiler chick placings and high feed prices continuing to impact.

Hen Eggs

Egg production fell slightly in 2011 following the over-supply experienced across the market during 2010.

Intensive egg production fell as producers switched to enriched colonies in preparation for the 2012 EU conventional cage ban.

This reduction in production led to a slight fall in the value of eggs for human consumption.

The annual average price per dozen was virtually unchanged on the year previous, although higher feed prices and enriched cage investment costs impacted on profit margins.

Dairy and Milk

The main dairy herd saw a small decrease of 1.8 per cent, standing at 1.8 million in 2011. This continues the long term decline. Conversely numbers in the beef herd rose by 1.1 per cent to 1.7 million.

Milk production from the dairy herd increased again in 2011, with an increase to the average yield per dairy cow across the national herd offsetting the fall in overall dairy cow numbers.

The value of production rose significantly in 2011 as a result of increased milk availability helped by favourable weather conditions and higher farmgate milk prices.

However, high input costs continue to be a major factor for United Kingdom milk producers affecting farm level profit margins.

Strong global demand for dairy products led to an increase in the production of butter and cheese compared to the previous year

Further Reading

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