Incomes fall by £68,000 at model farm after ‘perfect storm’ hits harvest

After a year of weather extremes, 2020 harvest incomes fell by more than £68,000 at Brown and Co's h

After a year of weather extremes, 2020 harvest incomes fell by more than £68,000 at Brown and Co's hypothetical East Anglian model farm, named Brown's Farm. Picture: Lesley Buckley, iWitness24 - Credit: Lesley Buckley

Crop incomes at a hypothetical East Anglian model farm fell by more than £68,000 this year as yields tumbled during one of the poorest harvests in decades.

Rural agency Brown and Co carried out the analysis to measure the financial impact of extreme weather, poor soil conditions, flea beetle pest infestations and crop diseases which culminated in a “perfect storm” for many arable farmers in the last 12 months.

Some cereal growers reported their worst-ever harvests after a challenging season which began with continuous rain in autumn and winter, leaving many crops struggling to establish roots, followed by a prolonged dry spell in spring – including East Anglia’s driest May on record – and a heatwave in the summer.

Brown and Co surveyed farmers to assess how these factors had affected harvest performance, and applied the results to the firm’s budgeting model named Brown’s Farm, based on a typical eastern counties unit growing a mix of combinable crops and sugar beet on 386ha of cultivated arable land, of which 160ha is rented.

With harvest yields falling by as much as 40pc, the figures show income from crops at Brown’s Farm fell by £68,664 in 2020, although some of this loss will be mitigated by reduced input costs.

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A report by Bradley Hurn, of the agricultural business consultancy in the King’s Lynn office of Brown and Co, says the analysis should serve as a warning that budgeting and financial planning are critical in both the arable and livestock sectors going forward.

“Even with higher than budgeted prices for all crops, apart from winter malting barley where premiums have fallen away, this year’s harvest results will put pressure on businesses, particularly on cashflow next spring and summer,” he says.

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“It has been a challenging year for a lot of arable growers and there will be a knock-on effect for livestock farmers, due to the sharp price increases we are seeing for straw and feed.

READ MORE: ‘We had 20pc of our annual rainfall in five days’ - farmers’ concerns amid autumn deluges“Many farming businesses have the financial cushioning of farm-based diversification, in the tourism, accommodation or wedding venue sectors, but this income has been removed in part due to Covid-19 – increasing the financial pressure on these businesses.

“We know that a high proportion of farmers don’t prepare an annual budget and that exposes them to financial risk when they generate lower than expected margins and the higher input costs that the livestock sector will be exposed to this winter.

“With deferred tax payments, the repayment of bounce-back loans and additional costs, cashflow is going to be tight, even with higher prices for grain, lambs and beef cattle.

READ MORE: ‘Weather extremes are now the norm’ – farmer reflects on his worst wheat harvest“We advise producers to benchmark themselves against others, using the Brown’s Farm model or other resources to assess their businesses performance, to identify any areas for improvement.

“Resilience is needed to help farmers respond to the pressure on their incomes, this is particularly paramount as we approach the agricultural transition period.”

The survey results, adjusted in line with land type at the model farm, show yields for combinable crops dropped by as much as 40pc for winter oilseed rape, and by 20pc for winter wheat on heavy land, spring wheat and spring beans, compared to the farm’s average yields. Winter barley yields fell by 17pc and winter wheat on light land by 15pc. For the sugar beet campaign now under way, yields are estimated to be down by 16pc due to the dry spring and the predicted impact of virus yellows disease.

When applied to the budgeted yields and prices, the survey shows outputs falling by -£93.50 per hectare winter wheat (on light land), -£82.50/ha for winter wheat (on heavy land), -£181.50/ha for spring wheat, -£300.30/ha for winter barley, -£345/ha for winter oilseed rape, -£78/ha for spring beans and -£140.10/ha for sugar beet.

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