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Better year than expected after spells of bad weather
AFTER exceptional snow falls in the Spring, 2013 proved a much better year than most expected.
But, despite the better growing conditions that followed, the impact of the snow combined with the torrential rains of 2012 will be felt for some time.
Andersons, the Farm Business Consultants, have warned that the combinable cropping sector could be particularly badly hit.
Its “Outlook 2014” report states: “The reduced volumes of grain resulting from disrupted rotations coupled with lower prices than last year, may make the returns from harvest 2013 worse than in 2012 despite it feeling a better year.”
But for livestock producers, particularly in dairy, pigs and poultry, falling grain prices reduced their input costs.
Andersons said: “Coupled with rising output prices, this provides a generally profitable platform with which to go into 2014.”
The company estimates the Total Income from Farming (TIFF) for the industry as a whole could fall by seven to eight per cent in 2013 to around £4bn to £4.01bn in real terms.
Official figures will not be out until May, but the Outlook report says: “This would be the lowest profit level since 2007. It illustrates the point that, although 2013 was much better than 2012 in terms of physical farming, the financial outcome could be worse.”
However it predicts better news for 2014 and estimates TIFF will recover to around 4.4bn to 4.5bn in real terms.
This is largely due to lower costs notably in feed, fertiliser and fuel. Output prices are forecast to remain firm, although they could come under pressure as the year progresses.
Richard King, a director and report contributor, said the financial damage caused by 2012 and early 2013 could take time to repair.
He said: “Borrowings have risen across most sectors and a period of positive margins will be required to bring these down. High output prices have also seen rents in many areas rise to unsustainable levels.”
The report says the industry is likely to face lower support levels in the future and CAP reform will dominate 2014.
More details will emerge through the first half of the year but producers will, at the very least, need to know the rules on greening before autumn planting.
The report says the biggest long-term impact on the industry will be reduced support under the Basic Payments Scheme.
It estimates that rates may fall by ten to 15pc by 2015, compared to the 2012/13 Single Payment Scheme.
Much of the focus during 2014 and beyond will need to be improving the efficiency of the farming industry.
“The emphasis will be on improving advice and training for farm businesses, translating scientific and engineering developments onto farm, and ensuring the best young people get involved in the industry.
“The range in performance between businesses is large and getting wider with the best farms continuing to innovate and improve, whilst many others tread water.”
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