FARM incomes are likely to fall further in 2015, according to a leading farm business consultancy.

But Andersons believe the best farm businesses – those which made the correct investment decisions during the better times – will still see opportunities for profit.

Richard King, one of the author's of the companies "Outlook 2015" report, said estimates suggest farm incomes for the 2014 calendar year will be lower than in 2013.

"Whilst the figures for 2013 were very good – perhaps surprisingly so and may be revised downwards – it seems almost certain that returns for 2014 will be lower," he said, "The prospects for 2015 suggest a further fall."

According to Defra, Total Income from Farming (TIFF) was £5.6bn in 2013, the highest amount since the mid-1990s. However, Andersons believe the 2014 figure could drop by 15 per cent to around £4.7bn to £4.8bn in real terms - mainly due to falling prices such as in the dairy and combinable crops sectors.

Although some costs have fallen, the report says they have not been sufficient to offset lower sales receipts.

Outlook predicts that TIFF in 2015 will fall a further six to eight per cent to £4.4bn – the lowest level since 2008. However that would still be better than the 1997 to 2007 period and would provide opportunities for the best businesses to make good returns.

The report says some businesses will find it more difficult to trade through any cyclical downturn in prices. These are ones that created high-cost production systems during the better years - often through paying uneconomically high rents or buying machinery and equipment that has not increased the efficiency of the business. "These businesses may have to look at a fundamental restructure," it said.

Falling support payments may exacerbate the problems.

Outlook says 2014 farm payments have already been lower than in 2013 due to CAP reform and changes in the exchange rates. It expects the trend to continue with the 2015 introduction of the Basic Payment Scheme.

Andersons estimate that 2015 rates may fall by 10 to 15 per cent compared to the 2013 Single Payment Scheme making it important that farm businesses focus on improving their efficiency.

"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," said the report.