Chapter 3: Farming income
Updated 21 October 2022
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Summary
- In 2020/21, the average Farm Business Income (FBI) across all UK farm types was £46,500 (at current prices) compared to £39,000 in 2019/20.
- FBI varies greatly with 16% of UK farms failing to make a positive FBI in 2020/21 while 28% of farms had a FBI of over £50,000.
- In 2021/22, higher prices for key outputs such as cereals, meat and milk coupled with increased yields are forecast to drive a rise in the value of output, although this is expected to be offset to some degree by higher costs, particularly for feed and fertilisers.
Introduction
This chapter presents Farm Business Income. Total Income from Farming (TIFF) data can be found in Chapter 4 Accounts.
Farm Business Income (FBI) is the preferred measure for comparisons of farm type and represents the return to all unpaid labour (farmers, spouses and others with an entrepreneurial interest in the farm business) and to all their capital invested in the farm business including land and farm buildings.
Total Income from Farming (TIFF) represents business profits and remuneration for work done by owners and other unpaid workers. It is used to assess UK agriculture as a whole.
Table 3.3, found at the end of this chapter, provides more detailed information on definition, method used and similarities and differences for the two income measures.
Farm business incomes by farm type
The estimates of Farm Business Income are averages. It should be noted that across different regions and farm types, some farmers receive considerably more or less than these averages.
Estimates of Farm Business Income for 2021/22 (i.e. the year ending February 2022 and harvest 2021) at current prices are shown in Table 3.1a for England and Northern Ireland alongside outturn data for earlier years. These estimates include Basic Payment Scheme receipts which are recorded as due for the appropriate accounting year, for example receipts of the 2021 Basic Payment Scheme are recorded in the 2021/22 accounting year. Note that forecasts of Farm Business Income for 2021/22 have not been produced for Wales or Scotland.
Higher prices for outputs such as cereals, meat and milk coupled with increased yields are expected to be a key factor influencing Farm Business Income in 2021/22, although a rise in output is forecast to be offset to some degree by higher costs, particularly for feed and fertilisers. In England, the average Basic Payment is expected to fall by around 9% across all farm types, reflecting the first year of progressive reductions to the payment.
On cereal farms in England, average income is forecast to rise by 51% in 2021/22. Favourable conditions compared to 2020 are expected to result in a return to more normal cropping patterns with a larger proportion of winter crops. This, together with higher prices (reflecting tight global supplies), is forecasted to increase crop output by 42%. This increase is expected to more than offset an 18% rise in input costs. Higher crop costs are predicted to be the main driver, notably fertiliser costs which are forecast to more than double, reflecting higher prices and the increased area of winter cropping.
On general cropping farms in England, average incomes are expected to rise by 70%. As with cereal farms, this will be primarily driven by higher crop output, particularly from cereal crops. Peas, beans, oilseed rape and sugar beet are also expected to see higher values for the 2021 harvest, coupled with increased yields compared to 2020. These are forecast to more than offset reductions in crop area for oilseed rape, potatoes and sugar beet. At the same time, input costs will rise by around 12%. Like cereal farms, fertiliser costs are expected to more than double compared to 2020/21.
Average income on dairy farms in Northern Ireland is expected to increase by 31% in 2021/22, largely driven by higher output prices. A similar picture is expected on dairy farms in England where income is forecast to rise by 21%. Output from milk is predicted to rise by 9%, with slightly lower production resulting in tight supplies and higher farmgate prices. Output from crops and other cattle enterprises will also be higher. The increased output will more than offset higher input costs (notably feed and crop costs).
In England, income on lowland grazing livestock farms is forecast to rise by 3%. Higher input costs (primarily crop related costs) will be more than offset by increased output from crops, cattle and sheep, with a tight market seeing higher average prices. Similar drivers are forecast to result in the average income on grazing livestock farms in Less Favoured Areas increasing by 4% in Northern Ireland and by 1% in England. Sheep breeding stock prices, an important source of income on upland farms, are also expected to be higher in 2021.
Forecasts for specialist pig farms are subject to a considerable degree of uncertainty, reflecting both the structure of the sector and the relatively small sample of these farms in the Farm Business Survey (FBS) in England. In England, income is forecast to fall by nearly three quarters on this type of farm as input costs rise considerably more than output. A 7% increase in output will be insufficient to offset substantial rises to costs, particularly feed costs which are expected to go up by 22% as they track price increases for key feed ingredients such as wheat. The increased feed costs also reflect more pigs on farm due to abattoir and supply chain issues.
As with pig farms, forecasts for specialist poultry farms in England are subject to a considerable degree of uncertainty, again due to the structure of the sector and the relatively small sample of these farms in the survey. In England, average income on specialist poultry farms is expected to fall by around 51% compared to 2020/21. Input costs are forecast to rise by 14%. As with specialist pig farms, it is anticipated that higher feed costs will be a key contributing factor along with increased crop and general farming costs. The higher input costs are predicted to more than offset smaller rises in output for eggs and poultry meat.
Incomes on mixed farms in England are expected to increase by 29%. The changes reported previously for specialist farm types will all have influenced the incomes for this farm type.
Table 3.1a and 3.1b
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Email: fbs.queries@defra.gov.uk
Table 3.1a Farm business income by country and type of farm (Average farm business income per farm at current prices, £/farm)
| Standard Output (SO) Typology | 2018/19 | 2019/20 | 2020/21 | 2021/22 (Provisional) |
|---|---|---|---|---|
| England | ||||
| Cereals | 67,500 | 63,000 | 71,500 | 108,000 |
| General cropping | 106,500 | 84,500 | 67,000 | 113,000 |
| Dairy | 79,500 | 85,000 | 92,500 | 112,000 |
| Grazing livestock (lowland) | 12,500 | 9,500 | 18,500 | 19,000 |
| Grazing livestock (LFA) | 15,500 | 23,000 | 33,500 | 34,000 |
| Specialist pigs | 29,500 | 37,500 | 48,000 | 13,000 |
| Specialist poultry | 74,500 | 88,000 | 77,500 | 38,000 |
| Mixed | 45,500 | 29,000 | 40,000 | 52,000 |
| Wales | ||||
| Dairy | 46,500 | 50,500 | 60,000 | .. |
| Grazing livestock (lowland) | 17,000 | 16,500 | 23,000 | .. |
| Grazing livestock (LFA) | 19,000 | 22,500 | 30,000 | .. |
| Scotland | ||||
| Cereals | 61,000 | 41,000 | 68,500 | .. |
| General cropping | 132,000 | 69,000 | 68,000 | .. |
| Dairy | 68,000 | 51,000 | 99,500 | .. |
| Grazing livestock (lowland) | 11,500 | 13,500 | 30,000 | .. |
| Grazing livestock (LFA) | 16,000 | 15,500 | 20,500 | .. |
| Mixed | 35,500 | 8,000 | 45,500 | .. |
| Northern Ireland | ||||
| Dairy | 58,000 | 52,000 | 63,000 | 82,000 |
| Grazing livestock (LFA) | 14,500 | 15,000 | 20,500 | 21,000 |
Table 3.1b Farm business income by type of farm in the UK (Average farm business income per farm, £/farm)
| Standard Output (SO) Typology | 2018/19 | 2019/20 | 2020/21 | 2021/22 (Provisional) |
|---|---|---|---|---|
| At current prices | ||||
| Cereals | 66,500 | 60,500 | 70,500 | .. |
| General cropping | 110,500 | 80,500 | 67,000 | .. |
| Dairy | 69,000 | 70,000 | 81,500 | .. |
| Grazing livestock (lowland) | 12,500 | 10,500 | 19,500 | .. |
| Grazing livestock (LFA) | 16,500 | 19,500 | 27,000 | .. |
| Specialist pigs | 32,500 | 39,500 | 50,500 | .. |
| Specialist poultry | 74,500 | 88,000 | 77,500 | .. |
| Mixed | 43,000 | 25,500 | 41,500 | .. |
| ALL TYPES (Including Horticulture) | 44,000 | 39,000 | 46,500 | .. |
| In real terms (at 2020/21 prices) | ||||
| Cereals | 72,000 | 64,000 | 70,500 | .. |
| General cropping | 120,000 | 85,000 | 67,000 | .. |
| Dairy | 75,000 | 74,000 | 81,500 | .. |
| Grazing livestock (lowland) | 14,000 | 11,000 | 19,500 | .. |
| Grazing livestock (LFA) | 17,500 | 21,000 | 27,000 | .. |
| Specialist pigs | 35,000 | 42,000 | 50,500 | .. |
| Specialist poultry | 81,000 | 93,000 | 77,500 | .. |
| Mixed | 46,500 | 27,000 | 41,500 | .. |
| ALL TYPES (Including Horticulture) | 47,500 | 41,500 | 46,500 | .. |
Notes for table 3.1a and 3.1b:
- .. data unavailable.
- Figures for 2018/19 to 2020/21 are rounded to nearest £500.
- Forecast figures for 2021/22 are provisional and subject to revision. They have been rounded to nearest £1,000.
- Years are accounting years ending on average in February.
- All figures for Table 3.1a are at current prices.
- Figures for Table 3.1b are shown at current prices and real terms. Real terms figures are adjusted for inflation using GDP deflator.
- UK farm type averages include data for some member countries that are not presented separately in the country level breakdown in Table 3.1a.
Download the full Farming income dataset.
Distribution of farm incomes and performance
Tables 3.2a to 3.2c show the variation in the level of Farm Business Income, Net Farm Income and Cash Income across farms in England, Wales, Scotland and Northern Ireland for 2020/21.
Around 16% of farms in the UK failed to make a positive Farm Business Income, although there was some variation between countries. The proportion in Scotland and England was higher at 19% and 18% respectively, while in Wales and Northern Ireland it was slightly lower at 13% and 11% respectively. Just under a third of farms in the UK fell into the lower income brackets (zero to less than £20,000). At the top end of the scale, 28% of farms in the UK had a Farm Business Income of more than £50,000. However, there was again some variation between UK countries in this highest income category. Wales and Northern Ireland each had around a fifth of their farms in the highest income band, while for England and Scotland the proportion of farms was 31% and 26% respectively.
A greater proportion of farms fall into lower band income ranges for Net Farm Income. This is because Net Farm Income is a narrower measure of income; it is net of an imputed rent on owned land and an imputed cost for unpaid labour (apart from farmer and spouse). On this basis 29% of farms in the UK failed to make a profit.
Tables 3.2a to 3.2c All farm types: distribution of farm incomes by country 2020/21 (percentage of farms)
Enquiries: Alison Wray +44 (0)20 8026 6119
Email: fbs.queries@defra.gov.uk
Table 3.2a - Farm business income (percentage of farms)
| Farm business income | England | Wales | Scotland | Northern Ireland | United Kingdom |
|---|---|---|---|---|---|
| Less than zero | 18 | 13 | 19 | 11 | 16 |
| 0 to less than £5,000 | 6 | 5 | 8 | 3 | 6 |
| £5,000 to less than £10,000 | 7 | 11 | 7 | 8 | 8 |
| £10,000 to less than £20,000 | 14 | 18 | 12 | 26 | 15 |
| £20,000 to less than £30,000 | 11 | 13 | 12 | 14 | 12 |
| £30,000 to less than £50,000 | 14 | 20 | 17 | 16 | 15 |
| £50,000 and over | 31 | 20 | 26 | 21 | 28 |
| Average (£ thousand per farm) | 52 | 34 | 39 | 34 | 47 |
Table 3.2b - Net farm income (percentage of farms)
| Net farm income | England | Wales | Scotland | Northern Ireland | United Kingdom |
|---|---|---|---|---|---|
| Less than zero | 31 | 26 | 31 | 23 | 29 |
| 0 to less than £5,000 | 7 | 9 | 7 | 5 | 7 |
| £5,000 to less than £10,000 | 6 | 10 | 7 | 11 | 7 |
| £10,000 to less than £20,000 | 12 | 17 | 13 | 18 | 13 |
| £20,000 to less than £30,000 | 9 | 13 | 10 | 12 | 10 |
| £30,000 to less than £50,000 | 10 | 11 | 12 | 12 | 11 |
| £50,000 and over | 25 | 14 | 19 | 19 | 22 |
| Average (£ thousand per farm) | 37 | 21 | 25 | 26 | 33 |
Table 3.2c Cash income (percentage of farms)
| Cash income | England | Wales | Scotland | Northern Ireland | United Kingdom |
|---|---|---|---|---|---|
| Less than zero | 10 | 4 | 12 | 8 | 9 |
| 0 to less than £5,000 | 3 | 4 | 2 | 6 | 3 |
| £5,000 to less than £10,000 | 5 | 6 | 3 | 6 | 5 |
| £10,000 to less than £20,000 | 11 | 16 | 13 | 14 | 12 |
| £20,000 to less than £30,000 | 9 | 14 | 10 | 13 | 10 |
| £30,000 to less than £50,000 | 16 | 22 | 15 | 23 | 17 |
| £50,000 and over | 47 | 33 | 45 | 31 | 43 |
| Average (£ thousand per farm) | 88 | 52 | 63 | 48 | 77 |
Download the full Farming income dataset.
Figure 3.1 shows the differences in performance of farms in England for 2020/21. Performance is measured as “£ of output per £100 of input”. An imputed value for unpaid labour is added to the input costs. The chart illustrates the significant variation in performance with 52% of farms failing to recover their costs in that year.
Figure 3.1 Distribution of performance across farms 2020/21: England only (£ output per £100 input)
Enquiries: Alison Wray +44 (0)20 8026 619
Email: fbs.queries@defra.gov.uk
| £ output per £100 input | % |
|---|---|
| 0 < 60 | 7.0 |
| 60 < 70 | 5.5 |
| 70 < 80 | 10.3 |
| 80 < 90 | 12.3 |
| 90 < 100 | 17.2 |
| 100 < 110 | 15.3 |
| 110 < 120 | 11.2 |
| 120 < 130 | 9.1 |
| 130 < 140 | 5.0 |
| 140 < 150 | 2.9 |
| 150 < 160 | 1.7 |
| 160 < 170 | 1.1 |
| 170 and over | 1.4 |
Source: Farm Business Survey
Notes:
- Performance is based on the ratio of farm business output to farm business costs which includes an adjustment for unpaid labour.
Download the full Farming income dataset.
Definitions and explanatory note
There are two main measures of agricultural income which are closely related and complement each other. Total Income from Farming provides an estimate of total income for agriculture as a whole whereas Farm Business Income provides a breakdown of average incomes by farm type. Table 3.3 compares the two measures in terms of definition, methodology and main similarities and differences.
Table 3.3 Comparison table showing main similarities and differences between Total Income from Farming (TIFF) and Farm Business Income (FBI) statistics
| Total Income from Farming | Farm Business Income | |
|---|---|---|
| Geographic scope | United Kingdom | England |
| Reference period | Calendar year | 12-month period March to February. |
| Definition | Represents business profits and remuneration for work done by owners and other unpaid workers. | Represents the return to all unpaid labour (farmers, spouses and others with an entrepreneurial interest in the farm business) and to all their capital invested in the farm business including land and farm buildings. |
| Data source | A wide range of data sources including industry data and Defra survey data (i.e. the Farm Business Survey). | Farm Business Survey: annual sample surveys run by each of the four UK countries. |
| Method | Gross output at basic prices | Total output from agriculture (includes crop and livestock valuation change) |
| plus Other subsidies less taxes | plus Total output from agri-environment schemes | |
| less Total intermediate consumption, rent, paid labour | plus Total output from diversification | |
| less Total consumption of fixed capital (depreciation) | plus Single/Basic payment scheme | |
| less interest | less Expenditure (costs, overheads, fuel, repairs, rent, depreciation, paid labour) | |
| plus Profit / (loss) on sale of fixed assets. | ||
| Differences | The main aggregate measure of farm income used to assess agriculture as a whole. | The preferred measure for comparisons of farm type. |
| Treatment of stocks: the physical changes in stocks valued at average calendar year prices. | Treatment of stocks: the change in the book value of stocks between the start and end of the accounting year. | |
| Does not subtract imputed rent for owner occupiers. | Does not subtract imputed rent for owner occupiers. | |
| Similarities | Complete range of on-farm activities including income from diversified activities where they are included in the farm accounts. | Complete range of on-farm activities including income from diversified activities where they are included in the farm accounts. |
Revisions
Farm Business Survey
Compared with the provisional 2020/21 results published in the 2020 edition of AUK, the outturns (based on actual survey results from the Farm Business Survey) were higher for all farm types in England except specialist poultry farms, where the outturn was lower. For general cropping, grazing livestock LFA, grazing livestock lowland and mixed farms the forecasts were within the confidence intervals of the survey outturns. For cereal farms average income was higher than predicted, largely due to an under estimation of crop output, particularly from barley and other cereals. For dairy farms income was also higher than expected, the result of an under estimation of the value of output from cattle. On specialist pig farms average income was higher than forecast due to a substantial under estimation of output from pig enterprises. Average income on specialist poultry farms was lower than predicted; crop output was higher than forecast while enterprise output from poultry was over estimated.
In Northern Ireland, actual income on LFA grazing livestock farms matched the provisional 2020/21 income estimate. For Dairy farms, average income was slightly lower than expected due to an under estimation of the value of inputs.
Feedback
We are looking at ways to improve and possibly expand the UK Farm Business Survey data presented in Agriculture in the UK. If you have any suggestion for additions or improvements to the Farm Business Survey chapter we would very much welcome your feedback, please contact us at: fbs.queries@defra.gov.uk.