Chapter 3: Farming income
Updated 20 February 2024
© Crown copyright 2024
This publication is licensed under the terms of the Open Government Licence v3.0 except where otherwise stated. To view this licence, visit nationalarchives.gov.uk/doc/open-government-licence/version/3 or write to the Information Policy Team, The National Archives, Kew, London TW9 4DU, or email: psi@nationalarchives.gov.uk.
Where we have identified any third party copyright information you will need to obtain permission from the copyright holders concerned.
This publication is available at https://www.gov.uk/government/statistics/agriculture-in-the-united-kingdom-2022/chapter-3-farming-income
Summary
-
In 2021/22, the average Farm Business Income (FBI) across all UK farm types, at current prices, was £72,000 compared to £46,500 in 2020/21.
-
FBI varies greatly with 10% of UK farms failing to make a positive FBI in 2021/22 while 41% of farms had an FBI of over £50,000.
-
In 2022/23, exceptional price volatility, both in terms of input costs and output revenue, is forecast to be one of the key factors influencing Farm Business Income.
Introduction
This chapter presents Farm Business Income. Total Income from Farming (TIFF) data can be found in Chapter 4.
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.
Forecasts of Farm Business Income for 2022/23 (i.e. the year ending February 2023 and harvest 2022) at current prices are shown in Table 3.3a for England and Northern Ireland alongside outturn data for earlier years. These forecasts include Basic Payment Scheme receipts which are recorded as due for the appropriate accounting year, for example receipts of the 2022 Basic Payment Scheme are recorded in the 2022/23 accounting year.
Note that forecasts of Farm Business Income for Wales and Scotland are not produced. In England, no income forecasts for 2022/23 have been produced for specialist pig, specialist poultry or horticulture farms. These forecasts are subject to a considerable degree of uncertainty, reflecting both the structure of these sectors and the relatively small sample of these farms in the Farm Business Survey. These factors, combined with the market uncertainties and extreme price volatility of the last year, have meant it has not been possible to produce robust forecast estimates.
Exceptional price volatility, both in terms of input costs and output revenue, is expected to be one of the key factors influencing Farm Business Incomes in 2022/23. For some farm types, substantially higher output revenue is expected to more than offset rises to input costs, while for other sectors cost increases are forecast to outstrip increased output, leading to an overall fall in income. In England, the average Basic Payment is expected to be around 24% lower across all farm types, reflecting the second year of progressive reductions to the payment.
On cereal farms in England, average income is expected to increase by 11% in 2022/23 to £134,000. The rise is forecast to be driven by a sizeable increase to output from crop enterprises, particularly wheat and oilseed rape. Overall, crop output is expected to rise by 31% reflecting a combination of higher prices, tight global supplies (both influenced by the war in Ukraine) and increased yields. The rise in output is forecast to more than offset higher input costs. In terms of price, virtually all inputs are predicted to increase with higher fertiliser costs (expected to more than double) having the greatest impact for cereal farms.
In England, average income on general cropping farms is forecast to be 14% lower than 2021/22 (when average income more than doubled), primarily as a result of higher input costs which are expected to increase by 16%. As with cereal farms, substantially higher (nearly double) fertiliser costs, reflecting uncertainties around gas supplies in Europe, will be a key driver. Output is also expected to rise, although to a lesser extent than costs. Higher output from cereals and oilseed rape is forecast to be partially offset by a fall in output from potatoes, peas and beans with the hot, dry summer expected to take a toll on yields.
Average income on dairy farms in Northern Ireland is expected to increase by 59% in 2022/23, largely driven by higher output prices. A similar picture is expected on dairy farms in England where income is forecast to rise by 78%. A substantial rise in livestock output will be almost entirely driven by an increase in output from milk. It is anticipated that the overall volume of milk and number of animals will be little changed compared to 2021/22, but that tight supplies during the year will support higher milk prices. Crop output is also expected to rise (particularly wheat, driven by higher yields and firm prices). These increases are forecast to more than offset a rise to input costs, most notably for feed and fertilisers.
In England, income on lowland grazing livestock farms is predicted to fall by around half in 2022/23. Higher input costs are expected to be a key driver, particularly those associated with fertiliser, feed and machinery. At the same time, total output is forecast to be lower compared to 2021/22, as a result of a very small fall in output from livestock largely offset by an increase from cropping activities. Similar drivers for grazing livestock farms in Less Favoured Areas are forecast to result in a fall in average income of around two thirds in both England and Northern Ireland.
Incomes on mixed farms in England are expected to fall by 14%. The changes reported previously for specialist farm types will all have influenced the incomes for this farm type.
Table 3.1a and 3.1b
Enquires: Alison Wray +44 (0)20 802 66119
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 Typology | 2019/20 | 2020/21 | 2021/22 | 2022/23 (Provisional) |
|---|---|---|---|---|
| England | ||||
| Cereals | 63,000 | 71,500 | 120,000 | 134,000 |
| General cropping | 84,500 | 67,000 | 145,500 | 125,000 |
| Dairy | 85,000 | 92,500 | 140,000 | 249,000 |
| Grazing livestock (lowland) | 9,500 | 18,500 | 34,000 | 17,000 |
| Grazing livestock (LFA) | 23,000 | 33,500 | 43,000 | 16,000 |
| Specialist pigs | 37,500 | 48,000 | 12,000 | .. |
| Specialist poultry | 88,000 | 77,500 | 138,000 | .. |
| Mixed | 29,000 | 40,000 | 74,000 | 63,000 |
| Wales | ||||
| Dairy | 50,500 | 60,000 | 88,000 | .. |
| Grazing livestock (lowland) | 16,500 | 23,000 | 26,500 | .. |
| Grazing livestock (LFA) | 22,500 | 30,000 | 38,500 | .. |
| Scotland | ||||
| Cereals | 41,000 | 65,000 | 84,500 | .. |
| General cropping | 69,000 | 72,000 | 82,500 | .. |
| Dairy | 51,000 | 101,500 | 162,000 | .. |
| Grazing livestock (lowland) | 13,500 | 30,500 | 34,000 | .. |
| Grazing livestock (LFA) | 15,500 | 19,500 | 23,500 | .. |
| Mixed | 8,000 | 46,000 | 60,000 | .. |
| Northern Ireland | ||||
| Dairy | 52,000 | 63,000 | 83,000 | 132,000 |
| Grazing livestock (LFA) | 15,000 | 20,500 | 23,000 | 8,000 |
Table 3.1b Farm Business Income by type of farm in the UK (Average Farm Business Income per farm, £/farm)
| Standard Output Typology | 2019/20 | 2020/21 | 2021/22 | 2022/23 (Provisional) |
|---|---|---|---|---|
| At current prices | ||||
| Cereals | 60,500 | 70,500 | 115,000 | .. |
| General cropping | 80,500 | 67,500 | 132,000 | .. |
| Dairy | 70,000 | 81,500 | 119,500 | .. |
| Grazing livestock (lowland) | 10,500 | 19,500 | 32,500 | .. |
| Grazing livestock (LFA) | 19,500 | 26,500 | 33,000 | .. |
| Specialist pigs | 39,500 | 50,500 | 14,000 | .. |
| Specialist poultry | 88,000 | 77,500 | 138,000 | .. |
| Mixed | 25,500 | 41,500 | 71,000 | .. |
| All types (including Horticulture) | 39,000 | 46,500 | 72,000 | .. |
| In real terms (at 2021/22 prices) | ||||
| Cereals | 63,500 | 70,000 | 115,000 | .. |
| General cropping | 85,000 | 67,000 | 132,000 | .. |
| Dairy | 74,000 | 81,000 | 119,500 | .. |
| Grazing livestock (lowland) | 11,000 | 19,500 | 32,500 | .. |
| Grazing livestock (LFA) | 20,500 | 26,500 | 33,000 | .. |
| Specialist pigs | 42,000 | 50,500 | 14,000 | .. |
| Specialist poultry | 92,500 | 77,000 | 138,000 | .. |
| Mixed | 26,500 | 41,000 | 71,000 | .. |
| All types (including Horticulture) | 41,500 | 46,000 | 72,000 | .. |
Notes for table 3.1a and 3.1b:
-
.. data unavailable.
-
All Table 3.1a figures are at current prices.
-
Figures for 2022/23 are provisional and subject to revision.
-
Figures for 2019/20 to 2021/22 rounded to nearest £500.
-
Forecast figures for 2022/23 rounded to the nearest £1,000.
-
Years are accounting years ending on average in February.
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 2021/22.
Around 10% of farms in the UK failed to make a positive Farm Business Income compared to 16% in 2020/21 , although there was some variation between countries. The proportion was higher in Scotland at 18%, while in England it was slightly lower at 9%. Just over a third of farms in the UK fell into the lower income brackets (less than £20,000). At the top end of the scale, 41% of farms in the UK had a Farm Business Income of more than £50,000, considerably more than in 2020/21 when the figure was 28% of farms. However, there was again some variation between UK countries in this highest income category. Wales and Northern Ireland each had 29% of their farms in the highest income band, while for England and Scotland the proportion of farms was 46% and 34% 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 19% of farms in the UK failed to make a profit.
For comparison, the full distribution of farm incomes for 2020/21 can be found in Chapter 3 of the 2021 Agriculture in the UK.
Tables 3.2a to 3.2c All farm types: distribution of farm incomes by country 2021/22 (percentage of farms)
Enquires: Alison Wray +44 (0)20 802 66119
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 | 9 | 10 | 18 | 10 | 10 |
| 0 to less than £5,000 | 3 | 5 | 4 | 6 | 4 |
| £5,000 to less than £10,000 | 6 | 9 | 5 | 9 | 6 |
| £10,000 to less than £20,000 | 12 | 16 | 12 | 17 | 13 |
| £20,000 to less than £30,000 | 10 | 14 | 13 | 8 | 11 |
| £30,000 to less than £50,000 | 14 | 17 | 15 | 20 | 15 |
| £50,000 and over | 46 | 29 | 34 | 29 | 41 |
| Average (£ thousand per farm) | 86 | 45 | 50 | 43 | 72 |
Table 3.2b Net Farm Income (percentage of farms)
| Net Farm Income | England | Wales | Scotland | Northern Ireland | United Kingdom |
|---|---|---|---|---|---|
| Less than zero | 17 | 22 | 27 | 18 | 19 |
| 0 to less than £5,000 | 5 | 8 | 5 | 13 | 6 |
| £5,000 to less than £10,000 | 7 | 9 | 6 | 9 | 7 |
| £10,000 to less than £20,000 | 13 | 14 | 13 | 14 | 13 |
| £20,000 to less than £30,000 | 8 | 11 | 10 | 9 | 9 |
| £30,000 to less than £50,000 | 12 | 15 | 13 | 11 | 12 |
| £50,000 and over | 38 | 22 | 27 | 26 | 34 |
| Average (£ thousand per farm) | 70 | 32 | 36 | 35 | 57 |
Table 3.2c Cash Income (percentage of farms)
| Cash Income | England | Wales | Scotland | Northern Ireland | United Kingdom |
|---|---|---|---|---|---|
| Less than zero | 10 | 9 | 10 | 5 | 10 |
| 0 to less than £5,000 | 4 | 4 | 5 | 5 | 4 |
| £5,000 to less than £10,000 | 3 | 4 | 2 | 4 | 3 |
| £10,000 to less than £20,000 | 12 | 13 | 9 | 11 | 11 |
| £20,000 to less than £30,000 | 8 | 12 | 12 | 17 | 10 |
| £30,000 to less than £50,000 | 16 | 21 | 18 | 22 | 18 |
| £50,000 and over | 47 | 38 | 45 | 36 | 45 |
| Average (£ thousand per farm) | 92 | 59 | 67 | 59 | 77 |
Download the full Farming Income dataset
Figure 3.1 shows the differences in performance of farms in England for 2021/22. 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 37% of farms failing to recover their costs in that year.
Figure 3.1 Distribution of performance across farms 2021/22: England only (£ output per £100 input)
Enquires: Alison Wray +44 (0)20 802 66119
Email:fbs.queries@defra.gov.uk
| £ output per £100 input | % |
|---|---|
| 0 < 60 | 3.6 |
| 60 < 70 | 3.9 |
| 70 < 80 | 6.0 |
| 80 < 90 | 10.7 |
| 90 < 100 | 13.2 |
| 100 < 110 | 15.7 |
| 110 < 120 | 13.5 |
| 120 < 130 | 9.4 |
| 130 < 140 | 7.6 |
| 140 < 150 | 4.6 |
| 150 < 160 | 4.3 |
| 160 < 170 | 2.9 |
| 170 and over | 4.7 |
Notes:
- Performance is based on the ratio of farm business output to farm business costs which includes an adjustment for unpaid labour
Source: Farm Business Survey
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. | |
| 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. |
| Does not subtract imputed rent for owner occupiers. | Does not subtract imputed rent for owner occupiers. |
Revisions
Compared with the provisional 2021/22 results published in the 2021 edition of AUK, the outturns (based on actual survey results from the Farm Business Survey) for cereal and specialist pig farms in England were within the confidence intervals of the survey outturns. The average income for general cropping farms was considerably higher than forecast due to an underestimation of crop and livestock output, while input costs were lower than anticipated. For dairy farms income was also higher than forecast, the result of an underestimation of the value of output from milk and milk products. On grazing livestock farms both lowland and LFA average income was higher than expected, largely due to an underestimation of output from sheep and cattle enterprises. Average income on specialist poultry farms was substantially higher than predicted with egg and poultry meat output both greater than forecast. On mixed farms both inputs and output were underestimated, but particularly output, leading to a higher average income than anticipated.
In Northern Ireland the actual income for dairy farms closely matched the provisional 2021/22 estimate. For LFA grazing farms, the average income was slightly higher than expected due to an underestimation of the value of outputs.