National statistics

Farm Business Income in England, 2021/22 forecast

Updated 16 November 2023

Applies to England

Forecasts of Farm Business Income by type of farm, England, 2021/22

This statistical notice provides forecasts of Farm Business Income for 2021/22 alongside results from the Farm Business Survey for the years 2018/19 to 2020/21 (Table 1.1). These figures are for March/February years with the latest estimates covering the 2021 harvest and including the 2021 rate of the Basic Payment Scheme (which is included within the total farm output and therefore contributes to Farm Business Income). Actual survey results for this period will be published in November 2022.

The forecasts for 2021/22 are derived from information available in early February 2022 for prices, livestock populations, marketings, crop areas, yields and input costs. They are intended as a broad indication of how incomes for each farm type are expected to move compared with 2020/21. The forecasts are subject to a margin of error, reflecting, in particular, the fact that farm income is derived as the relatively small difference between total output and total input; small percentage changes in either of these can result in large percentage changes in income. It should also be noted that within each year there is a wide range in income across farms around the average figures published here.

Data on farm business incomes are used to monitor and evaluate Government policies and to inform wider research into the economic performance, productivity and competitiveness of the agricultural industry. The data are also widely used by the industry for benchmarking.

Key results

• With the exception of specialist pig and specialist poultry farms, average Farm Business Income is forecast to increase in 2021/22. Higher prices for key outputs such as cereals, meat and milk coupled with increased yields are expected to drive a rise in output, although this will be offset to some degree by higher costs, particularly for feed and fertilisers.
• For specialist pig and specialist poultry farms the impact of substantially higher costs, particularly for feed (reflecting price increases to feed ingredients such as wheat), is expected to more than offset a smaller rise in output.
• Compared to 2020, the average 2021 Basic Payment is expected to fall by around 9 percent across all farm types, reflecting the first year of progressive reductions to the payment.

1 Farm Business Income by farm type

Figure 1.1 Average Farm Business Income (£ per farm) by farm type, England 2020/21 and forecast 2021/22

Table 1.1 Average Farm Business Income per farm at current prices (£/farm) (a)

Farm Type	2018/19	2019/20	2020/21	2021/22 forecast	% Change 2020/21 to 2021/22
Cereals	67,300	62,800	71,700	108,000	51%
General cropping	106,400	84,400	66,900	113,000	70%
Dairy	79,700	84,800	92,500	112,000	21%
Grazing livestock (Lowland)	12,500	9,400	18,400	19,000	3%
Grazing livestock (LFA)	15,500	22,800	33,400	34,000	1%
Specialist pigs (b)	29,600	37,700	48,000	13,000	-73%
Specialist poultry (b)	74,700	87,900	77,700	38,000	-51%
Mixed	45,500	28,900	40,200	52,000	29%

^(a) Data for forecast year rounded to the nearest thousand. The percentages shown are calculated against the unrounded figures. Years ending at end of February.
^(b) The sample sizes for specialist pig and poultry farms are relatively small and the confidence intervals relatively large. Results for individual farms can have a large influence on the overall results.

1.2 Average Farm Business Income per farm in real terms (a) at 2020/21 prices (£/farm) (b)

Farm Type	2018/19	2019/20	2020/21	2021/22 forecast	% Change 2020/21 to 2021/22
Cereals	72,700	66,500	71,900	108,000	50%
General cropping	114,900	89,400	67,100	113,000	69%
Dairy	86,100	89,800	92,700	112,000	21%
Grazing livestock (Lowland)	13,500	9,900	18,400	19,000	3%
Grazing livestock (LFA)	16,800	24,200	33,500	34,000	1%
Specialist pigs (c)	32,000	40,000	48,200	13,000	-73%
Specialist poultry (c)	80,700	93,000	77,900	38,000	-51%
Mixed	49,100	30,600	40,300	52,000	29%

^(a) Uses GDP deflator.
^(b) Data for forecast year rounded to the nearest thousand. The percentages shown are calculated against the unrounded figures. Years ending at end of February.
^(c) The sample sizes for specialist pig and poultry farms are relatively small and the confidence intervals relatively large. Results for individual farms can have a large influence on the overall results.

1.1 Cereal Farms

On cereal farms, average income is forecast to increase by around 51 percent in 2021/22 to £108,000 (Figure 1.1 and Table 1.1) driven by an increase in crop output of 42 percent, the result of higher prices, reflecting tight global supplies, and increased yields. Compared to 2020, when many crops were badly impacted by the adverse weather, more favourable conditions in 2021 are expected to bring a return to more normal cropping patterns, with a larger proportion of higher yielding winter crops. Wheat, barley, oats and oilseed rape will all see higher yields compared to the previous year, with the area of wheat increasing due to the return of winter planting and the area of barley falling after a big drop in the spring crop area. The increase in crop output is forecast to more than offset an 18 percent rise in input costs. Higher crop costs are expected 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. Agri-environment payments are expected to rise by around 9 percent while the Basic Payment is predicted to fall by around 11 percent on cereal farms.

1.2 General Cropping Farms

Average Farm Business Income on general cropping farms is forecast to rise by 70 percent to £113,00 in 2021/22 (Figure 1.1 and Table 1.1). 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 on general cropping farms will rise by around 12 percent. Like cereal farms, fertiliser costs will more than double compared to 2020/21, driven by the return to normal patterns of winter cropping and higher prices. Building depreciation, other farming costs and property costs will also see rises. It is anticipated that the Basic Payment will fall by 11 percent on this type of farm.

1.3 Dairy Farms

In 2021/22, average income on dairy farms is expected to increase by just over a fifth to £112,00 (Figure 1.1 and Table 1.1). A rise in output from livestock will be mainly driven by a 9 percent increase in output from milk and milk products: slightly lower production than 2020/21 will result in tight supplies and higher farmgate prices. It is important to note the wide variation in milk prices with some farmers receiving considerably more or less than the average. Prices for cull, finished and store cattle are all predicted to rise across the survey year, increasing output from other cattle enterprises by around 13 percent. Crop output is also expected to be higher (by around by 39 percent) driven by higher yields and firm prices. These rises are forecast to more than offset a 10 percent increase to input costs; feed costs are expected to be 11 percent higher while crop costs will rise by more than half. For dairy farms, the Basic Payment is forecast to fall by around 7 percent.

1.4 Lowland Grazing Livestock Farms

On lowland grazing livestock farms, average income is predicted to rise by 3 percent in 2021/22 to £19,000 (Figure 1.1 and Table 1.1). Buoyant prices for fat and store lambs across the survey year are expected to increase output from sheep enterprises by 15 percent. At the same time, output from cattle enterprises is forecast to rise by 9 percent: although a tight market will see higher average prices for finished and store cattle, these will be slightly offset by lower throughput. A change in livestock valuation is also expected to bolster cattle output with the value of finished and store cattle estimated to be higher at the closing, compared to opening, valuation. Crop output is forecast to rise by 3 percent. Higher crop costs and building depreciation will be the main drivers increasing inputs by 8 percent. The Basic Payment is predicted to fall by around 6 percent on lowland grazing livestock farms.

1.5 LFA Grazing Livestock Farms

The average income on LFA grazing livestock farms is expected to increase very slightly to £34,000, with similar value increases to outputs and input costs largely offsetting each other. Livestock output is forecast to rise by 11 percent with similar trends for cattle and sheep enterprises to those seen on lowland farms. Sheep breeding stock prices are also forecast to be higher compared to 2020. Crop output is predicted to rise by 15 percent. Overall, agricultural output is expected to go up by 6 percent while costs are predicted to increase by 6 percent, notably crop costs and building depreciation, which will rise by 62 percent and 21 percent respectively. Agri-environment payments, which represent an important source of income for this type of farm, are expected to be around 11 percent higher while the Basic Payment will fall by 9 percent.

1.6 Specialist Pig Farms

Forecasts for specialist pig farms are subject to a considerable degree of uncertainty reflecting both the structure of this sector and the relatively small sample of these farms in the Farm Business Survey. For this type of farm average Farm Business Income is expected to fall by nearly three quarters in 2021/22 to £13,000, the result of input costs rising considerably more than output. Feed costs (which typically represent around half the total costs on these farms), are expected to rise by 22 percent, tracking price increases for key feed ingredients such as wheat and also reflecting more pigs on farm due to abattoir and supply chain issues. Other livestock costs, building depreciation and crop costs are also forecast to see notable increases. In comparison, output is expected to rise by 7 percent. For pig farms who grow crops, crop output will increase, particularly for wheat. It is anticipated that higher throughput and heavier carcase weights will partially offset a fall in finished pig prices, which are expected to be around 6 percent lower than 2020/21. Weaner, store and cull sow prices are also forecast to be lower. Combined, these factors are expected to result in a 5 percent increase to output from pig enterprises.

1.7 Specialist Poultry Farms

Forecasts for specialist poultry farms are subject to a considerable degree of uncertainty reflecting both the structure of this sector and the relatively small sample of these farms in the Farm Business Survey. In 2021/22, average income on specialist poultry farms is forecast to be £38,000, around half the average income of 2020/21. Input costs are expected to increase by 14 percent, as with specialist pig farms it is anticipated that rising feed costs (which are forecast be 19 percent higher than the previous year) will be a key contributing factor along with higher crop costs and general farming costs. These rises will be partially offset by an increase in poultry output of 7 percent, reflecting higher egg prices and production. Output from broiler enterprises is also forecast to rise, although lower slaughter numbers for turkeys and other poultry indicate a reduction in other poultry meat production.

1.8 Mixed Farms

On mixed farms incomes are expected to rise by just under a third to £52,000. This type of farm reflects all the enterprises found in the more specialist farm types reported above. Overall output is forecast to increase by 14 percent with a rise in crop output of 33 percent a key determining factor. Output from livestock is also expected to go up, primarily driven by higher revenue from sheep enterprises. In comparison, input costs are forecast to rise by 11 percent compared to 2020/21 with crop costs increasing by over a third. It is anticipated that the average Basic Payment will be around 9 percent lower than 2020/21 on mixed farms.

2 What you need to know about this release

2.1 Availability of results

All Defra statistical notices can be viewed on the Gov.UK site at:
www.gov.uk/government/organisations/department-for-environment-food-rural-affairs/about/statistics

Results from the Farm Business Survey including time series in spreadsheet format can be found at:
www.gov.uk/government/collections/farm-business-survey

2.2 Contact details

Responsible statistician: Alison Wray

Public enquiries: fbs.queries@defra.gov.uk

Room 201
Foss House
1-2 Peasholme Green
York
YO1 7PX

2.3 National Statistics Status

National Statistics status means that our statistics meet the highest standards of trustworthiness, quality and public value, and it is our responsibility to maintain compliance with these standards.

These statistics last underwent a full assessment Assessment Report 271 Statistics on Agriculture against the Code of Practice for Statistics in 2014. Since the last review by the Office for Statistics Regulation, we have continued to comply with the Code of Practice for Statistics across the FBS.

For general enquiries about National Statistics, contact the National Statistics Public Enquiry Service:
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Email: info@statistics.gov.uk
You can find National Statistics on the internet on the Gov.uk website.

As part of our ongoing commitment to compliance with the Code of Practice for Official Statistics we wish to strengthen our engagement with users of these statistics and better understand the use made of them and the types of decisions that they inform. Consequently, we invite users to make contact to advise us of the use they do, or might, make of these statistics, and what their wishes are in terms of engagement. Feedback on this statistical release and enquiries about these statistics are also welcome.

3 Background information

3.1 Accuracy and reliability of results

The forecasts shown in this release for 2021/22 are provisional, based on information available in early February 2022 for prices, livestock populations, marketings, crop areas and yields. The relative changes, compared to the previous 12 months, are then applied to aggregate data from the most recent Farm Business Survey (FBS) for each robust farm type. A level of estimation is necessary, particularly for variables where no market information is available. Outturn results (which will be published in November 2022 based on results for the 2021/22 FBS), could differ from these forecasts for several reasons. These include changes to the sample and to the weighting framework. In 2020/21, of the 1,661 farms that were included in the FBS target population around 160 farms came into the sample that weren’t present in 2019/20. In addition, the FBS weights are refreshed each year in line with the latest farm population data from the June Survey of Agriculture.

3.2 Definition of Farm Business Income

For non corporate businesses, Farm Business Income represents the financial return to all unpaid labour (farmers and spouses, non-principal partners and their spouses and family workers) and on all their capital invested in the farm business, including land and buildings. For corporate businesses it represents the financial return on the shareholders capital invested in the farm business.

In essence Farm Business Income is the same as Net Profit, which as a standard financial accounting measure of income is used widely within and outside agriculture. Using the term Farm Business Income rather than Net Profit, gives an indication of the measure’s farm management accounting rather than financial accounting origins, accurately describes its composition and is intuitively recognisable to users as a measure of farm income.

3.3 Survey coverage and weighting

The Farm Business Survey (FBS) is an annual survey providing information on the financial position and physical and economic performance of commercial farm businesses in England. It covers all types of farming in all regions of the country and includes owner-occupied, tenanted and mixed tenure farms. The FBS only includes farm businesses with a Standard Output of at least €25,000, based on activity recorded in the previous June Survey of Agriculture and Horticulture. In 2020, this accounted for approximately 56,048 farm businesses. In 2019/20 and 2020/21 the samples were slightly smaller as Covid-19 restrictions impacted data collection. Data are collected from a sample of around 1,750 farm businesses by face to face interviews with farmers, conducted by highly trained researchers.

Each record is given a weight to make the sample representative of the population. Initial weights are applied to the FBS records based on the inverse sampling fraction. These weights are then adjusted by calibrating certain totals to match published totals from other surveys so that they can be used to produce unbiased estimators of a number of different target variables.

More detailed information about the Farm Business Survey and the data collected can be found at https://www.gov.uk/farm-business-survey-technical-notes-and-guidance