Did currency fluctuations really boost UK's 2009 farm income?

According to official figures, UK farm income this year will increase by nearly 25% but analysts point to an 8% drop instead.

The provisional estimates from DEFRA said the biggest drive behind the upbeat figures was the dramatic effect on the value of the single farm payment caused by the sterling's plunge against the euro, making SFP cheques worth 15% more for farmers.

But specialists from agribusiness Andersons expect 2009 Total Income From Farming (TIFF) to drop 8% on-year to GBP3.2 billion (US$5.1 billion), due to lower grain and milk prices that were not offset by strong beef and sheep values.

Still, the specialists said farmers can look forward to better profitability in 2010 as market prices for both grains and dairy are expected to strengthen, albeit only marginally.

Prices in the meat production sectors are forecast to remain strong, based on reduced supplies and less import competition. Falling fertiliser costs will make production more profitability although other costs such as fuel may increase. This means it is possible that TIFF could rebound above the GBP3.5 billion (US$5.6 billion) mark in 2010, according to an Andersons analyst.

However, a TIFF figure of more than GBP4 billion (US$6.4 billion) will be required to provide a realistic return to farmers for their time and capital employed. Fundamental changes to farm support in 2013 make the need for farm businesses to increase their productivity and profitability all the more pressing.