The UK total income from farming is estimated to be around £7.9 billion with the wider agri-food sector estimated to contribute £127 billion to the UK economy. The agricultural landscape in the UK has faced significant challenges over the past four years, a key one being cost fluctuations. Varying weather patterns, disease and pest pressures have also given our clients something to lose sleep over.
The table below illustrates some of the price fluctuations UK arable farmers have seen over the last four years.
| 2024 | 2023 | 2022 | 2021 | |
| Milling wheat | £255/t | £275/t | £345/t | £200/t |
| Feed wheat | £180/t | £210/t | £290/t | £185/t |
| Malting barley | £170/t | £200/t | £270/t | £180/t |
| Feed barley | £150/t | £185/t | £250/t | £160/t |
| Oilseed rape | £390/t | £405/t | £630/t | £385/t |
| Fertiliser (AN UK) | £339/t | £465/t | £839/t | £283/t |
| Fertiliser (Gran Urea) | £365/t | £469/t | £911/t | £318/t |
| Red diesel | 80.85ppl | 89.05ppl | 104.27ppl | 65.64ppl |
| Average gross profit | 54% | 50% | 62% | 67% |
Prices taken from Agriculture and Horticulture Development Board (AHDB) and Defra.
In 2021, there was a recovery in harvest yields following the challenging conditions of 2020; for instance, the wheat market saw an increase, with yields averaging around 7.1 tonnes per hectare (t/ha), up from the previous year’s 6.7 t/ha. Coupled with the low input prices this was a profitable year for many.
2022 saw Russia declare war on Ukraine, which was the start of the price fluctuations we have seen since. March 2022 saw record high oil seed rape prices of £800/t upwards, resulting in the 2022 harvest being another profitable year.
The price of fertiliser and fuel increased significantly with farmers being forced to purchase at high prices to meet on-farm requirements. Ammonium Nitrate (AN) fertiliser reached a high of £870/t in September 2022, with some farmers paying more, which impacted the 2023 harvest results.
The UK harvest yields in 2023 were significantly impacted by pest pressures, particularly the cabbage stem flea beetle, which affected oil seed rape crops. Farmers were still battling with inflated fertiliser and fuel prices, although we did start to see a decline from January 2023 onwards. This decline in input costs was closely followed by a decline in sale prices, meaning the profits of the previous two years were not repeated.
By 2023, many farmers were feeling the effects of the progressive reductions in BPS and for those who hadn’t got to grips with new SFI and Stewardship schemes available, cash was tight.
The most recent harvest in 2024 has been particularly challenging. The wet autumn and winter, coupled with the spring being either too wet or too dry, created difficult growing conditions. Although the 2024 harvest has been never ending for many, the results seem positive.
The big swing in costs and output prices, along with tax bills for good years falling in less good years, has resulted in cashflow pressure for many farming businesses. Those with variable rate borrowing have also had to manage the effect of the rise in interest rates. Cashflow forecasting is essential to help
businesses manage these fluctuations and to plan when additional finance may be needed.
Diversification projects are a way to mitigate the risks of the volatile UK harvest results and landowners should be looking to get the maximum output from their assets. A good starting point is identifying any areas that are not generating income, e.g. farm buildings that could lend themselves to commercial letting, and assessing the options for generating additional income.
If you are unsure of where to start or have concerns over cashflow forecasts please do get in touch.