Heaven knows what planet Jeff Rooker is on when he calls the latest TIFF (Total Income from Farming) figures an encouraging sign for the industry.The farming press and NFU have rightly called for numbers and commentary to be viewed by enterprise so that the precarious position of livestock farming is disentangled from the dazzle of arable and better returns from dairy.
Simultaneously with the TIFF, an analysis of numbers from the Farm Business Survey England were published by DEFRA. These figures highlight the patchy returns from farming, especially if subsidies are excluded, but they also point up the amount of farm income which depends on diversification. Latest actual figures are for the year to April 2007, and these show income for the 60,000 farms who support at least one worker half-time, as follows:
£m
TIFF Total - 2250
Agri income excluding subsidies - 80
Subsidies - 1740
Diversification income - 430
So income from diversification is over 5 times the size of income from regular farming, and about 19% of total income. Not a small amount. Diversification is defined (deep breath here) as "non agricultural work of an entrepreneurial nature, on or off farm, which utilises farm resources".
About half of the total sample of 60,000 farms have diversified, and the biggest activity by far is renting out farm buildings, followed by sport and recreation, processing and retailing farm food produce, tourist related activity, and "other" which is not broken down further but would include activities such as spinning wool, or woodwork from farm trees.
The numbers of farms involved in diversification are:
Diversified total - 30,000
Letting buildings - 21,400
Sport/recreation - 6,700
Processing/retailing - 4,500
Tourist related - 2,600
Other - 4,800
About 30% of farms have more than one diversified enterprise.
The average income per farm from the various enterprises differs alot, with processing and retailing leading the field, followed by tourism.
Income £ per farm
Letting buildings - 12,200
Sport/recreation - 5,100
Processing/retailing - 14,200
Tourist related - 13,800
Other - 10,500
Only 1.5% of farms failed to make a profit from their diversification.
Diversification shows no sign of slowing down. An additional 2,400 farms came into sports/recreation in the year ending April 2007, and 1,100 into processing and retailing.
Against this rosy picture should be set the fact that most diversified enterprises are small. 57% have an output, ie sales, not income, of less than £10,000, and 12% have an output of less than £1000. Also, about 2,800 farms stopped diversifying activities, and what the numbers don't tell us is whether profits fell unacceptably in the core business when the diversification took place because the eye was taken off the core farm ball.
Overall though, the DEFRA numbers are encouraging for existing or would-be diversifiers. Particularly the one about only 1.5% of enterprises failing to make a profit. Many diversifications may be smallish in size, but the majority seem to help make ends meet, and some turn in a substantial profit. All in all, its probably worth taking a regular look at what else the farm's assets could be used for other than core farming, particularly as subsidies shrink. And of course any venture needs thorough market research and detailed costings before going ahead.
No comments:
Post a Comment