Defra figures show falling incomes for farms

As farmers across the country wait to hear more about the proposed inheritance tax in next week's Government budget, we've been taking a closer look at farming as a business.

You can read more about the proposed inheritance tax changes here.

How much money do they make?

The Government's department for Environment, Food and Rural Affairs (DEFRA) keep track of farm incomes year on year.

According to their website: "Data on Farm Business Income are used to monitor and evaluate Government policies."

This in then used to inform wider research into the economic performance, productivity and competitiveness of the agricultural industry.

The most recent data covers March 2023 to the end of February 2024, in effect, a financial year.

From that we're able to see how much farms in each sector, on average, are making.

The figures

Defra shows that:

in 2023/24, average Farm Business Income (FBI) was lower for all farm types (compared to the previous year) except for specialist pig farms and specialist poultry farms.

For cereal farms, following two years of exceptional highs, FBI fell by 73 per cent to £39,400. For general cropping farms average income was 24 per cent lower at £95,300.

On dairy farms, average FBI was 68 per cent lower at £70,900.

On lowland grazing livestock farms, average FBI fell by nearly a quarter to £17,300 driven by lower output from crop and sheep enterprises.

Average FBI increased to £135,800 for specialist pig farms. On specialist poultry farms Farm Business Income rose by nearly a quarter to £143,600.

Across all farm types, net income from agri-environment activities increased by an average of 14% to £10,600.

What do the experts say?

Andrew Diver is an accountant, and head of tax, Beatons Group in Ipswich.

He's been taking a look into farm accounts since the announcement around inheritance tax was made, and he's shared his evaluation with us.

He said: "It is very upsetting. These businesses do not make the income to be able to pay for an inheritance tax, they do not have the savings available.

"It's all going into farming.

"None of these people have seen this money (from the land value). They get the money they get from selling the crops or livestock that they have.

"The rate of return is around 1.6 per cent, which on a million pound property is around 16 thousand pounds a year.

"I'm seeing people looking at ways of transferring ownership now, earlier, to try and negate an inheritance tax.

"Some have even said, rather sinisterly, about the benefits of dying ahead of these changes that come in."

Also weighing in on the struggles of trying to make any money out of farming was James Airey, an advisor for the NFU.

He said: "It's been a perfect storm this past year.

"We've had business over-heads, energy prices, feed prices, all going through the roof. It means extra pressure on agriculture.

"You name it, at the moment agriculture seems to have faced it.

"We vary from other businesses too. We can't simply put a price on our products. We're governed by the price that the market wants to give us. Milk buyers for instance set their price, supermarkets set their price.

"A supermarket can do cut-price offers and we at the producer end carry the burden.

"We're not like an ordinary shop, where we can put the prices on and the customer pays it."

DEFRA's Response

A Defra Spokesperson said: "Our commitment to farmers is steadfast.

"We are going further with reforms to boost profits for farmers by backing British produce, reforming planning rules on farms to support food production, and making the supply chain work more fairly, while tackling the mental health crisis in our farming communities by investing billions of pounds and recruiting 8,500 mental health professionals across our NHS.

"Our reform to Agricultural and Business Property Relief will mean three quarters of estates will continue to pay no inheritance tax at all, while the remaining quarter will pay half the inheritance tax that most people pay, and payments can be spread over 10 years, interest-free.

"This is a fair and balanced approach which helps fix the public services we all rely on."