Production costs higher than 2015 wheat market price
© Tim Scrivener More than nine in 10 winter wheat growers failed to cover their production costs from the bumper 2015 harvest.
The latest figures from the Farm Business Survey (FBS) put the average cost of production (COP) at £143/t, which meant an average loss of £29/t, based on the average wheat sales price in 2015-16 of £114/t.
Production costs are calculated on a full economic basis, including a charge to represent the value of unpaid labour – for example, that of the farmer, spouse and partners in the business – as well as an imputed rental charge for owner-occupied land.
The value of straw has been deducted from the costs and the analysis covers only winter wheat, excluding organic and in-conversion wheat.
See also: Production costs top market prices for many 2015 crops
About 8% of growers either broke even or made a positive return from winter wheat in 2015-16, compared with about 12% for the 2014 crop.
The average production cost of £143/t for 2015 winter wheat compares with £157/t for the 2014 crop, when the average selling price was about £130/t.
Cost of production
However, at the top of the scale, about 3% of growers had a cost of production lower than £100/t.
These were likely to be those with the highest yields, predominantly in the north-east of England in 2015, said Ben Lang, senior researcher and manager of the University of Cambridge Rural Business Unit.
The average winter wheat yield in 2015 was 9.8t/ha, the highest national yield on record, with the East Riding of Yorkshire topping the county table at 10.7t/ha.
“Many cereals farms in the North East achieved excellent yields, but this was achieved from a lower-than-average cost base,” said Mr Lang.
“These businesses have tight cost controls, which is vital in the face of different pest and disease pressures.”
However, almost 5% of growers spent £250 or more to produce a tonne of winter wheat. A further 10% had a cost of production of £200-£250/t.
“There are a lot of farms out there achieving 8t/ha yields, but with running costs you would expect from 12t/ha crops,” says Mr Lang.
From the Farm Business Survey
- In the 2015-16 financial year, more than 3,000 arable farms in England failed to make a profit, even after subsidies, environmental stewardship and non-farming income
- The average cereals farm business income fell 20% to £35,500
- The top 25% group achieved a farm business income of more than £100,000 a farm, and an average profit of £114/ha from agriculture alone
The FBS is carried out by Rural Business Research, a group of universities and colleges across England that includes the universities of Cambridge, Newcastle-Upon-Tyne, Nottingham, Reading, Askham Bryan and Duchy College. Farmers can use a free online FBS benchmarking tool.