Average arable performance will see losses from harvest 2024

Many average-performing arable farms will make a loss from the 2024 harvest, with a predicted net margin of £80/ha before rent and finance costs.

The figures come from Strutt & Parker and are based on a 131ha in-hand holding with an expected winter wheat yield of 7.5t/ha in 2024.  

The £80/ha margin is a drop of £119/ha compared with 2023 performance and assumes that growers have managed to drill spring crops on unplanted winter crop areas.

This gives a whole farm net margin of £10,480 to cover rent, finance, drawings and reinvestment.

Things look slightly better for harvest 2025, says the firm, assuming rotations and yields return to more normal levels.

However, the predicted average pre- rent and finance margin for that year is just about half the levels seen in 2021 and 2022.

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Higher performers are predicted a net margin of £271/ha on a wheat yield of 8t/ha in 2024, about a third lower than in 2023.

Marked difference in fixed costs

For harvest 2025, the net margin for these farms rises to £449/ha, more than double that of the average farm. Lower fixed costs account for a large proportion of the difference between the two groups.  

The firm’s head of farming, Jonathan Armitage, highlights the wide range of risks requiring active management, including weather extremes, geopolitics, commodity price volatility, input availability and costs, alongside staff management and the increased requirement and cost of working capital.

On the Sustainable Farming Incentive (SFI) as part of risk management, he says: “While the return may not be as high as that produced by a really good crop, it does avoid the risk of costly losses.

“Taking this approach should also mean that growers can focus their efforts on the more profitable crops in the rotation.”

Efficient use of resources

The lower fixed costs of higher performing businesses are largely down to lower machinery costs. Labour, property and administration costs also tend to be lower because resources are being deployed more efficiently.

Businesses cutting their cropped area need to look for ways to reduce fixed costs, says Jonathan, for example, machinery sharing and greater use of contractors or alternative structures such as a joint venture or contract farming agreements.

“Motivating and rewarding staff and family members appropriately can have a big impact on efficiency and staff retention so that needs to be a priority,” he advises.