Only one in five family farms able to survive on farming alone

October 23, 2017

New research by The Prince’s Countryside Fund (the Fund) carried out by the Andersons Centre has found that fewer than one in five farm businesses is making a profit from farming activity alone.

The research used data supplied by 172 participants of The Prince’s Farm Resilience Programme, and showed that just 16% of participating farms made profit from farming in the analysed period, with the average farm making a loss of -£20,488 from farming activities.

Most farms made up this deficit through non-farming diversification enterprises, such as tourism, selling produce direct to the consumer, renewables and income from working off farm, as well as being supplemented by direct farm payments.

Lord Curry of Kirkharle, chairman of The Prince’s Countryside Fund said: “Although the initial figure is startling, the research from the Andersons Centre shows that farmers are increasingly looking at their farms as a business, and are proactively looking for how they can generate an income from diversified sources to remain profitable.

“This is more crucial now than ever. Farmers must develop their skills and improve their business confidence to survive. If they do not, the risk of extinction for the family farm is very real; farmers must act now to both strengthen their core farming business and to spread the risk.

“The Prince’s Farm Resilience Programme is vital, because it equips farmers with the tools they need to remain financially stable. Maintaining diversity of farm size is essential to protect the British countryside and our rural communities.”

These findings were produced by the Andersons Centre, who developed a bespoke Business Health Check Tool for The Prince’s Farm Resilience Programme. Business Health Check is an entry level benchmarking tool that allows users to compare the performance of their different on farm enterprises, including dairy, beef and sheep, to each other, as well as to similar businesses.

The tool also provides information on the outputs and costs of diversification activities, and income from subsidies, and presents their contribution to the total business profit or loss. The result of this is that farm businesses are able to identify the strengths and weaknesses of individual enterprises on and off their farm, allowing them to identify opportunities or improvements to focus on during the programme of workshops.

Farm businesses input their data into the tool, which is then analysed. Each farm receives an individual report and the results are presented anonymously at a group feedback meeting. This is the first stage in a series of five business workshops focusing on topics including managing cash flow, practical cost savings on farm and business planning designed to equip farming families with the skills and knowledge to create stronger, more resilient businesses.

Find out more about our Farm Resilience Programme here.