Wettest year drives down farm incomes

LONDON Thu Jan 31, 2013 2:10pm GMT

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LONDON (Reuters) - Farm incomes are set to fall in England in 2012/13 with pig and dairy producers among the hardest hit as feed costs climb and the wettest year on record reduces crop yields and quality, Britain's farm ministry said on Thursday.

Specialist pig farms are expected to see a 50 percent fall in incomes to 19,000 pounds per farm and those of dairy farms projected to decline 42 percent to 50,000 pounds.

The 2012/13 season runs until the end of February.

The figures showed a third consecutive fall for pig farmers whose income is now barely more than a quarter of the 75,500 pounds reported in 2009/10.

"An unprecedented increase in the cost of feed which accounts for 60 percent of the cost of producing a pig was not supported by an increase in the price that farmers were paid for their pork," Zoe Davies, general manager of the National Pig Association, said.

"This put many businesses under severe pressure with the net result that around 17,500 sows were lost from the national herd last year," she added.

The beginning of the year had been dry, with the government calling a drought summit in February, but the deluge began in April and continued for much of the rest of the year, saturating farmland and causing widespread flooding on several occasions.

"The figures make sobering reading but will be no surprise for many in the industry," National Farmers Union chief economist Phil Bicknell said in a statement.

"Rising costs outstripped farmgate price changes for dairy and pork producers at times over the last year. More recently, we can add the plummeting lamb price to the list of challenges the industry faces," he added.

The ministry said the dairy sector was hit not only by a rise in feed costs but also by the need to purchase higher volumes due to a combination of reduced grazing days and low quality home produced forage.

Feed wheat prices in Britain for nearby delivery rose to a record high of 227.00 pounds a tonne in November last year as rains drove yields down to a 23-year low. A year earlier the price had fallen to as low as 140.00 pounds.

Income for cereal farmers in England fell by 11 percent to 84,000 pounds with higher prices more than offset by lower yields and quality.

Poultry was the best performing sector with income expected to be unchanged at 21,000 pounds per farm.

"In this sector, while feed costs are predicted to increase, a higher output from both broiler and egg production are also expected, resulting in average incomes being unchanged," the ministry said.

(Reporting by Nigel Hunt; editing by James Jukwey)

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