Arable inflationary pressures on input costs coupled with falling grain prices are expected to reduce arable profit margins by a massive 50%, according to a new report

Add in the reduction in BPS payments and the average UK arable farm is expected to see net margins for the 2023 harvest of £183 per hectare compared to £568/ha in 2022.

Even the best performing farms are expected to be hit with the report – based on work conducted by Strutt & Parker – pointing out that such units achieving higher yields and with lower fixed costs is forecast to achieve net margins of £364/ha for 2023. This is 52% less than the previous year and 42% lower than in 2021.

"Harvest 2022 was a profitable year for arable growers who purchased the bulk of their inputs before the massive increases in input costs and benefited from the significant increases in grain prices," said Andrew Atkinson, farm consultant with Strutt and Parker.

"But the huge rise in fertiliser prices which followed, along with declining commodity prices over recent months, means harvest 2023 could end up being one of the worst financially for a number of years."

He added that it is also "worrying" to see that while profits are forecast to rise a little in 2024, they are likely to be significantly down on where they were in 2021.

"Volatility is not new to farmers, but the extent of it really has been unprecedented over the past 24 months and it is this year where the pain will be felt on many arable farms."

Mr Atkinson pointed out that while fertiliser prices soared to £1000/t in the spring 2022, feed wheat prices have since dropped by almost £150/t compared with summer 2022 levels.

Furthermore, oilseed rape prices have plummeted from in excess of £800/t last year to around £350/t at present

"Arable farmers will be feeling like they have been on a rollercoaster and that looks set to continue," Mr Atkinson said.

"The forecast for 2024 is better than this season, but still worryingly low, which puts pressure on businesses to look for areas where they can improve financial and technical performance."