After some concerning conditions in March and April 2021, better weather in May turned around the outlook for 2021, and now with wheat being harvested in between rain showers we are starting to see the results.
Yields are looking to be average when compared to pre 2020 harvests, but are looking like a notable improvement on the poor 2020 harvest.
It is still too early to estimate prices and we will continue to observe global markets but the AHDB are suggesting concerns for the Russian, US, Canadian and EU harvests which may improve prospects for UK farmers.
We continue to see increases in costs, with the largest increases noted in fertilisers, fuel and machinery. This seems to be a national trend with the Government reporting almost a year of continuous increases in the Agricultural Price Index.
We will continue to monitor the position but the hope is that the price achieved on the 2021 crop will offset the rising input costs to result in an average profit for the harvest.
The 2020 harvest
The accounts we are discussing with our clients now include results from the 2020 harvest. There is great value in reviewing historic results against other farmers, and making assessments about your own operation. We summarise below the key points, but for the benchmarking detail relating to our Ellacotts’ farming clients for the 2020 harvest please click through:
||Yields on all crops were down, due to poor weather, difficult disease and weed control.|
|Prices did increase but not enough to recover the position on the fallen yields.|
|Variable costs fell for the harvest, reflecting less spending on fertiliser and sprays as a cost mitigation exercise after a late and difficult crop establishment.|
|Ultimately profits were down for the 2020 harvest, mainly due to the margin points above but also due to some fixed cost movements and changes to other income. The 2020 harvest on average failed to make a profit if you exclude the Basic Payment Scheme. This highlights how sensitive the industry is to the upcoming changes to subsidies.|
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