Farmers must find ways of boosting profits as total income falls 24%
Total income from farming fell by 24% in 2015, driven by lower commodity prices and reduced direct payments due to an unfavourable Euro/Sterling exchange rate. The outlook may be better this year though, as the exchange rate for the 2016 Basic Payment Scheme (BPS) cheques has increased by 16.5% compared to 2015, helping to boost net farming income for 2016.
It’s likely however that gross income for the majority of farms will be flat this year due to global economic challenges in the food and production sector.
On the bright side, the agriculture industry’s productivity increased by 0.7% between 2014 and 2015, as a result of high levels of production in 2015 including record yields for cereals. Productivity is up by 5.3% compared to 2010.
To boost profits, farmers must continue to embrace automation which will help them better manage their businesses. Technology such as IoT telematics can enhance yields, help with cost management, and ultimately improve profitability.
The sector can’t afford to sit on the fence, despite the challenges currently facing agriculture, businesses need to think long-term and make critical decisions. For example, farmers should ensure that they are maximising their annual investment allowance of £200,000 before the December 31st deadline – investing in new equipment and technologies to boost their businesses and reduce their tax bill.
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