The announcement of the provisional analysis of UK farming profitability in 2006, its Total Income from Farming (TIFF) assessment, heralds an improvement in the fortunes of agriculture, having risen by 10.4% over the past year (equating to 7.0% in real terms). However this is from a painfully low base. Over the past 10 years, TIFF has fallen by 36% and the income per full time person equivalent is now only £13,867pa.

The value of subsidies – at £2.9bn is greater than the net profit, at £2.7bn, demonstrating how exposed the industry is to potential reductions in subsidy support due to rising modulation in forthcoming years.

The greatest improvement in profitability has been in the arable sector, with profits having more than doubled on the back of a significant rise in commodity prices over the year. Profits from beef and sheep have improved significantly – but nevertheless these two sectors still remain the least profitable of the different categories. Dairy profits have fallen, as a result of the much publicised inadequacy of milk price, and specialist livestock enterprises (pigs and poultry) have also reduced in profitability.

Livestock numbers continued to decline at an alarming rate. Nevertheless we must recognise the importance of the livestock sector to UK agriculture, and thus the concerning significance of the lack of profitability in the main livestock sectors. Of the total £14.8bn income from UK agriculture, £5.2bn comes from livestock sales and a further £2.5bn from milk; this compares with £2.7bn from vegetables, potatoes and fruit, and £2.3bn from other arable crops. Whilst a rise in arable commodity price is very welcome for a cash-strapped arable sector, inevitably this will have a knock-on effect on the cost of animal feed – which, at £2.4bn – is the single most expensive direct cost to the industry.

Net profit per farm over the past year is estimated at £21,300. This includes the value of owners labour, but does not reflect rental value of owner-occupied land nor the value of the farmers capital invested in the business. Nevertheless, the UK Government is of the opinion that direct farming subsidies should be withdrawn. It is time our Government stopped taking for granted the commitment, investment, management expertise and shear hard work which our farmers deliver, and show proper appreciation support for the benefits which our farmers deliver in both top quality food at very affordable price and responsible management of the countryside.