An Agro Business Consultants report is warning that farmers could soon be experiencing cash flow issues, as commodity prices fall and the pound remains strong.
It was claimed that there is very little chance that the price of commodities will start to rise anytime soon, meaning that farmers will continue to struggle to make a profit.
The cost of producing wheat for winter feed against the market price demonstrates this issue. Currently, feed wheat is being traded at £104 per tonnes, but production costs are running at around £118.90 per tonne. That is without the cost of rent, finance and labour being factored in.
In May 2014, the price per tonne stood at £152, meaning that it has fallen by 32%. The going rate for finished steers fell by 5%, milk 26% and old season lambs 17%.
As such, many farmers are reportedly struggling to make a profit. The author of ‘The Agricultural Budgeting and Costing Book’ and head of research for Andersons, Richard King, highlighted this fact in an interview with Farmers Weekly. He said:
“Even in the current climate there are good farmers out there still making money, but the gap between the best and the rest keeps getting bigger.”
The strong pound has not helped. With 80% of what UK farmers produce being sold in the EU, this can be a big problem.
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