Westcountry

A major new report has predicted a rosy future for the British farming industry.

According to farm business consultants Andersons, Total Income from Farming (TIFF) reached £3bn last year, up 10 per cent on 2006.

This is the highest level of returns since 2003. And the prospects for 2008 are even more encouraging.

Andersons predicts that TIFF will hit the £4bn mark in 2008. This would represent the best year for the industry since 1995.

2007 was an eventful year for British farmers, with foot-and-mouth disease and bluetongue costing the industry millions of pounds in lost income.

"Can 2008 possibly be as eventful as 2007? Prices, weather and disease conspired to produce an unpredictable year - hopefully 2008 will be less dramatic," the report said.

The report: "Despite the vagaries of the British weather, world markets, diseases and government red tape, there is now the prospect of farmers making adequate returns from their hard work - albeit not in very sector."

"The profitability outlook for the industry as a whole looks better than it has for many years," it added.

Last year's improving returns were helped by the healthy rise in dairy and cereal prices, the report noted.

"One of the biggest changes during 2007 was the boom in commodity prices. So far this has been limited to combinable crops and milk products, with other sectors not enjoying similar gains.

"Because of the importance of cereals and dairying in the UK, there will be a noticeable effect on the overall farm income figures for 2007 and 2008 from these price rises."

Looking ahead, milk prices are expected to remain at current levels, while cereal prices are forecast to drop slightly.

Despite the positive profitability outlook for the industry as a whole, the report says this masks huge disparities between individual sectors.

The pig, beef and sheep industries were particularly badly hit last year, and the report predicts that the livestock sector will face another difficult period in 2008.

According to the report, there is massive task ahead for the livestock sector to persuade buyers to increase the prices paid to reflect the growing cost of production.

The weakening of sterling against the Euro will, however, provide a boost to farm incomes in 2008.

The Andersons report concluded: "Despite the vagaries of the British weather, world markets, diseases and government red tape, there is now the prospect of farmers making adequate returns from their hard work – albeit not in very sector.

"It is now up to the industry not to waste that opportunity."