Accountancy firm Duncan & Toplis is warning arable farmers to be prepared for reduced yields and profits this harvest.
The company, which supports agri-businesses across the East Midlands, has expressed concern over this years harvest and predicts a difficult season ahead for farmers.
Several factors have contributed to the negative impact on income this year in comparison to 2022, including volatility in commodity markets due to the Ukraine war, weather instability and a “significant lack of sunshine”, the company said.
Head of agriculture at Duncan & Toplis, Mark Chatterton, said: “What a difference a year makes. Arable farmers had a glorious summer in 2022, both with higher crop yields and higher prices. This year however, the weather means that harvest is very stop and start.
“The quality of wheat crops in the field is suffering significantly, and yields will not be as good as 2022 due to a severe lack of sunshine in July.
“Clients are reporting that wheat yields are likely to average closer to 8t/ha, whereas in 2022, they were nearer to 10t/ha.”
Chatterton pointed out that prices have experienced a “sizable decrease”, with feed wheat currently trading at £180/t, down from a peak of £350/t in July 2022 or £240/t this time last year.
Market volatility
Chatterton said there has been extreme volatility in the commodity markets since February 2022 due to war in Ukraine.
“Input costs have also risen, especially fertiliser, with the price peaking at 800/t in summer 2022,” he said.
“Fuel and electricity prices have also seen a huge increase during the 2022/23 crop year.
“As well as dealing with the weather and market volatility, farmers have the added pressure of managing input purchases and crop selling.”
In addition to this, Chatterton said, the higher profits from harvest 2022 will result in higher tax bills and many of these will be due in January of 2024 – when bank balances are “likely to be dwindling”.
“It has never been more important to plan ahead and work with your accountant to ensure that your business is prepared for what is to come,” he said.
