May 14, 2025
Article
The 2024/25 farming year may well be remembered as the year of stormy weather and a topsy turvy political landscape. The change of Government and the subsequent fall out from Labour’s first budget has created challenges for farmers. The increase in bank interest rates has also squeezed cashflow for many businesses.
Finding and keeping the labour needed to manage businesses has also been a struggle. The increase in minimum wage and employers’ national insurance from April 2025 will need careful management, potentially through changes to hours worked, more benefits, or investing in improved facilities to ensure a more efficient and motivated workforce.
Dairy prices have strengthened recently. The average farmgate milk price was 37.21 pence per litre in April 2024 and now most conventional milk prices are in the mid to high 40s, so an increase of around 10 pence per litre. Conventional concentrate prices are down about £20 per tonne year on year.
Beef prices have seen market records being broken almost every week. The average price per kilo deadweight has increased to over £6.30, with the top prices being over £7 per kilo. This is an increase of around 20% year on year. With no sign of supply meeting demand in the short-term, prices should remain buoyant.
Sheep prices have increased about 50 pence per kilo deadweight to around £7.40 per kilo. Imports of sheep meat increased 37% in 2024 because of reduced UK production and the record prices being seen.
Arable prices have remained low with future feed wheat for late 2026 / early 2027 being around £200 per tonne. Low prices, the drop in Basic Payment Scheme for 2025 and wet weather has led to difficult decisions on land usage for the coming year.
Poultry meat prices have increased nearly to the all-time high of £8.60 per kilo, which was back in September 2021. This coupled with lower feed prices has meant that good margins have been seen across the sector. Egg prices have increased by around 6% year on year to just over £1.45 per dozen.
Pork has remained around £2 per kilo, down slightly on last year. Costs of production have been around £1.90 per kilo, so a 100kg pig would give a margin of around £10, leaving very little profit. Feed makes up around 60% of the total costs of production so any changes in feed prices have a large impact on profit.
Machinery costs have also increased. With a mid-powered tractor now costing more than £100,000, decisions need to be made on whether to replace machinery or keep for longer. With repair bills also increasing, once warranties run out the risk of a costly repair bill will increase. Using contractors more often may be a solution for some but with the changes in weather there are smaller windows of opportunity to get the work completed at the right time.
Actions to consider:
- Ensure that you have a detailed monthly cashflows, for at least the next year ahead.
- Review this with your team of professionals and discuss ways to manage this.
- See if there are ways to spread costs or boost income to smooth out any expensive periods.
- Early conversations with your bank manager should give you time to make the right business decisions and not be forced into doing things at the wrong time.
In summary, whilst prices have increased across most sectors, excluding arable, there is very little margin for error and the management of your business is paramount to ensuring a prosperous future.