the economics of very small farms

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•No. 9
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pniversity of Reading
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THE ECONOMICS OF
VERY SMALL FARMS
A FURTHER LOOK
D. J. Ansel!, A. K. Giles and J. Rendell
Special Studies in Agricultural Economics
Report No 9 1990
UNIVERSITY OF READING
Department of
Agricultural Economics & Management
The Economics of
VERY SMALL FARMS
— A Further Look
D. J. Ansell, A. K. Giles and J. Rendell
Special Studies in Agricultural Economics
Report No. 9.
0 7049 0593 0
1990 Price £6.00
CONTENTS
Page
Preface and Acknowledgements
Summary 1
Some Extracts from Provincial Reports 3
Introduction 5
Section A: Analysis of Survey Results by 10
Type of Holding
Section B: Provincial Reports 39
Introduction 39
Centres: Wye 43
Reading 49
Exeter 56
Cambridge 62
Nottingham 69
Manchester 74
Askham Bryan 82
Newcastle 86
Aberystwyth 90
Section C: The European Community Regions 108
Definitions of Terms Used in the Summary Tables 114
Annex 1: Reports on Special Studies
in Agricultural Economics
Annex 2: Provincial Centres of
Agricultural Economics
Erratum
PREFACE AND ACKNOWLEDGEMENTS
The agriculture of the UK is characterised by large farm
businesses, which produce most of the industry's output. For
many years the share in total production of these larger
enterprises has tended to grow. By 1989 almost three-quarters
of the area of cereals was in farms with 50 ha. or more
cereals and more than 40% of our dairy cows were in herds of
100 or more. In the light of this, it might seem that from
the point of view of food the farms studied here are
insignificant. Indeed, they have usually been excluded from
official agricultural statistics on those grounds.
Very small farms, however, do occupy a distinctive role
in our countryside. They are the homes of a large number of
people. Those who live in them devote a significant part of
their time and energy to farming activities. Some small farms
make an important contribution to special, niche, markets;
their owners may be pioneers - or fanatics. Most, however,
cope with conventional farming enterprises, facing the ups and
downs of the market in common with all farmers and having to
undertake additional non-farm work in order to make ends meet.
Clearly such farmers value their way of life and, in doing so,
contribute to the rural communities of which they are part.
This report, which has been written and edited by
Professor Giles and Mr. Ansell, helps to provide a factual
background to the economic situation of such farms. It,
together with the two earlier reports, gives, an insight into
how such businesses are affected by the changes taking place
in agriculture in the European Community and the UK. As
attention switches from policies designed to promote food
production to policies which are of a more socially' and
environmentally sensitive nature, the significance of very
small farms, which help to keep village communities alive, is
of growing importance. The balance of agricultural and non-
farming activities may affect the stability of this important
group of rural business and their influence in the future
development of rural Britain.
This University would, of course, not have been able to
carry out its work as national co-ordinator of this study
without the helpful collaboration of many individuals and
institutions to whom we are grateful. Our thanks, therefore,
go to members of the Economics (Farm Business) Division of
MAFF, who have helped in initiating the study; to members of
the Planning Group; to the investigational staff at all of the
Centres involved, and in particular to the local co-ordinators
and authors; and to John Rendell, now retired from this
Department, but who has again undertaken the mammoth task of
analysing the data. We have, as in previous years, included
as much of the data as seems manageable in a simple report,
but would do our best to meet any requests for additional
information that may be hidden in our computer.
As always in these matters special thanks must go to the
co-operating farmers: many of them, up and down the country
who - in their busy and sometimes worrying lives - have
patiently given us their time and answered our questions. We
will have met them for a second time before this study is in
print and we are grateful to them.
Finally, we have to end on a sad note: for it was with
the deepest sadness that we and our colleagues around the
country heard of the sudden news, late in 1989, of Mike Pick's
death. A graduate of this University and a loyal servant of
MAFF, he had, in various ways, endeared himself to all who
knew and worked with him. He had fought stubbornly against
uncertain health, but his death was unexpected. In recent
years he had a major influence on the new series of Special
Studies in Agricultural Economics of which Number 1 was the
first in the sequence of reports on Very Small Farms. When
the four-year study is complete it will stand as a major part
of the testimony to Mike Pick's interests and industry. He is
and will be greatly missed.
Professor J. S. Marsh,
Head of Department.
April, 1990.
SUMARY
Objectives
This report presents the results from the third year of a four-year
study of Very Small Farms which has had as its objectives to provide
information about:
- the farming activities practised,
- the profitability of those activities,
- the nature and content of non-farming employment and incomes,
- attitudes regarding past, present and future intentions.
Methodology
The study has been conducted for all three years (1986, 1987 and 1988)
by departments responsible for agricultural economics in nine universities
and colleges in England awl Wales,1 and has embraced those farms which,
because of their smallness are not included in the annual Farm Business
Survey.
Data have been collected from these farms, by interview, for each of
the three calendar years. An identical sample of just over 500 holdings
was involved in 1966 and 1987. In this third year the study has been based
on a freshly drawn and enlarged sample of over 1,200 holdings.
The results for 1988 are presented here, as they have been in the two
previous reports, in three different ways: for seven main farming types,
for the nine investigating centres, and for four European Community
regions.
Main Conclusions
1. It has been a feature of this survey, over its three years, that
whilst it has drawn attention to the variability of individual
circumstances and motives for farming on this scale, it has reflected
a distinct lack of variability in the general financial outcome for
most of those involved.
The new and enlarged sample has served to confirm that, even within
the changing fortunes of different sectors of farming, the picture
remains virtually unchanged on these 'very small farms' with low
agricultural investment levels, low intensity farming and low (almost
non-existent) farming incomes.
1Northern Ireland was included in this study for 1986 and 1987, and in
Scotland a separate but similar study has been conducted for 1987 and 1968.
2The farms are below 4 British Size Units and, therefore, do not warrant
the full-time employment of one person.
1
2. In England, average Net Farm Income on these farms in 1988 averaged a
mere £300; in Wales, by the same token, there were losses. Off-farm
income averaged £12,600 in England and £7,600 in Wales. With the
labour of farmer and spouse being fairly evenly divided between on-
farm and off-farm work, the disproportionate reward to on-farm work is
self-evident.
3. It is tempting to draw attention to the substantial percentage changes
in average farming incomes reflected in this survey from year to year,
e.g. nationally speaking, just over £300 in 1986, over £800 in 1987
and back to around £100 in 1988. But such changes are, of course,
small in absolute terms; and (as pointed out in the concluding remarks
of Section A) are likely to occur where the figure is a residual
between two other figures (output and costs) often changing
independently and similar in magnitude to each other. To emphasise
such changes would be inconsistent with our already stated general
conclusions.
4. Even the gradually improving - and, in percentage terms, the
dramatically improving - circumstances of very small dairy farms (with
occupier's farming income of around £1,200 in 1986, £2,000 in 1987 and
£4,500 in 1988) do not represent a move from anything but dire income
levels - coupled, as they inevitably are on dairy farms, with less
opportunity to work and earn off the farm. All other farm types, with
a much more even distribution of labour effort on and off the farm
(except in the case of horticulture), were able to generate
substantially more non-farming income than were dairy farmers. But
this was needed to compensate, in many cases, for a substantially
lower farm income as well.
5. It is not intended to draw conclusions here about the differences
reflected by the various data-collecting centres, with the often
artificial farming divisions represented by their boundaries. Again,
however, the differences are small in absolute terms although the
influence of dairying in the more western areas is evident. The same
influence is evident in the results from the four EC regions with the
highest average 'occupier's income' (£1,706) occurring in the West
Region, with the dairying figure (£4,929) the highest component of
that regional average.
The Future
There remains one more year of results to emerge from this four-year
study: those for the 1989 calendar year. At the time of writing this
report (i.e. the Spring of 1990) the field work is well underway. The data
will again be analysed at Reading - during the second half of 1990 - and
our final report, including a renewed socio-economic emphasis - will be
written in time to appear in the early summer of 1991.
2
SOME EXTRACTS FROM THE PROVINCIAL REPORTS IN SECTION B
- 1988 Financial Year, Surveyed in 1989 -
'Anecdotes of investment successes were frequently encountered (in 1988)
from those with significant off-farm incomes, which were absent from the
present study (in 1969). One may postulate that the reversal of fortunes
resulting from Black Monday and higher interest rates has created
difficulties in this sector, and that the 'smallholder' rather than the
commuting resident has emerged in relatively robust shape in the South
East.'
M. 3. M. Bent, Wye College.
'In addition to differences in soil type and climate, the main reason for
the wide spectrum of results (from farm financial surveys) is due to the
variation of technical efficiency with which farmers produce agricultural
and horticultural products. An added variable that could be ascribed to
the participants in this particular study was the purpose for which the
farm was being occupied.'
J. Wright, University of Reading.
'It would appear that, in most cases, the very small farm is better
regarded as being on the residential fringe of agriculture rather than as a
first step on the farming ladder.'
M. M. Turner, University of Exeter.
'It would be wrong to assume that all of these farms have serious problems.
Clearly some do, where, for example, the level of output is low and the
holding provides the sole occupation for the farmer. For others, where the
main source of income came from an off-farm occupation, the farming
activity is much less important and the holding mainly residential.'
J. G. Davidson, University of Cambridge.
'By their very nature these holdings are not dynamic in their management
.... in general (they) tend to be extensively farmed and the level of off-
farm activity is more significant than time spent on the holding, both in
terms of hours spent and income generated.'
S. J. Mellors, University of Nottingham.
3
'What is remarkable in many cases, is the ability of farm families to
survive on very low incomes. It is significant also, that so many of these
holdings were owner-occupied; on the one hand, it is simply because the
farm is owned that many of these holdings remain solvent, whilst it is also
true that owning one's own land seems to be an important concept in
itself.'
C. Maddison, University of Manchester.
'There are those (in this survey) who are clearly improving their lifestyle
by purchasing a smallholding and can only be considered to be farming for a
hobby and not for monetary gain. In many cases these farmers would be
financially better off letting their land. Equally, there are those who
are working very long hours for very small monetary rewards. Some of these
will make a financial success of their farming but for many, financial
dependency on farming will not be possible.'
Susan Holley, Askham Bryan College.
'There were virtually no holdings where farm income was greater than non-
farm income with the average from the farm being less than £800 ... (but)
... the labour input in many cases is substantial so (presumably) many
farmers are motivated by non-financial considerations ..• agricultural
activities are carried out for pleasure and enjoyment ... (and) non-farm
incomes may be considerable.'
D. Barnes, University of Newcastle upon Tyne.
'The farms visited in the course of the survey range from traditional
family small holdings, yielding a modest living for their occupiers, to
units purchased with outside resources and run for the purpose of indulging
a vision or a philosophy. In the middle, and probably not typical, are
farms which are merely sidelines or convenient bases for their occupiers
whose main livelihood is non-agricultural.'
T. N. Jenkins, University College of Wales, Aberystwyth.