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Agricultural income increased by almost ten percent

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06.03.2008

Agricultural income increased by almost ten percent last year compared to the previous year, as indicated by MTT Agrifood Research Finland’s overall calculations for agriculture and horticulture. In 2007, agricultural income reached EUR 988 million, while in 2006 it amounted to about EUR 900 million.

Agricultural income, which indicates the return on agricultural entrepreneurs’ labour input and capital investment, thus saw an increase for the first time since 2002. Despite the increase, agricultural income in 2007 fell almost 14 percent short of the figures in 2002.

FEED COSTS REDUCED EARNINGS

The central factor in the rise in agricultural income is the increase in producer prices both in plant farming and in domestic animal production. On the other hand, a slight decrease was recorded in the volume of agricultural and horticultural subsidies compared to the previous year.

Costs continued to rise rapidly last year, and as a result the increase in income was almost two thirds lower than it would have been otherwise. Total costs rose by over five percent to almost EUR 3.3 billion. Especially feed costs, which rose especially rapidly at the end of 2007, increased total costs. The cost of construction also continued to rise faster than the standard rate of inflation. Furthermore, an overall rise in the level of interest rates and increased borrowing pushed interest costs up.

INCOME FROM GRAIN INCREASED MASSIVELY

According to MTT’s calculations, the overall agricultural and horticultural income last year amounted to slightly over EUR 4.3 billion, which is a six percent increase from the previous year. This increase in income resulted from a rise in producer prices of grain, milk, meat and eggs, in particular.

Sales proceeds from grain almost doubled in 2007. The increase in income is both a result of the increase in grain volumes due to good crops and the 50-percent increase in the average price. Grain prices are expected to remain high throughout the year, as the supply of grain on the global market is scarce compared to demand.

In 2007, the price of pork increased by an average of five percent, the price of beef by four percent, and the price of poultry by two percent compared to the previous year. The growth in production volumes of pork and poultry further increased the income.

The eight percent increase in the producer price of milk boosted sales proceeds of milk by almost six percent, despite the production volume being two percent lower than in the previous year.

GREENHOUSE PRODUCTION LOWERED HORTICULTURAL INCOME

Horticultural income only increased by just over 0.5 percent compared to the previous year. There was a clear increase in the value of open-field production, whereas returns from greenhouse production dropped by over four percent. Berry and apple crops were quite disappointing. Due to heavy rain, grey mould ruined some strawberry crops. However, the slightly higher prices of strawberries compared to the previous year partly compensated for the loss of crops.

Ulla Jauhiainen | Source: alphagalileo
Further information: portal.mtt.fi/portal/page/portal/www_en/News/Press%20releases

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