Narcissus and Daffodil

Economics of bulb production 135
These figures give some idea of the high variability in returns for some crops, particularly
field vegetables and roots. Climatic factors, particularly rainfall, have a
significant effect on market prices, notably for potatoes.
Crops marked with an asterisk in the above list are within the Integrated
Administration and Control System (IACS) of agricultural support. IACS is the
system for administering farm support payments within the EU. Included in this
regime is the requirement for an area of arable land to be set-aside from food
production, in order that support payments can be claimed on both that land and
on land cropped with combinable crops such as wheat and oilseed rape. These
support payments are known as Arable Area Payments, or simply area payments,
and are one of the main pillars of support under the Common Agricultural Policy
(CAP). The current level of gross margin is heavily reliant on these subsidies which,
for the 1999 harvest (including an element of agromonetary compensation), were
as follows (£/ha):
Cereals 235
Proteins 340
Oilseeds 254
Linseed 456
Obviously, changes in the level of support will alter the relative profitability of
such crops. In order to be eligible for these payments, one of the requirements of
the scheme is that, an area of land must be ‘set-aside’ and not used for food
production, in return for which a subsidy of around £298/ha is payable.
FIXED COSTS
As mentioned previously, the allocation of fixed costs is not often carried out, yet
different farming systems carry with them different fixed cost structures, particularly
in the area of labour and machinery costings. Within each type of enterprise
there will still be considerable variation due to differences in business circumstances
and efficiency. The ‘top 25% figures’ are frequently presented to give an
indication of the performance levels of the most efficient businesses. Table 5.4
(University of Nottingham Rural Business Research Unit, 1998) shows the actual
results for 1996–1997 and 1997–1998 for costed farms, grouped by cropping type
and farm size.
As a long-term trend, root and vegetable farms generate higher gross margins
associated with high-value crops such as potatoes and sugar beet. However, exceptional
grain prices, at the same time as a high area payment, gave high levels of
profitability in 1996. In contrast, by the 1998 harvest, the gross margin for a cereal
farm was nearer £200/ha, with many farms generating a negative net farm income.
This trend has continued in 1999.
Machinery costs are usually higher on mixed cropping farms, with depreciation
reflecting a higher value of capital investment in specialist equipment. The use of
agricultural contractors used to be more common on mixed cropping farms, but is
now an increasing trend on all types of farm, as machinery becomes more expensive.
The point at which it is cheaper to use contractors differs with cropping type