A new Defra evidence pack puts a stark number on the difference between farm businesses: across all English farm types, the average economic performance of the top quarter was almost twice that of the bottom quarter between 2022/23 and 2024/25.
The Farming evidence pack, updated on 21 September 2026, also shows why a single headline profit figure is not enough. Average Farm Business Income over that three-year period ranged from £32,400 for lowland grazing livestock farms to £166,300 for specialist poultry farms.
These are English averages, not a prediction for an individual business. Farm type, tenure, scale, weather, accounting period and income mix all matter. The useful question is not whether a farm is above or below one national figure. It is which enterprises, assets and working practices are improving the margin and which are consuming it.
Autumn is a good time to answer that question while harvest records, contractor invoices and machinery hours are still close to hand.
Why whole-farm profit can hide the problem
Defra divides Farm Business Income into agriculture, agri-environment activity, direct payments and diversification. Its latest evidence says lowland and Less Favoured Area grazing livestock farms, and mixed farms, made a loss from the agricultural side of the business on average over the three-year period. Other income streams supported the overall result.
That does not make environmental or diversified income less valid. It does mean managers should know which part of the business generated each pound.
Farm Business Income also does not deduct the cost of unpaid labour. Defra includes that cost when comparing economic performance, creating a fairer comparison between a family-run business and one employing paid staff.
The following seven numbers provide a more useful review than total turnover alone.
Seven figures to put on the benchmarking sheet
1. Output and margin for each enterprise
Separate wheat from oilseed rape, milk from youngstock, and contracting from the core farm. A profitable enterprise can otherwise subsidise a weak one without anybody seeing the transfer.
The AHDB Farmbench Guide 2025 recommends analysing individual enterprises rather than only whole-farm profit. Choose a unit that reflects how the enterprise operates: per hectare, per tonne, per head, per breeding animal or per kilogram of output.
Record physical output as well as revenue. A higher sale value caused by price movement is different from a genuine improvement in yield, growth rate or input efficiency.
2. Output-to-input ratio
Divide the value of outputs by the value of inputs. A ratio of one means they are equal; a figure above one means output exceeds input.
Defra reports that the top quarter of general cropping farms achieved outputs 51% higher than inputs on average. At the other end, the bottom quarter of lowland grazing livestock farms had outputs 40% below inputs.
Those figures are not targets to copy blindly. They show why the ratio is worth tracking over several years on the same business. If it falls, identify whether output, variable costs, fixed costs or all three moved first.
3. Unpaid and family labour
Enter a realistic market cost for every regular hour, including the proprietor and family members. AHDB currently uses a £30,000 full-time equivalent in Farmbench, but the right internal figure should reflect the role, hours and local market.
Also record peak periods. A business that appears profitable only because family members absorb night work, weekend repairs or seasonal administration may not be resilient or easy to transfer to the next generation.
The aim is not to create a fictional wage bill. It is to expose the labour the enterprise genuinely requires.
4. Machinery cost by hour, hectare or enterprise
Fuel is only one part of machinery cost. Include repairs, spares, servicing, tyres, hire, leasing, depreciation, finance where appropriate, insurance and contractor charges.
Allocate shared machines according to use rather than spreading every cost evenly. Tractor hours, telehandler hours, hectares covered or job records can provide a practical basis. Include idle assets: low annual utilisation can make ownership expensive even when repair bills are modest.
For each major machine, record annual cost, productive hours, downtime and a realistic second-hand value. Compare owning, hiring and contracting on the same basis before the next replacement decision.
5. Cost of downtime and repeat work
Accounts show the repair invoice but may miss the crop left waiting, extra labour, replacement hire or repeated journey.
Log breakdown date, lost hours, affected operation and knock-on cost. Repeated small faults can matter more than one memorable repair. The same applies to preventable cab damage, missing keys, dirty controls or equipment moving between operators without a proper handover.
A simple condition record helps. Farm Packs offers heavy-duty tractor and machinery seat covers, but selection should be based on the real seat configuration and measurements. A cover may support routine cleanliness; it does not replace inspection or maintenance.
6. Income by cost centre
Keep agricultural trading, agri-environment activity, direct payments and diversification visible as separate lines. Then calculate the labour, machinery, property and administration each uses.
The latest Farm Business Income release says average net income from agri-environment activity across English farms rose from £10,100 in 2023/24 to £21,100 in 2024/25, around 30% of total Farm Business Income.
That is material income, but the payment is not the same as margin. Record establishment, maintenance, inspections, advice, foregone output and timing of cash receipts.
7. Cash conversion and sensitivity
Profit can coexist with a cash squeeze when crop sales, support payments, tax, finance and major repairs fall in different months.
Build a 12-month cash forecast and test at least three changes relevant to the farm: a lower output price, higher feed or fertiliser cost, delayed scheme payment, poorer yield or an unexpected machinery repair.
Do not use an extreme scenario simply to frighten the business. Use plausible movements and decide in advance what action each threshold would trigger, such as delaying capital spending, fixing a price, arranging finance or changing an enterprise plan.
Compare like with like, then act
Benchmarking is useful only when definitions are consistent. Check whether the comparison includes unpaid labour, owned land, finance, depreciation and diversified income. Compare similar systems and use several years where possible; one weather event or exceptional price can distort a single season.
Then choose one or two controllable gaps. Assign an owner, action, cost and review date. “Reduce machinery cost” is vague. “Record telehandler hours and repair downtime for 90 days, then compare ownership cost with hire” is testable.
Defra’s new evidence does not say every farm should look alike. It shows that farms within the same broad sector can turn inputs into outputs very differently. The value of benchmarking is not the league table. It is finding the next decision that improves the resilience of your own business.
This article provides general information and does not replace farm-specific accounting, tax, legal, finance or business advice.
Sources
Defra: Farming evidence - key statistics - updated 21 September 2026
AHDB: Farmbench Guide 2025 - accessed 22 September 2026
Defra: Farm Business Income by farm type in England, 2024/25 - published 8 September 2026
