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Returns are facing pressure for both farmers and contractors due to the loss of Basic Payment Scheme (BPS) funds and rising costs, especially for machinery and fuel. Crop yields for 2024 are generally lower, counteracting the benefits of reduced fertilizer expenses compared to the previous year.

Ceres Rural recently analyzed arable-only and mainly combinable cropping contract farming agreements (CFAs) covering 14,946ha across 14 counties, with data from 66 agreements in 2023 and 64 in 2024, mostly in Eastern England. The key findings include:

– Increase in contractors’ charges to an average of £288/ha for 2024, up from £285/ha in 2023, with sugar beet rates rising significantly.
– Stable basic return for farmers at £242/ha in 2024.
– More than 80% of CFAs incorporating some form of environmental stewardship, with the average area for these features growing to 42ha in 2024.
– Expected improvement in CFA returns for 2024 due to lower fertiliser prices, bringing returns back to levels similar to 2021 despite lower yields.

The shift towards more bespoke agreements reflects the changing landscape of support for farmers. Environmental payments are increasingly included in CFAs, with a focus on maximizing government funding. The results for the 2023 harvest were impacted by high fertiliser costs and unpredictable weather, leading to reduced returns for both parties.

Looking ahead to 2024, Ceres Rural anticipates better returns for both contractors and farmers, with an emphasis on environmental grant schemes. The industry is witnessing a transformation in contract farming agreements, with a move towards more tailored agreements and a focus on maximizing profitability while managing risks effectively.

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