Other aspects of farm profitability

Figure 11: Other aspects of farm profitability, 2021‑22 and 2022‑23. 2022-23 prices.

Assets and debt impact farm businesses. Net worth (assets minus debt) estimates the overall value of a business. The average farm was estimated to have a net worth of £1.81 million in 2022‑23, an increase of 7% compared with the previous year.

The average debt ratio was 11.2% in 2022‑23, a decrease of 1 percentage point from 2021-22 and its lowest value since 2014-15. This indicates how much of the average business’s assets are financed by debt.

Farms may also earn income from off-farm jobs that do not contribute to farm business income. The average farm earned £14,400 from off-farm income in 2022‑23, a decrease of 3% from the previous year.

Another way of looking at farm profitability is whether farm income is enough to pay unpaid labour the minimum agricultural wage (MAW). MAW is the weighted average over the calendar year, accounting for rate change at the start of the financial year. In 2022, MAW is estimated at £9.35 per hour. In 2022‑23, 60% of farms could afford to pay the MAW, the same proportion as the previous year despite the increase in average income.