Other aspects of farm profitability
Another way of looking at farm profitability is whether farm income is enough to pay unpaid labour the minimum agricultural wage (MAW, £8.59 per hour). In 2020-21, 58 per cent of farms could afford to pay the MAW. This increased from 48 per cent of farms in the previous year.
Farm incomes are variable from year to year. Among the farms that have been providing us with their data over the last five years, 56 per cent had farm income above zero in each year.
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 £1.42 million in 2020-21, a decrease of 1.4 per cent compared to the previous year.
The average debt ratio decreased slightly, by one percentage point, to 12 per cent in 2020-21. This indicates how much of the average businesses 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 £13,100 from off-farm income in 2020-21, an increase of four per cent from the previous year.
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