The 2015 EBS results show that average gross incomes on ‘All Estates’ increased by 6.2% to £223 per acre across the whole estate (including woodland). This represents the second year of steady growth following relatively stable incomes between 2010 and 2013.

The long-term trend in estate incomes (gross and net) has delivered a steady upward performance (see Graph 1). The diversity of assets (agricultural, residential, commercial and more recently renewable energy) has helped spread risk and been a key factor in this performance. Income from trading enterprises on ‘All Estates’ contributed just under 10% of gross income.

^{Source: Savills Research}

In contrast, farm incomes (see Graph 2) have recorded some significant swings from year-to-year being exposed to commodity price volatility.

In addition, agriculture is more exposed to exchange rate fluctuations as commodities trade on a global platform and CAP subsidies are calculated in Euros. Cereal farm incomes have been around 15 times more volatile than estate incomes since 2000.

^{Source: Defra}

Average net incomes on ‘All Estates’ (before depreciation, finance, drawings and tax) have followed a similar trend to gross incomes since 2000 (see Graph 1) and have averaged 57% of gross income peaking at almost 60% during the recession.

Although total expenditure increased in 2015 by 3.9% (to £95 per acre) it was capped well beneath the growth in gross incomes, resulting in net income growth of 8%, to £128 per acre. For more information on estate costs, see Expenditure Proportion Remains Constant.

Our research shows that agriculture’s contribution to gross income on ‘All Estates’ is now 37%. The weak performance of other assets in the recession increased agriculture’s contribution; especially at a time when there was zero or little growth in total gross incomes.

We expect that this will now start to reverse as the general economic upturn favours residential and commercial asset performance.