School of Natural and Environmental Sciences

Farm Type Groups

Farm Classification

Group 1 - Lowland dairy farms have at least 50 per cent of their standard labour requirements attributable to the dairy herd.

Group 2 - Lowland mainly grazing livestock farms depend primarily on beef, sheep and crop production.  At least 50 per cent of the standard labour requirement must be derived from grazing livestock.  None of the farms produce milk.

Group 3 - Lowland mainly arable farms depend primarily on crop, beef and sheep production.  Over 50 per cent of the standard labour requirements must be derived from arable crops.  None of the farms produce milk.

Group 4 - Hill rearing farms are primarily located in the “severely disadvantaged area”, and mainly engaged in sheep production with some beef production.

Group 5 - Upland rearing farms are also primarily located in the “severely disadvantaged area”, and engaged in beef and/or sheep production.

Groups 4 and 5 are differentiated according to the following criteria:

(a) ratio actual hectares of rough and common grazing to inbye is at least 5:1;

(b) grazing livestock units attributable to sheep are at least 50 per cent of total grazing livestock units;

(c) grazing livestock density is at least 2 actual hectares per grazing livestock unit.

Farms satisfying two or three of the criteria are in group 4 (hill) the remainder are in group 5 (upland).

Group 6 - Marginal (disadvantaged area) farms depend primarily upon beef and sheep production, some farms also have an arable enterprise.  All farms are located wholly or partially in the “disadvantaged area”.  Dairy farms are excluded from this group.

Group 7 - Upland dairy farms are located in the “less favoured area”.  All have flocks, and some have beef herds.  The total population of these farms has been declining for many years reflecting structural change in the less favoured areas.

Glossary of Terms

Adjusted forage hectares.  The pasture equivalent area of forage crops and grass allocated to the grazing livestock enterprise.

Breeding livestock appreciation (BLSA).  The imputed value based on the change in market price of breeding cattle, sheep and pigs between opening and closing valuations.  It is the product of the change in unit price (excluding any element relating to quality change) and the average number of stock.  BLSA is excluded from all measures of tenant's capital, output and margins used in this publication.

Enterprise output:

  • Livestock Output comprises receipts (adjusted for debtors) for livestock and livestock products and livestock headage payments; the value of produce consumed on the farm, in the farmhouse or by employees; valuation change excluding breeding livestock appreciation; less purchase of livestock and livestock products.  The livestock output is calculated on an accounting year basis.
  • Crop Output comprises the total value of crop harvested  together with arable area payments.   It therefore includes current crop receipts (adjusted for debtors), crops used in situ and stock on hand.
  • Other Crop Output takes account of residuals, for example, minor crops, adjustment for disposal of previous crops, valuation changes of by-products, forage and cultivations.

Environmental payments include annual payments for participation in Environmental management agreements, e.g. Environmentally Sensitive Area (ESA) Country side Stewardship (CSS) Entry Level (ELS) and Higher Level Schemes (HLS), Uplands Entry Level Scheme and Uplands Transitional Payment. Capital grants from such schemes are not included in the Profit and Loss account.

Fixed costs.  Costs not readily attributable to specific enterprises and include labour, machinery depreciation and repairs, fuel, rent, rental value (for land in owner occupation) and general overheads.

Grazing livestock units (GLUs) are based on the estimated energy requirements of a dairy cow.  The factors used to convert numbers of animals into grazing livestock units are:

Cattle Sheep 
Dairy cows 1.00 Rams 0.08
Beef cows 0.75 Lowland ewes 0.11
Breeding bulls 0.65 Upland ewes 0.08
Heifers in-calf (rearing) 0.80 Hill ewes 0.06
Other cattle, 2 years & over 0.80 Breeding ewe hoggs 0.06
Other cattle, 1 to 2 years 0.65 Other sheep over 1 year 0.08
Other cattle, under 1 year 0.34 Store lambs under 1 year 0.04
Horses 0.80    
Deer 0.08    
Goats 0.11    

Uplands Entry Level Scheme and Uplands Transitional Payment (UELS and UTP) replaced the Hill Farm Allowance (HFA) in 2010. UELS requires a minimum number of environmental management points to allow participation and is tiered in respect of land parcel size and common grazing inclusion. UTP, available on land currently in ESA or CSS agreements, follows a tiered rate of payment on SDA land up to a maximum of 700ha (full rate up to 350 ha, 50% rate from 350 to 700ha).

Management and investment income (MII).  The difference between total output and total costs (including the imputed value of the manual labour of the farmer and spouse).  It represents the reward to management and the return on tenant's capital invested in the farm.  Management and investment income expressed as a return on tenant's capital is used as a measure of farm performance.  The managerial component of salaried managers is included in paid labour and added back to the MII figure.

Net farm income (NFI).  The sum of management and investment income and the imputed value of the manual labour of the farmer and spouse.

Farm Business Income (FBI). Net Farm Income with all imputed items either added back or subtracted as appropriate. That is, Net Farm Income plus: unpaid labour (excluding farmer and spouse) imputed rent, rental value and windfall gains less: net interest payments, perquisite rents on tenant's farmhouses and cottages, building depreciation, buildings insurance and landlord repairs.

Rent or rental value & keep. Keep and rent paid or an imputed rental value on owner occupied land. Building and improvements depreciation is included within this figure.

Occupier's equity (net worth) .  Total business assets less external liabilities, i.e. total capital provided by the occupier (farmer/partners).

Tenant's and tenant type capital. The average of the opening and closing valuations adjusted to exclude breeding livestock appreciation.

Total (actual) hectares.  The area of the farm in sole occupation.

Total adjusted hectares.  The area of land utilised for crop and grass production expressed in terms of pasture hectare equivalents.  The concept is of greatest relevance to hill farms, where rough and/or common grazing can form a large proportion of the land area.

Total output.  The sum of crop and livestock enterprise outputs, other crop output and miscellaneous output. All non-capital support payments are included in total output.

Valuation change.  The difference between opening and closing valuations.  The breeding livestock valuation change has three components:-

(a) market price change;

(b) volume change (increase or decrease in stock numbers);

(c) quality change (re-grading or shift in age distribution of stock).

Valuations.  Trading livestock, livestock products, crops and stores are valued at estimated market prices or at cost of production.  Cultivation costs are based on machinery and labour hours valued at standard rates.  Breeding livestock values reflect market price trends over the accounting period.  Machinery, livestock quotas, equipment and permanent crops are valued at current cost.  Other assets include sundry debtors, miscellaneous business assets, cash in hand and bank.

Variable costs.  Costs directly attributable to specific enterprises.  The main variable costs are feeding stuffs (purchased and homegrown), veterinary and medicines, seeds (purchased and homegrown), fertilizers, sprays and sundry livestock and crop costs.