User Guide
- Contents -
FBS Cost Centres (and Allocation to them)
The four cost centres used in the FBS are: i) Agriculture; ii) Agri-environment and other Payments;
iii) Diversification out of Agriculture; and iv) Basic Payment Scheme.
Within the results presented for 08/09 onwards, some of the fixed costs are notional
for the four cost centres, being dependent upon allocation and apportionment
of total farm business fixed costs across the four costs centres.
Because of revisions to methodology, data from years preceding 08/09
are not directly comparable with 08/09 results onwards. For more details of the methodology
refer to
Methodology for the Allocation and Apportionment of Costs.
Farm Level Income Measures Used in the Reports
Farm business income (FBI) for sole traders and partnerships represents the financial return to all unpaid labour (farmers and spouses, non-principal partners and directors and their spouses and family workers) and on all their capital invested in the farm business, including land and buildings. For corporate businesses it represents the financial return on the shareholders capital invested in the farm business. It is used when assessing the impact of new policies or regulations on the individual farm business. Although Farm Business Income is equivalent to financial Net Profit, in practice they are likely to differ because Net Profit is derived from financial accounting principles whereas Farm Business Income is derived from management accounting principles. For example in financial accounting output stocks are usually valued at cost of production, whereas in management accounting they are usually valued at market price. In financial accounting depreciation is usually calculated at historic cost whereas in management accounting it is often calculated at replacement cost
Net farm income (NFI) assumes all farms are tenanted and that all tenant type assets are owned by the farmer. It represents the return to the farmer and spouse for their manual and managerial labour and on tenant type capital in livestock, crops, machinery, etc., but excluding land and buildings. It is calculated before deduction of interest payments on any farming loans and also excludes interest earned on any financial assets owned. (Breeding livestock stock appreciation (BLSA) is excluded from total farm output and, therefore, is not included in net farm income.)
Occupier's net income (ONI) represents the return to the farmer and spouse for their manual and managerial labour and on all their assets invested in the farm business, including land and buildings. As with net farm income, total inputs do not include farmer and spouse labour but interest payments on farming loans (net of any receipts) of interest are deducted.
Cash income (CI) is the difference between total revenue and total expenditure. Revenue is: receipts adjusted for debtors; and expenditure is: purchases adjusted for creditors. It is assumed, therefore, that all end of year debtor and creditor payments are settled in full, even though this may happen beyond the end of the accounting year. Cash income represents the cash return to the group with an entrepreneurial interest in the business (farmers and spouses, non-principal partners and directors and their spouses and family workers) for their manual and managerial labour and on all their investment in the business.
Different Cash income (CI) is the difference between total revenue and total expenditure. Revenue is: receipts adjusted for debtors; and expenditure is: purchases adjusted for creditors. It is assumed, therefore, that all end of year debtor and creditor payments are settled in full, even though this may happen beyond the end of the accounting year. Cash income represents the cash return to the group with an entrepreneurial interest in the business (farmers and spouses, non-principal partners and directors and their spouses and family workers) for their manual and managerial labour and on all their investment in the business.
Management and Investment Income (MII) is a measure of farm level income used by universities in England and included in their annual reports on farm incomes is management and investment income. It is defined as the return to the farmer and spouse for their management and on the tenant-type capital of the business. Management and investment income is net farm income minus an imputed cost for the manual labour of the farmer and spouse.
Family farm income (FFI) is a measure of farm income used by the European Commission. Like occupier’s net income, it is based upon actual tenure and indebtedness. However, it is a broader measure than either net farm income or occupier’s net income in that it represents the return to all unpaid labour (farmers and spouses, non-principal partners and directors and their spouses and family workers). It also includes breeding livestock stock appreciation although it cannot be realised without reducing the productive capacity of the farm.
Click to download 'Flow chart of Income Measures' (pdf: 92k)