With England's wettest year on record a key factor in driving down farm profit, new government forecasts for farm income look bleak. Farmers in less favoured areas and livestock farmers are set to fare worst according to estimates released by Defra.

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The estimates, released on Thursday, predict a fall in farm income across the board. The forecasts for 2012/13 are based on information available in early January 2013 for prices, animal populations, marketings, crop areas and yields and are intended as a broad indication of how farming is performing.

For arable farmers and horticulturalists, the outlook is better than for those keeping animals, though reduced income is predicted in all sectors bar poultry. Defra said, "For the cropping sector higher output prices are expected to only partially offset the impact of lower yields and quality."

Although higher costs will eat into margins across the board, according to the estimates, this will be felt acutely in the livestock sector, where feed prices in particular will take their toll. The forecasts show profitability for the pig and dairy sectors falling by 50 per cent and 42 per cent respectively. For beef and sheep producers, falls of 44 per cent are predicted for lowland producers, while their uplands counterparts have fared worse with income falling by 52 per cent.

Reacting to the publication, NFU said the figures "underline the importance of CAP to the farming industry," adding "farm payments act as a lifeline for many farm businesses and play a vital role when it comes to adapting to increasingly-volatile agricultural markets."

NFU chief economist Phil Bicknell commented, "Falling farm income data shatters the myth that high commodity prices mean high profits. The reality is that price volatility, low profitability and falling confidence does not provide a secure framework for a sustainable food industry. Managing risk and volatility are key and that must be recognised by both the government in its CAP negotiations and in pricing decisions taken by the food chain."

The Defra figures cover March/February years with the latest estimates covering the 2012 harvest and including the 2012 rate of Single Farm Payment. Actual survey results for the time period will be published at the end of October 2013.

A detailed breakdown of the results is available here.