A leading UK farm economist warned over the emergence of a two-speed agriculture sector after data showed one-in-four horticulture enterprises chalking up a loss even as grain growers doubled profits.

Phil Bicknell, chief economist at the NFU farmers union, welcomed as "good news" data from farm ministry Defra showing a jump to £84,800 in cereal farm profits in England in 2010-11 as the surge in grain prices last summer kicked in.

The rise represented a "turnaround" from the season before when, while cereal farms on average reaped income of £41,000, that figure concealed losses for a large number, which found wheat prices below £100 a tonne for much of the period insufficient to cover costs of production.

Wheat prices, as measured by London's near-term feed wheat contract, hit a record £222 a tonne in March this year.

Grain farmers also gained from production benefits, after a favourable autumn in 2009 allowed greater sowings of higher-yielding winter crops, Defra said.

'Mounting price pressure'

However Mr Bicknell termed "alarming" the fate of horticulture enterprises, which on average saw a 24% drop in income, and of which one-in-four ran at a loss.

A further 29% earned less than £20,000, the data showed.

Although some flower, fruit and vegetable growers had seen prices rise "slightly" this year, "few growers will have received enough to cover the escalating cost of production or allow for reinvestment".

Horticulture businesses were also "experiencing mounting pressure" from buyers, which include the big supermarket chains, to keep prices low, a factor "which is eroding margins and confidence".

Pig farmers lose out

Livestock farms also suffered a decline in profits, notably specialist pig enterprises, which suffered a fall of more than one-third in earnings, a decline Defra attributed to "lower prices for finished pigs combined with higher input costs".

However, dairy farmers saw a rise of 12% to £66,200 in incomes, albeit reflecting greater cropping operations which increased their exposure to the buoyant cereals market.

And mixed arable farms achieved the highest average income, of £117,000, a rise of 80%, helped by higher prices of rapeseed and potatoes as well as cereals.