Farming income falls for second year in a row



Total income from farming in Scotland fell in both 2014 and 2015, meaning that for only the second time since the 1990s it has fallen in two consecutive years.

Scotland’s Chief Statistician today published Total Income from Farming Estimates for Scotland 2013-2015, which contains near-final estimates of Total Income from Farming (TIFF) for 2014 and an initial estimate of 2015 TIFF. The figures show income fell by nine per cent in 2014 compared to the previous year, and initial estimates for 2015 suggest a further drop of 15 per cent.

Agriculture was worth £777 million to the Scottish economy in 2014, down from £837 million in 2013, with subsidies, potatoes and barley all seeing big falls.

Although not all the data are yet in, TIFF for 2015 may have fallen back to about £667 million, which, once inflation is taken into account, is the second lowest in the past decade. For 2015 it looks like the dairy sector suffered from the large drop in price, with the poultry-meat industry also falling back, now having lost half its value in two years. The main CAP subsidies were also down, though income from fruit increased considerably.

Overall, livestock saw a small decrease in value in both years. The largest sector, the beef industry, saw a small decline in 2014 followed by a partial recovery in 2015. Output from slaughter or sales of cattle amounted to an estimated £732 million in 2015. However, the opposite pattern was seen by sheep farmers, with a ten per cent increase in 2014 followed by an estimated four per cent fall in 2015 to £202 million. Likewise the pig industry saw an increase in 2014 followed by a fall in 2015 to £85 million. Poultry however saw large falls in both years, from £118 million in 2013 to £62 million in 2015.

The average milk price fell 23 per cent in 2015, resulting in a drop of 21 per cent in the overall value, to £364 million. Eggs increased an estimated 14 per cent during 2015 to £94 million, meaning it would have a greater value than the poultry-meat sector for the first time.

Cereals fell 13 per cent both years, with barley now worth an estimated £198 million and wheat £119 million. Potatoes also saw two drops, of 24 per cent and 12 per cent, now down at an estimated £167 million. Vegetables saw a steady 2015 after a 14 per cent fall in 2014, and now stand at £115 million. Fruit was one area that saw growth in 2015, with increases in volume and price leading to an estimated 39 per cent increase in value to £128 million.

Total costs were estimated to have fallen slightly in both years. Feed costs are estimated to have fallen as much as £70 million in 2014, and may fall further in 2015 (due to the poultry industry) to an estimated £594 million. The cost of fertiliser is estimated to have fallen nine per cent in 2014 which if, as estimated, is repeated in 2015 will give a value of £169 million. Fuel costs fell ten per cent in 2014 and look like they will fall further in 2015, to an estimated £115 million. However labour costs look like they will be up about five per cent in 2015, to £373 million.

Subsidies, including coupled support, amounted to £510 million in 2014 and £490 million in 2015. The reduction in 2015 was due to CAP Direct Payments (Basic Payment Scheme, Greening and Young Farmer Payments) being down 13 per cent on Single Farm Payment, due to both a less favourable exchange rate and a six per cent reduction in the original euro payment. Subsidies remain an important factor in the profitability of farming, accounting for 14 per cent of gross income and 74 per cent of TIFF in 2015.

In the longer term, income from farming has been rising steadily since a dip in the late nineties. However, within that trend the figures fluctuate from year to year.

Also included in the publication are regional estimates for TIFF. On a per hectare basis, the highest level of income from farming is in the South West. This is mainly due to income from milk, accounting for about 30-40 per cent of the region’s output, and beef production. The North West is the second highest, with beef and cereals being its strength. Highlands & Islands has the lowest income from farming, where agriculture is estimated to have made only a very small profit once support is included. Eastern Scotland has the most balanced distribution of output, with cereals, potatoes, horticulture, cattle, poultry and other income each producing more than ten per cent of the region’s output, with none of them above 20 per cent.

Income from farming information is used to monitor the performance of the industry, but also as part of the calculation of Scottish GDP and in the UK National Accounts. The 2015 figures will be revised next year, once more complete data are available.

The figures released today were produced by independent statistical staff, free from any political interference, in accordance with professional standards set out in the Code of Practice for Official Statistics.

In relation to the Total Income from Farming, Jonnie Hall, NFU Scotland’s Director of Policy commented: “The latest farm income figures should have alarm bells ringing. The bottom line for the industry as a whole, rather than individual sectors, is that over two years total costs have decreased but total output has decreased further, and at a faster rate. Worryingly, that fall in Scottish farming’s total output is as much to do with decreased production as it is to do with decreased prices. These figures back up our argument that farmers need monies available through all support schemes as soon as possible, and justifies the pressure we have been putting on Scottish Government in recent months to deliver payments on time to cash poor businesses.”

“While farmers would welcome a fair returns from the marketplace for their efforts, the fact that TIFF is falling fast only increases the industry’s reliance on support payments in the face of price and production volatility. The total pot of support scheme funding available to the industry is also in decline, but its value to Scottish agriculture is actually increasing in relative terms. It is sobering that some 74 per cent of the TIFF figure equates to the amount of support Scottish agriculture receives.”

In relation to the UK’s EU membership and the impact on agriculture, Andrew McCornick, NFU Scotland Vice President commented: “Put simply, the interests of agriculture in Europe are clear – farmers would prefer to farm without the financial support they receive from the EU, but the reality is that most farms don’t make enough from the market for this to be possible. The role of direct support in overall Scottish farm incomes is complex but invaluable. As we have detailed before, any drop in, or removal of, direct support could lead to a significant number of Scottish farm businesses hitting barriers and will remove the ‘multiplier’ effect of the farmers’ pound, to the detriment of the food sector and the wider rural economy.”

“A further issue is access to the European single market, which allows tariff-free trade amongst all member states. This is of great importance to Scotland’s food and drink industry, which continues to exceed targets and had an export value of £5.1 billion in 2014. There are many questions we still need answers to in order for our members make an informed vote. This includes details of what the trading arrangements with the rest of Europe would be if we were to leave the EU – would Scotland be able to continue to trade tariff-free with Europe or would our lamb, beef and other key farm exports face a tariff barrier? Would access to important overseas markets remain or would the UK have to start over again in negotiations? Access to markets is vital and clarity is required on what this would look like, should the vote be to leave the European Union.”

Get Our E-Newsletter - breaking news to your in-box twice a week
Will be used in accordance with our Privacy Policy
Share.

About The Author