Scottish farm debt continues to rise

Outstanding debt of Scottish farms increased seven per cent over the past year, according to the latest National Statistics released by Scotland’s Chief Statistician.

A survey of the main banks and other lending institutions showed outstanding loans to Scottish farms rose by £120 million in the year to May 31, 2014. Total outstanding loans to the agricultural sector amounted to £1.84 billion. Accounting for inflation, this was an increase of five per cent since May 2013.

This was the fifth consecutive annual increase in Scottish farm debt. Taking into account the effect of inflation, debt peaked in the mid-1980s at around £2.5 billion, before high inflation rapidly eroded the value of the sector’s outstanding debt. After remaining steady for a decade during the 2000s, debt levels have now risen to their highest since the late 1980s.

In related data, figures from the Bank of England showed that in May 2014, the UK agricultural sector was the only business area to see rises in outstanding debt over each of the last three years. Most other business sectors saw successive reductions in debt levels.

Note that these figures are for levels of outstanding debt, not estimates of new loans. Information is not available to show when the loans were taken out or the associated repayment periods.

The 2014 Survey of Bank Advances to Scottish Agriculture was 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.

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