Farm incomes increase for first time in six years

INCOMES from commercial farms in Scotland have increased by around 94 per cent, according to new government figures, reversing the decline from the previous year, with incomes recovering to 2014 levels.

Average farm business income rose this year by around £12,800 to £26,400 which shows that the industry has regained some of the decline since 2011. Farm income had decreased 46 per cent (£22,900) in real terms until last year.

The figures are based on annual audits of nearly 500 commercial farms in Scotland called the Farm Business Survey (FBS). The report focuses on the 2016 crop year. Other findings from the analysis show that farms spent less on raw materials and other inputs in 2016-17, such as cattle feed and labour costs, compared to the previous year. In contrast for outputs, such as revenue from livestock and crops, there was an improvement on the average output values across all farm types.

The reduced inputs and improved outputs combined with a five per cent rise in grants and subsidy payments from the EU, due to favourable exchange rate, led to an increase in the profitability of agriculture.

Farmers that have expanded from traditional agricultural work, such as renting out holidays homes or building small wind farms to generate electricity, did better than those farms that have not.

Across all farms in the survey there has been an average increase in the farming income.

However, incomes from 45 per cent of farm businesses in the survey would not have been enough to meet the legal minimum agricultural wage for unpaid labour, which includes farmers, spouses and business partners.

NFU Scotland chief executive Scott Walker said: ‘There are two key messages that should be taken from the figures that have been published on farm incomes. The first is that 45 per cent of farms in the survey are not able to pay the farmer, spouse and other working family members a rate of pay equal to the minimum agricultural wage. The second is that without the financial support payments these farms receive they would make a loss.

‘Until we can address the inequalities in the supply chain, government support for the industry remains essential and must not be threatened due to Brexit.’