Scottish farming debt at highest level in 45 years

Loans to agriculture sector now amount to £2.32billion

The Scottish farming industry’s debt levels have risen to their highest level since records began 45 years ago.

Figures released by Scotland’s chief statistician yesterday showed the total outstanding bank debt of Scottish farms rising by 5% over the past year, with loans to the agricultural sector now amounting to £2.32billion.

While debt levels were stable for a decade during the 2000s, a survey of the main banks and other lending institutions showed outstanding loans to Scottish farms rose by £113million in the year to May 31, the eighth consecutive annual increase in Scottish farm bank debt.

It is not known how much the problems with the IT support payment system have impacted on farm debt, but Scottish farmers’ union chief executive Scott Walker described the figures as “bad news”.

He added: “This is the eighth consecutive annual increase and underlines the lack of profitability across farming.

“Food and drink is Scotland’s largest manufacturing sector and requires a strong farming sector.

“We need to forge a new partnership between farming and the rest of the food and drink supply chain. There is ambition to double the size of Scotland’s food and drink industry by 2030. Without successful farming this will never be achieved.”

On top of bank loans, farms are estimated to have £1.1billion of liabilities which relate to hire purchase, family loans and other sources.

Half of the total liabilities are long-term loans, a percentage that has been slowly increasing over time. In 2003, about 40% of debt was long term. Liabilities now equate to about 8% of assets.

According to the Bank of England, the UK’s “agricultural, hunting and forestry” sector had an outstanding debt of £18.5billion in May after a 57% increase since 2010.

UNHAPPY: NFU chief executive Scott Walker has described the level of debt in Scottish farming as ‘bad news’