Latest farm figures reveal industry is on a knife edge

While statistics released yesterday showed that the average farm business profit for Scottish farms stood at £39,000 in 201819, the sector’s reliance on income from diversified enterprises outside normal farming and on support payments was once again made plain.

Ofthisnominaltotalbusiness profit – which often supports several families – on average £34,000 came from farming and support payments and £5,000 came from diversified, nonagricultural activities.

However the Scottish Government publication which analyses figures from the Scottish Farm Business Survey data showed that when support payments and diversification were excluded, the average farm made a loss of around £9,000 over the year which covered the 2018 harvest period. The average farm received around £43,000 from CAP support and other payments, with more than 70 per cent of this coming through the EU’S basic payment and greening schemes.

The figures showed a huge variation in farm profitability across different farm types, regions, andtenuresbutagainhighlighted just how dependant most sectors were on support payments.

The figures showed that without CAP support and other payments, 28 per cent of farms turned a profit while the addition of these support payments saw 72 per cent of farms move out of the red.

However over the last five years around 30 per cent of farms were never profitable when support payments were excluded – and even if they were included, there was still a hard core of 2.5 per cent of farms which had never profitable over this period.

On the other hand, around 30 per cent of farms were profitable every year when support payments were included.

Focusing on the different enterprise mixes, the statistics (which exclude unsupported sectors such as pigs, soft fruit and vegetables) showed that dairy, cereal and general cropping farms tended to be more profitable – while also receiving lower average support payments.

Livestock farms in less favourable areas were found to be the least profitable while, at the same time, they also received the highest average support payments. However the National Statistics publication also pointed out that large areas of less favourable area land in Scotland limited the potential for any expansion of the more profitable farm types.

Looking to the broader implications of the viability of the farming sector in Scotland, the report stated that agriculture contributes around 0.8 per cent of the total gross value added (GVA) economic output – but this figure makes up a larger proportion of the rural economic output – and also employs around 2.5 per cent of the working population.

“In addition to fluctuations in market prices which impact productivity and profitability, climate and geography provide additional challenges and variances in weather conditions and outbreaks of crop and livestock diseases can have large impacts on farm profitability,” notes the report.

“And while the uplands are ideal for low intensity grazing including sheep and some cattle, these tend to be less profitable types of farming and have the least capacity to improve or change to more profitable production systems.”