Scottish farm incomes fall

The average income of Scottish farm businesses fell by 34% to £30,000 in the 2012 accounting year compared to the previous 12 months, according to new figures.

The figures, released this week by Scotland’s Chief Statistician, examine a number of financial indicators for the 2012 crop year, which suffered from poor growing and harvesting conditions. The report shows that increased input costs combined with a fall in value of both crop and livestock production and a decrease in the value of grants and subsidies was responsible for the decline in profits.

The value of feed used on Scottish farms drove the increased costs, rising by an average of £6,000, or 19%, to £37,000. The fall in output value was due to an average £4,000 drop in both the value of crop production other than cereals and potatoes, and in the value of sheep. Due to unfavourable exchange rates the average value of single farm payments fell by around £2,000 to £38,000 in 2012.

Converting the income estimates to hourly income for unpaid labour – such as farm owners, family members and business partners – shows that the income generated from 43% of businesses wouldn’t have made enough to meet the minimum agricultural wage. This includes the one in five farm businesses that made a loss, up from one in ten in 2011.

The figures reveal the importance of other sources of revenue than that derived from farming alone. These include contracting work; hosting mobile phone masts, provision for tourism and recreation; and financial support from grants and subsidies. The significance of grants and subsidies is clear as the figures show that without them, the average farm made a loss of £16,000 in 2012.

Incomes fell across all farming sectors with the exception of general cropping businesses which saw an increase in profits from £52,000 in 2011 to £55,000 in 2012. Lowland cattle and sheep farms, and cattle and sheep farms in less favoured areas, saw incomes more than halved in in 2012 to £18,000 and £20,000, respectively.

Despite the reduction in incomes the estimated average net worth, assets minus liabilities, of Scottish farm businesses remain largely unchanged at £1.3 million in 2012; down only 1% due to a rise in liabilities.

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