Scottish farm incomes slump by almost half in 2015 accounts

Scottish farm incomes fell by almost half in the accounting year covering harvest 2015.

Scottish government figures show that on almost two-thirds of farms the profits were not enough to pay the owners, family members and business partners the legal minimum wage.

The results are based on annual audits of 500 commercial farms in Scotland and show the average Farm Business Income (FBI) at just £12,600 in 2015-2016, a drop of £11,500 from the previous year.

These take in accounting year ends in 2015-2016 so the figures are not comparable with the recent UK Total Income From Farming (TIFF) figures also released this week, which are calendar year based and showed a rise on a national basis of 1.5% in real terms for 2016.

See also: Total income from farming sees small real-terms rise in 2016

The 48% drop shown by the Scottish figures is the fifth consecutive annual fall in FBI for the country. The measure essentially represents profit – the return for the owners’ work and to cover other unpaid labour on commercial farms.

Dairy FBI fell most, down 97% to average just £1,900. Mixed farms suffered almost as badly, averaging a FBI of £2,300, a fall of 81%.

Farmers spent less on inputs in 2015-2016 compared to the previous year, however, there was a bigger decrease in crop and livestock production on average for all farm types.

Combined with a reduction in grants and subsidy payments (2015 basic payment), and less favourable market prices, especially for dairy farms, this put pressure on profitability.

Income from diversified enterprises rose 19% to average £2,800, with diversified farm businesses achieving average incomes £11,000 higher than non-diversified farms. The most common diversified activity was renting out buildings (other than for tourist accommodation).

‘Bleak’

NFU Scotland described the figures as bleak and called for a much fairer share of the margins in the supply chain to go to the primary producer, also for governments to commit to ongoing support targeted at active farm businesses.

“The viability, let alone profitability, of every Scottish farming business relies on three cogs working together – costs, markets and support,” said director of policy Jonnie Hall.

The Scottish National Party (SNP) used the figures to highlight that the average direct payment support to Scottish farm businesses in the survey was £30,000 in 2015-2016. When subsidy payments are excluded, the average Scottish FBI was a loss of £25,500 in 2015-2016.

Scotland receives 16.5% of the UK’s Common Agricultural Policy (CAP) allocation. “Despite repeated calls, UK ministers have refused to say what will happen to this funding after Brexit, nor have they guaranteed continued funding for the Less Favourable Area Status Scheme (LFASS) in 2019,” said the SNP. 

“LFASS is effectively a lifeline for many of the most remote and marginalised farms and crofts – as this research makes clear.”