Rising costs threaten future of Scottish farm businesses

Increased price pressures and poor returns from the marketplace are threatening the future of many of Scotland’s most go-ahead farming businesses.

NFU Scotland this week warned that many businesses with high levels of investment and risk were seriously contemplating significantly altering their business models to reduce their exposure in the face of spiralling costs and flatlining returns.

Not only did such an outcome raise the prospect of a return to more “dog and stick” farming, said union president Martin Kennedy, but it also represented a risk to critical mass in many of the country’s key sectors.

See also: Scottish Ag Bill must prioritise food production, says NFUS

He added: “Make no mistake, a serious cutback in production would have serious knock-on consequences, not only in rural areas but also in the wider Scottish economy, which relies heavily on the processing and value-added opportunities our produce offers to the country’s food and drink sectors.”

As a result of the continued pressures from high fertiliser, fuel and energy costs, together with difficulties in accessing reliable labour, many in the fruit and vegetable sector were taking the decision to return to simpler cropping systems, he said.

Despite accounting for only 1% of Scotland’s farmed area, this sector provides more than 16% of the industry’s gross output.

“Growers are asking themselves why they should take the huge risks of planting broccoli at the cost of many thousands of pounds a hectare when simpler systems offer far less risk” said Mr Kennedy.

Intentions survey

He revealed that following on from the highly successful “short-term intention” survey the union published in June, it was set to launch another to gauge the mood of the industry.

“The earlier survey got more than 340 responses – and showed that across all sectors over 92% were seriously considering major changes to their businesses in the face of the price pressures that arose in spring. And those pressures have only intensified as the year has progressed,” he said.

NFUS policy director Jonnie Hall said the results would give the union clear evidence when it was involved in discussions with governments and retailers.

“It would be fair to say that governments sat up and took notice when we showed them the figures that were released at the Highland Show.”

Mr Hall said that the survey had clearly shown the threat to the egg sector at the time – and despite claims from retailers that avian influenza was responsible for shortages on the shelf, the figures had shown that this accounted for only 3% of the reduction in supply, whereas a fall in producer investment had resulted in more than 20%.