Income gap of £102,000 between Scottish farms

Income on Scottish farms fell to its lowest level in four years in 2013, while the gap in income between the top and bottom performing farms reached £102,000.

Figures released in the Scottish government’s Economic Report of Scottish Agriculture 2014 revealed the average farm business income (FBI) fell again last year from £46,000 in 2011-12 to £30,000 in 2012-13.

This followed a 6% drop the previous year from a high of £49,000, in 2010-11, attributed to a reduction in the value of grants and subsidies. FBI is broadly equivalent to net profit and represents the financial return to all unpaid labour usually put in by family members, and their return in capital invested in the farm business. The Scottish government excluded pig, poultry and horticulture when calculating FBI.

See also: Scotland’s farm incomes fell by 34% in 2012

Incomes fell across all farming sectors with the exception of general cropping farms, which saw a 10% rise in FBI from £52,000 in 2011-12 to £55,000 in 2012-13. Lowland cattle and sheep farms and other cattle and sheep farms saw incomes more than halved in 2012 to £18,000 and £20,000, respectively.

There was a large gap across all farm types between the lowest and highest performing farms, with the bottom 25% of farms struggling on an average FBI of -£14,000, while those in the upper 25% averaged an FBI of £88,000 – nearly three times that of the average FBI.

A staggering 19% of Scottish farms were reported to be making a loss, while a further 42% had an FBI of lower than the average. This meant 61% of farms fell below the average FBI of £30,000, with the majority of farming income going to 39% of farm businesses.

About 18% of farms achieved an FBI of between £30,000 and £50,000, 14% of £50,000 to £100,000, and the top 8% eight achieved an FBI of £100,000 or more.

Both livestock and crop output fell between 2012-12 and 2012-13, while the cost of livestock production increased and the value of grants and subsidies fell.

According to the report, rising livestock costs contributed the most to the decline in profitability of Scottish farm businesses in 2012-13, with the cost of feed driving this.