Scotland’s Rural Affairs Secretary Richard Lochhead has this morning said that Scotland must stay in the EU, as recently released figures show that the Union is “absolutely crucial” for Scotland’s farming sector.

During the run-up to the independence vote in 2014, concerns were expressed about an independent Scotland’s place in Europe; pro-union ‘No’ campaigners said it make take some time for Scotland to rejoin the EU after leaving the UK, and the country would have to renegotiate its place, though exit could once again be a possibility as Prime Minister David Cameron has promised to hold an in-out referendum on Britain’s EU membership before the end of 2017.  

Richard Lochhead’s comments come after the Scottish Government published its latest figures on farm incomes, which show that farm profits in Scotland continue to be heavily reliant on Common Agricultural Policy (CAP) subsidies. Lochhead said the Total Income from Farming Estimates for Scotland 2013 to 2015 also highlight the impact of difficult global trading conditions, particularly in the dairy sector.

The figures show that incomes from farming fell in both 2014 and 2015, the first time incomes have fallen for two consecutive years since the 1990s. Stats show incomes fell by nine percent between 2013 and 2014, and suffered a further drop of 15 percent in 2015.

He said, “There can be no doubt that 2015 was a very difficult year for Scottish agriculture. In addition to the impact of extreme weather, global volatility has continued to take its toll on producers’ incomes – particularly in the dairy sector.

“These figures highlight the importance of EU funding to Scottish agriculture. The Common Agricultural Policy is expected to inject more than €4.5 billion into the Scottish economy over this CAP period, and Scottish dairy producers benefited from EU emergency aid last year.

“Europe is also our number one destination for international food and drink exports, with more than two thirds of the food produced here going to the Continent. Continued EU membership is therefore absolutely crucial for the future of Scottish farming.”

Scottish agriculture was worth £667 million in 2015 (according to provisional figures), down from £777 million in 2014 and £837 million in 2013, with subsidies, potatoes and barley all seeing big falls. Dairy and poultry producers were badly affected in 2015, through fruit producers saw incomes rise.

However, he added that Scotland needs “A fairer share of funding from a simpler and more streamlined CAP with food production at its core,” but said this must be addressed through discussions within the EU, stating, “It is clearly in the best interests of Scottish farming to stay in Europe.”

Farm income stats

Figures published on Tuesday show that the average milk price fell 23 per cent in 2015, resulting in a drop of 21 per cent in the overall value, to £364 million. Eggs increased an estimated 14 per cent during 2015 to £94 million, meaning it would have a greater value than the poultry-meat sector for the first time.

Cereals fell 13 per cent both years, with barley now worth an estimated £198 million and wheat £119 million. Potatoes also saw two drops, of 24 per cent and 12 per cent, now down at an estimated £167 million. Vegetables saw a steady 2015 after a 14 per cent fall in 2014, and now stand at £115 million. Fruit was one area that saw growth in 2015, with increases in volume and price leading to an estimated 39 per cent increase in value to £128 million.

Total costs were estimated to have fallen slightly in both years. Feed costs are estimated to have fallen as much as £70 million in 2014, and may fall further in 2015 (due to the poultry industry) to an estimated £594 million. The cost of fertiliser is estimated to have fallen nine per cent in 2014 which if, as estimated, is repeated in 2015 will give a value of £169 million. Fuel costs fell ten per cent in 2014 and look like they will fall further in 2015, to an estimated £115 million. However labour costs look like they will be up about five per cent in 2015, to £373 million.

Subsidies, including coupled support, amounted to £510 million in 2014 and £490 million in 2015. The reduction in 2015 was due to CAP Direct Payments (Basic Payment Scheme, Greening and Young Farmer Payments) being down 13 per cent on Single Farm Payment, due to both a less favourable exchange rate and a six per cent reduction in the original euro payment. Subsidies remain an important factor in the profitability of farming, accounting for 14 per cent of gross income and 74 per cent of TIFF in 2015.

In the longer term, the government said, income from farming has been rising steadily since a dip in the late nineties. However, within that trend the figures fluctuate from year to year.

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