New figures released this week by the Scottish government show that the incomes of commercial farms in Scotland halved over the four years to 2014.

Estimates from the Scottish Government’s annual Farm Accounts Survey show that average farm business income (FBI) fell by a quarter (£8,000) between 2013 and 2014, to £23,000; the lowest level of FBI since the measure was introduced.

The latest figures cover the period 2014-15 (the 2014 crop year) and are based on the results of audits from 500 commercial farms in Scotland. Income has been falling since a peak in 2010. Since then, commercial farms have seen a decrease of 55 per cent (£28,000) from an average of £51,000. Farm Business Income has only been calculated since 2009, but the government’s previous metric shows average farm income in 2014 to be the lowest recorded since 2005.

Government statisticians said farm incomes often show large fluctuations from year to year, but the decline over the last four years is the most severe decrease in income since the BSE outbreaks in the mid 90s. Due to movements in 2015 (including falls in milk, potato, cereals and lamb prices) officials said the drop-off in farm incomes is likely to have worsened since the period covered by this week’s stats release.

The 2014 crop year had the benefit of generally reasonable weather throughout. Cereal production increased compared to 2013 and lamb numbers also rose while longer term declines in other livestock halted. However, market prices for cereals, potatoes and milk were down. These low prices combined with the less favourable euro exchange rate and lower value of subsidy payments caused profitability from agriculture to fall, according to Scotland’s chief statistician.

The main factor behind the recent fall in incomes was the reduced value of crops, which fell by £18,000 on average in the year to 2014. The lower value of subsidy payments (down £7,000 on average) and long-term rises in input costs for livestock, as well as costs for machinery, land and buildings have also affected profitability.

Although average incomes were down in Scotland, cattle and sheep farmers benefitted from lower input costs and saw prices rise slightly form 2013 to 2014.

According to Defra forecasts for England, published in January, incomes from most farming activities are expected to fall in 2015/16, with only lowland grazing (up on tighter supplies), mixed farming (reduced input costs) and upland grazing (benefitting from lower input costs and higher Basic Payments) bucking the trend.

Defra data for the 2014/15 season show that, of the farm types measured, only horticulture operations were profitable without agri-environment funding and EU single payments. The figures for Scotland, released on Tuesday, do not cover the horticulture, pig or poultry sectors.  

At the beginning of March, the Food Research Collaboration (FRC) released a report warning that Britain’s food sector is in a vulnerable position and an exit from Europe would have “enormous” impacts on food and farming. The researchers called for a frank conversation on food policy in Britain, pushed for greater support for the horticulture sector, and lamented current food policy as one which sees Britain importing healthy fresh produce from other EU states and third countries outside the union, whilst exporting resource-dense, processed and generally unhealthy products abroad.

They said that, as well as impacting on farmers and growers, a vote to leave the Union could affect the availability of healthy foods and impact on Britons’ dietary health. On Thursday, the FRC authors released another report on the potential benefits of supporting horticulture in Britain.

NFU make British lamb ‘plea’ at Easter
 
Ahead of the Easter bank holiday, the NFU issued a ‘plea’ to retailers, asking them to stock British lamb this season (in the UK Easter traditionally marks the start of the lamb season). So far, only Aldi of all the UK’s leading supermarkets has committed to selling 100 percent home grown fresh lamb. NFU livestock board chair Charles Sercombe commented on Thursday, “Retailers can ensure that shoppers have access to fresh British lamb by making their sourcing commitments clear to allow farmers to plan ahead.  British farmers will gladly produce early season lamb if the demand is there.”
 
Looking at Scotland’s figures, government statisticians converted the income estimates to hourly income for unpaid labour (work by farm owners, family members and business partners) and concluded that the income generated from almost half of farm businesses (47 per cent) wouldn’t have been enough to meet the legal minimum agricultural wage for paid workers. This includes the one in five farm businesses that made a loss in 2014.