The average incomes of Scottish farm businesses fell by 34 per cent to £30,000 in the 2012 accounting year, compared to the previous 12 months, new figures released on Monday have revealed.

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The latest figures, released by Scotland’s Chief Statistician, examine a number of financial indicators for the 2012 crop year, when the UK's wettest summer on record led to poor growing conditions and trouble at harvest in many areas. The report shows that increased input costs combined with a fall in value of both crop and livestock production and a decrease in the value of grants and subsidies all combined to cut profits from farming.

The value of feed used on Scottish farms drove the increased costs, rising by an average of £6,000, or 19 per cent, to £37,000. The fall in output value was due to an average £4,000 drop in both the value of crop production other than cereals and potatoes, and in the value of sheep. Due to unfavourable exchange rates the average value of single farm payments fell by around £2,000 to £38,000 in 2012.

Converting the income estimates to hourly income for unpaid labour - such as farm owners, family members and business partners - shows that the income generated from 43 per cent of businesses wouldn't have made enough to meet the minimum agricultural wage. This includes the one in five farm businesses that made a loss – double the 2011 levels.

The figures suggest that some farm businesses rely on other sources of income than from farming alone, including: contracting work; hosting mobile phone masts, provision for tourism and recreation; and financial support from grants and subsidies. Excluding support from grants and subsidies, the average farm made a loss of £16,000 in 2012.

Incomes fell across all farming sectors with the exception of general cropping businesses which saw a 10 per cent rise in profits from £52,000 in 2011 to £55,000 in 2012. Lowland cattle and sheep farms and cattle and sheep farms in less favoured areas saw their incomes more than halved in 2012 to £18,000 and £20,000.

Despite the reduction in incomes the estimated average net worth, assets minus liabilities, of Scottish farm businesses remain largely unchanged at £1.3 million in 2012; down one per cent due to a rise in liabilities.

The report is based on the findings from the Farm Accounts Survey which is used to inform, monitor and evaluate European, UK and Scottish agricultural policy. The survey results did not include information from the pig, poultry and horticulture sectors.

Although the figures paint a potentially worrying picture for Scottish agriculture, Rural Affairs Secretary Richard Lochhead responded to the report by stating that 2012 was an unusually hard year for farmers, but that "All the indications are that 2013 was a much better year for Scottish agriculture, as shown in the Total Income from Farming 2013 statistics." He added, "My expectation is that this will be reflected in next year's Farm Business Income report."

However, the Rural Affairs secretary did add that impacts on livestock farms in both lowland and uplands areas show the need for appropriate support for Scottish agriculture in the reformed CAP.