Mixed news for farm incomes
A National Statistics Publication for Scotland.
The average incomes of Scottish farm businesses changed little between the 2012 and 2013 cropping years, with a fall of two per cent (£600) overall to an estimated £31,000. However, changes have been more marked across farming sectors.
The latest figures, released today by Scotland’s Chief Statistician, examine a number of financial indicators for the 2013 crop year, based on financial audits of around 500 Scottish farms.
The weather conditions for farming were poor at the beginning of 2013 but were more favourable later in the year. This resulted in some spring crops being planted in favour of winter crops and livestock benefiting with better pastures than in 2012. These conditions are reflected in the incomes of Scottish farm businesses, with general cropping and mixed (crop and livestock) farms seeing the largest falls in income, down 37 per cent and 13 per cent respectively. The average incomes were £36,000 for general cropping farms and £30,000 for mixed farms.
Most livestock sectors saw increased incomes, with the exception of specialist beef farms in less favoured areas which saw incomes reduce by around eight per cent on average to £25,000. Dairy farms (up 75 per cent on 2012) and lowland cattle and sheep farms (up 35 per cent) saw the greatest increases in average incomes, to £80,000 and £24,000 respectively.
The average value of livestock output rose in 2013 at the same time as a reduction in production costs. However, input costs for crops also rose and the value of grants and subsidies fell (due to unfavourable exchange rates). But it was the decline in value of crops which contributed the most to the decline in profitability of Scottish farm businesses in 2013.
The report examines farm business incomes over a five year period and shows that farm incomes from the 2013 crop year were the lowest over the period. While output values have improved over the longer term these have been outweighed by a rise in input costs, in particular ‘other’ costs such as: machinery; land and buildings and depreciation, combined with a declining average value of grants and subsidies.
Balance sheets from Scottish farms are also examined. These show that farm businesses are capital intensive and typically have high asset values which are not included in income measures. Average debt levels are fairly low with liabilities less than 10 per cent of the value of assets. In the latest year, the appreciation of business assets exceeded the income generated from farming activities at £33,000.
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 and shows little change overall compared to the previous year.
Losses made against agricultural farming activities were partly off-set by income generated through diversification, contracting and agri-environment activities, though the profitability of the average Scottish farm business is heavily reliant on income from the Direct Payment Schemes. Losses from agricultural farming activities were comparable to those seen in previous years (-£21,000 on average). The average farm business still made a loss even after accounting for diversification (£3,000), contracting (£3,000) and agri-environment activities (£8,000), indicating that farm businesses were reliant on subsidies, with an average value of £38,000, to make a profit.
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 does not include information on pig, poultry and horticulture sectors.
The figures released today were produced by statistical staff in accordance with professional standards set out in the Code of Practice for Official Statistics.
Notes To Editors
This publication contains farm business level estimates of average incomes for the accounting year 2013-14, relating to the 2013 crop year. Other financial indicators are also presented.
Farm Business Income (FBI) is the headline business-level measure of farm income, or profit, in the UK. FBI represents the total income available to all unpaid labour and their capital invested in the business. Returns from diversified activities are included in overall FBI. FBI figures are derived from the results of the Farm Accounts Survey.
The full statistical publication is available at http://www.scotland.gov.uk/Publications/2015/03/9632
An Infographic summary of this news release is available to download in .png and .pdf format. This can also be viewed at http://www.scotland.gov.uk/Topics/Statistics/Browse/Agriculture-Fisheries/Graphics
Interactive and customisable charts based on the results of the Farm Accounts Survey are available athttp://www.gov.scot/Topics/Statistics/Browse/Agriculture-Fisheries/Publications/FBI
The primary use of Farm Accounts Survey (FAS) data is to inform policy decisions and to help monitor and evaluate current policies, especially their impact on different agricultural sectors. FAS results also contribute to the compilation of Total Income from Farming (TIFF) estimates.
The data is also used to meet the European requirements of the Farm Accountancy Data Network (FADN). The FADN is the only source of micro-economic data that is harmonised across all EU countries and is used for the formulation and evaluation of agricultural policy.
The prominent profile of FAS in policy issues relates to the nature of the information collected and the scarcity of alternative sources.
Official statistics are produced by professionally independent statistical staff – more information on the standards of official statistics in Scotland can be accessed at:http://www.scotland.gov.uk/Topics/Statistics/About
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