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.

The latest figures, released yesterday by Scotland’s Chief Statistician, examine a number of financial indicators for the 2012 crop year, which suffered from poor growing and harvesting conditions. 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 was responsible for the decline in profits.

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, up from one in ten in 2011.

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 incomes more than halved in 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 does not include information on pig, poultry and horticulture sectors.

The figures were produced by independent statistical staff free from any political interference, in accordance with professional standards set out in the Code of Practice for Official Statistics.