Over the next 12 months, Scottish farmers will need to manage the downward pressure on prices and future reductions in subsidy payments.
Many will do so by investing in their businesses. Yet for some the cash needed to invest has been squeezed at an important moment in the farming calendar.
Recent storms have flooded lowland areas, affecting many rural businesses, and while storms raged outside, inside up to 22,000 Scottish farmers and crofters have been experiencing delays in their basic payment subsidy.
This follows a difficult few years for farmers. Total income from farming in 2014 was £688 million, down from £823m in 2013, due to lower prices, lower subsidy payments and poor weather hitting yields.
Funding support remains available through initiatives such as the £500m support fund Bank of Scotland launched for customers facing a delay in their subsidy payments. An additional £100m Bank of Scotland fund to waive arrangement fees on lending support is also available to farmers and businesses affected by the recent flooding.
Through help in the short term, we are optimistic that the agricultural sector can adapt and innovate in the face of the challenges ahead. With anticipated growth in the overall economy of around 2.5 per cent this year and falls in commodity prices stabilising, a positive future is in store for those who plan ahead.
To do so, farmers need to implement a long-term strategy to identify new revenue streams, increase their efficiency and find ways to cut costs as they prepare for the future. This will involve working closely with their professional advisers including their lenders. Over the past five years the total borrowed by Scottish farmers has increased by over £500m to over £2 billion. The resulting investment has helped Scottish farming produce outputs valued over £3bn in 2014.
• Sandy Hay is Bank of Scotland head of agriculture for south and east Scotland