Union fears for the future as farm industry income falls by £20m

NFU Scotland yesterday expressed disappointment at the latest estimates of farm incomes in Scotland in 2009, where a £20 million, or 3.2 per cent, reduction in income was recorded, with the total income from farming falling to £589m.

That is some 70m less than the total subsidy going into the industry last year, leaving the industry in a position where most of its businesses would have made a loss without public support.

NFUS policy director Scott Walker said the figures could have been even worse if there had not been a very favourable exchange rate, which had helped to boost Single Farm Payments. Low bank interest rates and improved farm-gate prices for some commodities had also helped.

Demand for red meat products, beef, lamb and pig meat had all risen in value, but this was offset by a crash in cereals and milk prices. The result is that the overall income to Scottish farming has fallen for the second year in a row, with a cumulative drop of 10 per cent in the two-year period.

The union admitted that the latest fall in income puts the industry into a financial position where the farm income figure is less than the amount of subsidy being used to support agriculture in Scotland. Payments and subsidies in 2009 rose 12.8 per cent or 70m to 658m, with most of the rise coming from beneficial exchange rates between sterling and the euro.

Walker said: "The income figures highlight the ongoing importance of public support to the industry.

"Without the benefit of SFP and monies delivered through the Less Favoured Areas scheme, the majority of Scottish farm businesses would have at best broken even, or operated at a loss."

Among the big changes to the previous year, the net figures produced by the Scottish Government show the degree the industry was affected by the costs of key inputs, such as fuel, fertiliser and animal feed.

When the government statistics are broken down into enterprises, the volatility in returns is shown by the drop in value of wheat, which fell 48m, or 36 per cent, in value from the previous year. In similar fashion, barley fell in value by 88m, or 35.8 per cent. Total income from the Scottish cereal harvest was put at 252m.

The growing importance of the horticultural sector to the Scottish economy emerges with the total output of strawberries, raspberries and field scale vegetables, such as broccoli and cauliflower, now amounting to 239m, thus becoming more important than the Scottish potato industry, where output was down at 180m.

The Scottish Government yesterday also announced figures relating to the profitability of farms in the past financial year. These Farm Business Income figures show the average income on Scottish farms for 2008-9 fell by 2,200 to 38,700 when compared with the previous year.

The biggest fall in incomes was experienced by specialist cereal producers, who saw their farm income plummet from an average of 65,900 in 2008 to 42,400, but the lowest reward for farming continues to be in the hills where sheep farmers in Less Favoured Areas saw an income of only 16,300.

Those who also had cattle enterprises in LFAs were slightly better off, averaging 26,900.