Farm incomes have fallen by a third in last year

In the past financial year, more than half the farmers in Scotland couldn’t afford to pay themselves the national minimum wage of just over £8 an hour for their unpaid labour, official figures have shown.

And with around 29 per cent unable to provide any earnings at all for unpaid labour from farm income, the latest national statistic report published by the Scottish government showed that the business income of the average Scottish farm fell by more than a third in the past year.

The statistics reveal that many farm types which had performed well in the previous year experienced a large drop in income in 2019-20 – due to increased costs and decreased revenues and support payments, with the average unit making a loss of £25,500 on its farming activities.

And the reliance of most sectors on support payments were once again highlighted – with 71 per cent of businesses falling into the red without the aid and the average business making a loss of around £17,100 without support payments even after additional income from diversifications and outside interests were included.

Output value from potatoes and cereals decreased and affected some farm types more than others – with the figures showing that mid-income farms, which include cereal, mixed and combined cattle/sheep farms, in general seeing poorer returns in 2019/20 than in the previous year –with the average income of mixed farms falling 77 per cent to £8,100 in 2019-20.

The publication said that sheep farms and beef farms in less favoured areas (LFA) have low incomes that have been historically low compared to other farm types and support payments play an important role for a large number of LFA farms - in 2019-20 LFA sheep farms would on average be making a loss of £37,600 without support.

With more than half of all farms adopting some form of diversification to bolster their incomes, renting out farm buildings, micro electricity generation, wind turbines, hosting mobile telephone masts and holiday cottages were amongst the most common forms of diversification adopted. Income from agri-environment schemes, however, decreased 22 per cent compared to the previous year.

Commenting on the figures NFU Scotland said that the Covid had seen a resurgence in the interest for local food – and expressed a hope that this would drive the changes in the supply chain which were required to ensure that farming became profitable.

A spokesperson added that despite farming being the driver for economic activity and environmental management across large swathes of Scotland, many farms struggled to survive.

“Sadly, these figures show that there are too many farms where not enough profit is generated to allow the family labour used to be paid at least the national minimum wage.

“The figures highlight that any change in how support is directed to farms will leave many farms very vulnerable. That is why it is important that the Scottish government continues to work with the industry as it looks to change how support is given to the industry in the future,” she added.