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Total income from farming is estimated to have fallen by £57 million in 2018, after increasing in 2017.
The chief statistician in the Scottish Government last week published Total Income from Farming Estimates for Scotland 2016-2018, which contains near-final estimates of total income from farming (TIFF) for 2017 and an initial estimate of 2018 TIFF.
Although not all the data is yet in, net income for 2018 was estimated as £672 million, down from £729 million in 2017. The fall is partly due to the cost of feed stuffs, which is estimated to have risen £74 million in 2018.
Total costs were estimated to have increased about five per cent. Labour costs increased £26 million to £441 million, and fuel costs increased £18 million to £147 million.
The total value of outputs only increased marginally. Barley and milk saw the biggest increases in value. While the harvest was adversely affected by the dry summer, prices were good and barley output was estimated to have risen £58 million to £312 million.
The dairy sector also saw a gain, with increased production and a small increase in price resulting in milk output being worth £402 million, up £29 million on 2017.
Overall, livestock is estimated to have seen a small increase in value in 2018. The largest sector, the beef industry, again remained reasonably steady in 2018, with prices slightly above 2018. Output from slaughter or sales of cattle amounted to an estimated £714 million in 2018. The sheep sector saw another year of price rises, with output worth £234 million. Lower prices saw an eight per cent drop in the value of pig meat, to £100 million, while the poultry sector saw a similar decline to £77 million. The value of eggs increased 12 per cent to top £100 million for the first time.
Depressed prices and quantities resulted in a five per cent decrease in the value of potatoes, with both seed and ware dropping. The vegetable sector saw little change, and now stands at an estimated £140 million. Fruit saw a small increase to £140 million, but growth has slowed since the large increases a few years ago.
Subsidies, including coupled support, were budgeted at to £549 million in 2018. The figure, which for accounting purposes is based on the claim year irrespective of when payments are actually made, includes £425 million in direct payments, a further £66 million in support for Less Favoured Areas, and £47 million in coupled support.
In the longer term, income from farming has been rising steadily since a dip in the late nineties. However, within that trend the figures have fluctuated from year to year, and have struggled since a drop in 2015.
The data also show that productivity, which measure the amount of output per input, irrespective of prices, has fallen in the past three years.
Reacting to the figures, a spokesman for NFU Scotland said: ‘It is important to remember when looking at the TIFF figures, that they are aggregate measures for Scottish agriculture as a whole and therefore mask the performance of different sectors and individual businesses and farms.
‘Farm inputs have increased across the board, with farmers and crofters facing significantly increased costs on a range of supplies, including feed and bedding for livestock, as the industry still feels the long-term effects of 18 months of bad weather.
‘There is not much we can do about the weather, but what today’s figures show is there is a clear need for political clarity and cohesion in order to steady an unpredictable market and a lack of confidence, created by the uncertainty of the current political climate.
‘Farmers and crofters are currently faced with a ‘dark corridor of uncertainty’ and need governments to provide a more certain pathway with greater clarity on the operating environment that they will find themselves navigating over the next few years.’
The NFUS’s livestock policy manager John Armour said: ‘While these figures demonstrate there are challenges for the sector, the national farm income figures demonstrate that the livestock sector is the biggest earner for Scottish agriculture – generating almost a third of the national farm output in 2018, worth £715 million. This is a sector which needs certainty, both from the market and from guaranteed support from government to continue to deliver for the Scottish economy by providing employment and opportunities in rural communities.’
Milk policy manager George Jamieson said: ‘The figures show a welcome rise in dairy output due to higher production and modest but welcome price increases. Looking back, the graphs demonstrate the volatile nature of dairy, some of which can be mitigated by ever increasing efficiency and economies of scale, which is evidenced by the continued reduction of dairy farmers and increased herd size and yield.
‘However, we don’t want or need to lose more dairy farmers from the sector. Dairy is high investment sector, which is increasingly vulnerable to volatility in input and output prices, which is compounded by uncertain weather patterns, and a powerful, competitive supply chain, hence the challenges remain for those who are still in the industry.
‘There is hope for a thriving future if we, the sector, can see a supply chain and political decisions that value production. These figures demonstrate that dairy can rise to challenges but needs help in forward planning and investment.’
Crops policy manager Peter Logie said: ‘The cereals output is up around 10 per cent from 2017. That’s the second rise in a row but it has to be put into context as the 2016 output figure was the fifth year in a row of falling output. So in real terms the output in 2018 is still lower than it was in 2013. And, of course, the input costs have also gone up. Growers report increasing costs of farm machinery, outstripping inflation or the rise of the Euro against the pound. Fertiliser costs are up and large increases are being seen in the cost of sprays.
‘Looking forward there is a lot of uncertainty about how Brexit will impact both on costs and on prices, for grain and the other crops.’