SCOTLAND'S farmers will not be surprised to learn that their income is on the wane.
Total income from farming figures issued by Scotland's chief statistician yesterday showed that, while income increased by 29% in 2013 compared to the previous year, initial estimates for 2014 suggest a drop of 18%.
Agriculture was worth £823 million to the Scottish economy in 2013, up from £630 million in 2012, with potatoes, milk and vegetables all doing very well.
Although not all the data is yet in, the figure for 2014 may have fallen back to about £688 million once inflation is taken into account.
For 2014 it looks like the potato and cereal sectors both suffered from the large drop in price, though the reduction for cereals was offset by a very productive harvest. Income from potatoes fell £105 million to £170 million, though this is relative to an exceptionally strong year in 2013. Cereals fell by £46 million to £381 million.
Overall, livestock saw a small increase in value, though there was a small decline in its largest sector, the beef industry, with falling prices and slaughter numbers. Balancing that out was the better year for sheep farmers, with increased prices and numbers resulting in a 15% increase in output to £203 million. The pig industry also regained some of the value lost in recent years, with an estimated output of £94 million, up £15 million on 2013. Poultry was, however, down £18 million to £100 million.
Total farm costs were estimated to have fallen in 2014. Feed costs in particular are estimated to have fallen as much as £40 million, to £644 million. The cost of fertiliser is estimated to have fallen £31 million to £167 million, and fuel by £14 million, to £127 million. However labour was up by £15 million to £361 million.
Total subsidies received by the industry amounted to £560 million in 2013 and £491 million in 2014. The large reduction in 2014's support was due to single farm payments being affected by both a less favourable exchange rate and an 8% belt-tightening in the original euro payment.
All the same, subsidies remain an important factor in the profitability of farming, accounting for 11% of the Scottish industry's gross income.
Commenting on these figures, NFU Scotland president Nigel Miller said: "The sun may have shone for most of 2014, but these headline figures only hint at the real challenge that many Scottish farm businesses have had to face up to in the past year.
"Brutal extremes in volatility have swept through the cropping setor and, in recent months, left both milk and potato producers in a critical place.
"The accounting periods used in this survey cut across production and market cycles and don't reflect the real world as it is today," he stressed. "The downturn in world markets since July 2014 has seen commodity prices plunge and strip out any margins being made at that time.
"Key sectors of Scottish agriculture are currently losing money heavily and that fragility is exacerbated by a fracture in trade with Russia and stalling Chinese markets. Europe has a role to manage the market in the face of such trade sanctions," insisted Mr Miller.
"The use of realistic intervention buying and export guarantees is now urgent if producers are not to be forced out of farming."
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