Farm Debt Continues to Rise

8th September 2015

Outstanding debt of Scottish farms increased four per cent over the past year, according to the latest National Statistics released by Scotland's Chief Statistician.

A survey of the main banks and other lending institutions showed outstanding loans to Scottish farms rose by £73 million in the year to May 31, 2015. Total outstanding loans to the agricultural sector amounted to £2.03 billion. Accounting for inflation, this was an increase of three per cent since May 2014.

This was the sixth consecutive annual increase in Scottish farm debt. Taking into account the effect of inflation, debt peaked in the mid-1980s at around £2.5 billion, before high inflation rapidly eroded the value of the sector's outstanding debt. After remaining steady for a decade during the 2000s, debt levels have now risen to their highest since the late 1980s.

In related data, figures from the Bank of England showed that, by May 2015, the UK "agricultural, hunting and forestry" sector had seen a 42 per cent increase in debt levels since 2010. The only other sector that had seen an increase was utilities, which increased 33 per cent, with all other sectors seeing a reduction in outstanding debt.

Note that these figures are for levels of outstanding debt, not estimates of new loans. Information is not available to show when the loans were taken out or the associated repayment periods.

The statistics publication was produced by independent statistical staff free from any political interference, in accordance with professional standards set out in the Code of Practice for Official Statistics.

1. "Real terms" means taking into account the effect of inflation. It shows, for previous years, the value of the debt expressed in today's prices. This is because, for example, a loan of £10,000 in 1990 could have paid for something that nowadays would need a loan of £20,000, so we say the 1990 loan was worth £20,000 in today’s prices.

2. The full statistical publication can be accessed at: www.gov.scot/stats/bulletins/01172

3. The release also includes a breakdown of outstanding debt by recipient type (i.e. owner occupier, tenant, contractors and livestock salesmen).