Indications of farm income recovery

29th January 2014

Scotland Agriculture Rural Development Official statistics point to partial bounce back in 2013.

Farm income in Scotland has made a partial recovery in 2013 following the poor weather of recent years, initial estimates suggest.

New statistics from the Scottish Government published today indicate agriculture was worth £700 million to the Scottish economy in 2012, a fall of 18 per cent on the previous year. However, early estimates for 2013 suggest income levels bounced back to about £830 million.

Commenting on the Total Income from Farming Estimates for Scotland 2011-2013, Rural Affairs Secretary Richard Lochhead said:

“These latest statistics reflect the challenging conditions our farmers have had to face in recent years, and it is good news that farm income levels are now going in the right direction. In fact, farm income in Scotland 2013 is estimated to be the second highest in a decade, which can only be welcome news for Scottish farmers.

“The figures show strong growth in some sectors reflecting strong demand for our premium products and higher prices. I am aware, however, that other sectors are not performing quite as well and this may be partly due to the impact of the extreme weather we have experienced over the past couple of years.

“The Scottish Government continues to do what we can to create the right conditions for Scottish farming to flourish. We are currently seeking views on the support that will be available to farmers in future, and I urge everyone who has not already done so to respond to our consultations on direct payments and rural development.”

Contrasting years for farm income
Scotland Agriculture Statistics A National Statistics Publication for Scotland.

Estimates of income from farming in 2012, together with a first look at 2013, show the varying profitability of the sector in recent years.

Scotland's Chief Statistician today published Total Income from Farming Estimates for Scotland 2011-2013, which contains near-final estimates of Total Income From Farming (TIFF) for 2012, an initial estimate of 2013 TIFF, and revisions for previous years. The figures show income fell by 18 per cent in 2012 compared to the previous year, with initial estimates suggesting most of that drop was recovered in 2013.

Agriculture was worth £700 million to the Scottish economy in 2012, down from £840 million in 2011, mainly due to the poor weather that year. Although not all the data are yet in, income for 2013 may have bounced back to about £830 million, which, once inflation is taken into account, is only five per cent short of 2011 levels.

The particularly good performers in 2013 look likely to be potatoes, which profited from very high prices at the start of the year and then a much better harvest. Income from milk also saw an increase, with average prices rising from 27.9p per litre in 2012 to 31.3p per litre in 2013.

However, livestock, which accounts for well over a third of farm output in Scotland, did less well, seeing an estimated four per cent fall in value. Likewise cereals, which account for about 15 per cent of output, also saw a decrease.

Total costs were estimated to have risen in line with inflation, but there was a large increase in the cost of feedstuffs for the second year running. Feed now accounts for 24 per cent of costs, compared to only 17 per cent a decade ago. However, labour costs do not appear to have risen in 2013, and there have been price reductions in red diesel and other fuel.

Subsidies amounted to £554 million in 2012 and £562 million in 2013, and remain an important factor in the profitability of farming.

In the longer term, income from farming has been rising steadily since a dip in the late nineties. Income in 2012 was the sixth highest in the past ten years, with 2013 looking like the second highest.

The information is used to monitor the performance of the industry, but also as part of the calculation of Scottish GDP and in the UK National Accounts. The 2013 figures will be revised next year, once more complete data are available.

The figures released today were 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.