The latest farm income figures paint a not-unexpected picture of price volatility and some very low earnings.
The figures, which relate to the 2013 crop year, are taken from the farm accounts of 500 farm businesses and show that 43% of them were unable to pay owners, business partners and family members even the minimum agricultural wage of the time.
Despite it being a much improved summer compared to 2012, one fifth of the farms recorded a loss.
Generally agricultural activities were loss making to an average of minus £21,000 and needed diversification income (£3,000), agri-environmental scheme income, including LFASS (£8,000), contracting (£3,000) and an average of £38,000 of subsidy to claw their way back into profit.
Average incomes changed little between the 2012 and 2013 cropping years, with a fall of only 2% (£600) overall to an estimated £31,000. The situation varies markedly between sectors however.
The figures, released by Scotland’s Chief Statistician note the effect of more spring crops than usual being planted in 2013 because of the poor autumn sowing conditions in 2012.
This may be part of the reason why general cropping and mixed farms saw the largest falls in income, down 37% and 13% respectively. The average incomes were £36,000 for general cropping farms and £30,000 for mixed farms.
Most livestock sectors saw increased incomes, with the exception of specialist beef farms in less favoured areas which saw incomes reduce by around 8% on average to £25,000.
No sector reflected price volatility more than dairy. Better prices and better grass led to a 12-month 75% increase to £80,000. Lowland cattle and sheep farms saw a 35% average increase to £24,000.
Production costs actually fell on livestock farms mostly due to the kind weather.
The opposite was the case however in the cropping sector with costs rising and the value of grants and subsidies falling. Some of this was thanks to unfavourable exchange rates, but it was the decline in the value of crops which contributed the most to the decline in profitability of Scottish farm businesses in 2013.
In particular ‘other’ costs such as machinery, land and buildings and depreciation had a biting effect.
Balance sheets showed that farm businesses are capital intensive and typically have high asset values which are not included in income measures.
Average debt levels are fairly low with liabilities less than 10% of the value of assets. In fact, the appreciation of business assets exceeded the income generated from farming activities at £33,000.
The report findings are based on the Farm Accounts Survey which is used to inform, monitor and evaluate European, UK and Scottish agricultural policy. The survey does not include information on the pig, poultry and horticulture sectors.