core business: producing milk. Just over half of the dairy sector’s Farm Business Income comprises cash from the Basic Payments Scheme. As regards core business, the preponderant source of Farm Business Income from grazing livestock is comprised by payments from the Basic Payments Scheme, rather less from livestock in the less favoured areas but this reflects the fact that, in the latter, substantial cash is generated from agri-environmental payments. The Farm Business Income picture as regards specialist pig and poultry producer is, as would be expected, much less dependent upon the Basic Payments Scheme but, as regards mixed farming, the data reflects the fact that in terms of core business, the sector depends on the Basic Payments Scheme to generate a positive Farm Business Income, with the Scheme generating two-thirds of net Farm Business Income in 2016-17. Again, it needs to be borne in mind that the data in Table 1


constitutes average Farm Business Income and that there is likely to be a significant degree of variation around the averages shown. The usual approach is to analyse the data on a quartile basis – the top and bottom 25 per cent together with the middle 50 per cent. It is likely that, on this basis, significant variation would be reported in terms of dependency on the Basic Payment Scheme, reflecting different performances as regards agriculture as a percentage of Farm Business Incomes. Farmers in England may be affected by a significant degree of ‘less


favourable’ agricultural conditions; it is not unreasonable to suppose that such conditions may exist to a greater degree in Scotland and Wales, although the situation in Northern Ireland is less clear cut. This emphasises the insistence of the devolved administrations that they should have an input into the negotiations taking place as regards Brexit as any deal struck on agriculture as regarding England is likely not to fit the prevailing conditions in Scotland, Wales and Northern Ireland. As a case in point, the Scottish Government’s publication ‘Annual Estimates of Scottish Farm Business Income (FBI) 2015-16’, the latest year available, reports that in the period under review, average Farm Business Income was £12,615. This represents a fall of 48 per cent over the last year, when the corresponding figure was £24,121, and of 75 per cent – down £38,200 – since 2010-11. Indeed, the data presents an appalling picture. In neither year did Scottish agriculture make a market return in terms of its core activity of agriculture (Table 2).


Table 2: Annual Estimates of Scottish Farm Business Income 2014-15 and 2015-16


2014-15 Cost Centre Agriculture


Agri-environment Diversification Contracting


Direct Payment Farm Business Income


£ per Farm


-21,269 8,397 2,368 3,060


31,565 24,121


% of total


-88 35 10 13


131 100


2015-16


£ per Farm


-31,077 7,761 2,818 3,122


29,991 12,615


Source: Annual Estimates of Scottish Farm Business Income 2015-16 - Scottish Government (27 April 2017)


There were positive cash inputs from two out of the three cost


centres shown in Table 1 (agri-environment and diversification) as well as a positive contribution from contracting, a category seemingly not recognised south of the border. For the years under review, it makes it quite clear that direct


payments were an essential, indeed, the essential element keeping Scottish agriculture on anything resembling an even keel. As one would expect, further details reveal the role that what may be termed non-core payments play in keeping Scottish agriculture afloat. The implications for those farming sectors closest to the feed industry are shown in Table 3; there are clearly additional implications for those sectors not shown, such as cereal farms and those engaged in general cropping. It is impossible to ignore the spread of red ink as regards farming


activities in Scotland, even if one bears in mind, once again, the distortions that averages can create. The core business of agriculture produced negative incomes across every sector of Scottish agriculture in 2015-16. Scottish dairy farmers even managed to lose an average of £163 per farm on diversification, an activity that can include the provision of tourist accommodation, wind turbines, the erecting of masts for mobile phones and the provision of micro-electric generation. Farm Business Incomes in Scotland, notably dairying and mixed


Table 3: Scotland: Farm Business Income by Farm Type and Cost Centre 2015-16


Type of Farm/average per farm


Dairy


Specialist Sheep - LFAs Specialist Cattle - LFAs Cattle & Sheep - LFAs Lowland cattle & Sheep Mixed


All Farms (1) Agriculture


-31,255 -31,324 -26,636 -32,497 -23,708 -39,964 -31,077


Agri-environmental Payments


1,146


14,334 9,637


14,819 2,888 2,747 7,761


Diversified Income


Contracting


All Figures in Average £ per Farm -163 962


2,737 2,014


1,988 757


2,450 3,980 2,818


1943.0 3232.0 1328.0 3160.0 3122.0


Source: Farm Business Income by Cost Centres: 2014-15 to 2015-16 - published by the Scottish Government (1) All farms in Scotland including those shown above.


FEED COMPOUNDER JANUARY/FEBRUARY 2018 PAGE 21


Basic Payments Scheme


29,419 21,377 35,550 34,582 29,345 32,340 29,991


Farm Business Income


1,884 7,363


22,482 20,893 12,303 2,263


12,615


% of total


-246 62 22 25


238 100


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