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    Huge Cost Hikes Overshadow Farm Income Figures
29/01/09

NFU Scotland believes the publication of Scotland’s farm income figures for 2008 has highlighted a turbulent year for Scottish agriculture.

© www.jennifermackenzie.co.uk

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For many, the higher farmgate prices farmers received for their cereals, livestock, milk and eggs were overshadowed by the costs of key inputs such as fuel, fertiliser and animal feed. These costs rose by as much as 50 per cent in 2008, resulting in the total income from farming (TIFF) falling by around six per cent in real terms on the 2007 figures. The statistics show that TIFF in Scotland decreased by £11.9 million in 2008 to £629.6 million.

Separate figures on average Net Farm Incomes (NFI) show an apparent increase in farm incomes of £10,000 from £19,800 in 2006/07 to £29,800 in 2007/08. The Union has repeatedly questioned the way the NFI figures are produced and welcomes the commitment that this will be revised for 2009.

NFU Scotland’s Policy Director Scott Walker said:

“Given the pressure in the last half of 2008 from the massive rise in input prices, the estimated decline in TIFF is less than some may have expected. The aggregate income figures show that Scottish farmers had to pay an extra £180 million for their feed, fuel and fertiliser last year and that increases of this scale could not be budgeted for. While some of these input prices have fallen back a bit in 2009, they remain at historically high levels.

“We continue to harbour reservations over the meaningfulness of the NFI figures. While we welcome the fact that many farmers may have had a better year financially in 2008, many of our members will look at the levels of profitability suggested in the Scottish Government figures and believe that they bear no resemblance to their own farming business. For years we have asked that the way in which NFI figures are calculated be revised and we believe that a change will be made for 2009.

“Looking ahead to 2009, we are expecting this to be a difficult year for farming. For sectors such as milk we have already seen farmgate prices fall by eight percent in the first few months of the year. Input prices remain high and there is much pressure from retailers on product prices. While the industry is, to some extent, isolated from the effects of the credit crunch, the global nature of this problem will mean demand for food may be less than it otherwise would have been. This, in turn, can be expected to impact on the prices achievable and only add to the volatility to which farming is increasingly prone.

“It is important that opportunities are taken to ensure the industry is competitive. We have suggested to Government ways in which it can redirect some support available under the Scotland Rural Development Plan (SRDP) to help farmers in the current trading environment whilst also ensuring delivery on a range of public benefits that are delivered by active farming.”

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