United Kingdom-Farm incomes.
Income from cereals rose by £52m to £387m, or 15.6 per cent. Given the fact that grain prices were much lower following the harvest of 2008, some farmers might well question the veracity of these figures. However, the calculations take account of the fact that around one-third of the 2007 crop was held over into the early months of 2008, frequently on contract prices of more than £165 per tonne for wheat. Prices last September were little more than £100 per tonne.
Beef finishers enjoyed better fortunes with total output rising by £77m to £466.3m – an increase of 20 per cent. But the worrying factor in this statistic is that beef production fell by 10 per cent during the year. Prime sheep income rose by £7m to £138.6m, again as a result of higher prices. But last year’s income figure is way below the 1999 level of £200.3m, reflecting the fact Scotland has lost around one million breeding ewes during the past decade.
Meanwhile, dairy farmers had a significantly better year, with total income rising by £40m, or 15.3 per cent to £303m. This was due to the fact the average ex-farm price of milk increased from 20.5p per litre to 26p per litre. Recent price cuts suggest a similar trend is unlikely during 2009. Scotland’s declining band of pig producers also fared better than for some time with a £4m increase in returns to £60.7m. But that is only £2m higher than during 1999.
But the real killer for the industry came on the input side of the equation where virtually all costs rose substantially. The bill for feeding stuffs jumped by18.5 per cent to £488m, largely as a result of higher charges for cereals and proteins. The bill for seeds was up by almost £9m to £62m, which was largely a reflection of the increased area devoted to wheat and barley production.
Another hammer blow was the massive hike in the cost of fertilisers and fuel. The bill for fertilisers rose by more than £70m, or 50.5 per cent, to £214.8m. Ten years ago the equivalent bill was a mere £104m. More of the same pain is anticipated during the current year.
Fuel costs rose by £37m, or 49 per cent, to £113.4m. Back in 1999 that bill was just £40m. The escalating cost of chemicals was another negative, with expenditure last year rising by almost 10 per cent to £66m. The bill for hired labour, despite a continuing decline in the workforce, increased by 5 per cent to just short of £300m.
Commenting on the figures Richard Lochhead, the Cabinet secretary for rural affairs, said: "Escalating costs caused a great deal of volatility in 2008 but the impact on total farming income was not anywhere near as bad as many feared. The recent drop in fuel prices and the ongoing marketing of Scotland as a source of top-quality produce should help to drive up income."
However, Scott Walker, the senior policy director at NFU Scotland, takes a different line. He said: "While we welcome the fact that many farmers may have had a better year financially in 2008, some of our members will look at the levels of profitability suggested by the Scottish Government figures and believe that they bear no resemblance to their own farming operations. There is a clear need to revise the manner in which these figures are calculated.
