Brexit has been described as the greatest threat to Scottish agriculture by the country's rural affairs secretary, Fergus Ewing.
The rural economy secretary in the SNP Government says that leaving the European Union presents Scottish farming with an "unprecedented challenge."
He has raised his concerns in comments written for a report by the Agriculture and Horticulture Development Board (AHDB), which looks at the effect of leaving the European Union on Scotland.
The report, 'Exploring the implications of Brexit for agriculture and horticulture in Scotland', is the latest in a series of reports on Brexit by AHDB.
"Brexit is by far the biggest threat to Scottish agriculture and we need to get ready to meet this unprecedented challenge," says Fergus Ewing in a foreword for the report.
"While Scotland voted to remain within the European Union, the UK as a whole did not. As such, whatever and wherever our future lies, change is inevitable.
"Let’s be clear, Brexit will have a significant impact on the day-to-day running of every farm and croft across Scotland. It will affect the level of future support payments our farmers and crofters receive, whether they operate a small hill farm or large lowland farm.
"It will impact the fruit and vegetable sector, which relies on the hard work of EU migrant labour to harvest its crop. It will alter farmers’ ability to trade freely with the world’s largest single market. While Brexit’s impact will not be uniform, it will be felt across all agricultural sectors and regions."
EU funds
Scotland could feel the effects of withdrawal from the Common Agricultural Policy more than other parts of the United Kingdom, according to the report's authors.
"EU funds are proportionately more important to Scotland than the rest of the UK," they say. "The largest part of Scotland’s pre- allocated EU funds come from CAP Pillar I with support to farmers’ incomes provided in the form of direct payments and market-support measures."
They say they can identify areas where Scotland has both higher and lower exposure to Brexit challenges compared with other parts of the UK, but say: "The evidence is clear that support payments are important to maintaining farm business incomes for many businesses.
"It is not clear how agricultural policy will change post-Brexit, but there is likely to be increased scrutiny of the degree to which agriculture provides public benefits for public money.
"Scottish agriculture would be more exposed to any reductions in support levels, given that support contributes a higher proportion of farm business income. Future decisions on the level of agricultural budgets and how this funding is allocated will be important."
They say that Scotland will be less exposed to the risk of loss of EU trade than other parts of the UK because EU exports are lower. However, they say that los of EU markets would still have an effect on Scottish agriculture.
Profitability
On the possible loss of migrant labour from the EU, the report says that, again, Scotland would suffer less than other areas because horticulture is the sector most dependant on foreign workers and Scotland has a lower proportion of horticultural output than elsewhere.
However it says: "The profitability of horticultural businesses, particularly those in soft fruit production, appears to be linked to availability of this flexible labour resource."
It is on agricultural support that the report raises the greatest concern for Scotland. "The evidence is clear that farm support is critical to the current financial viability of many farming businesses in Scotland, more so than in other parts of the UK.
"It is not clear how agricultural policy will change post-Brexit but Scottish agriculture would be more exposed to any reductions in direct support levels, given that support contributes a higher proportion of farm business income.
"Although the ultimate scale of the financial envelope available for support in Scotland, and the way in which it will be distributed, remains unclear, the issue of assuring financial viability while encouraging a more productive industry will be a particular challenge for policy-makers in Scotland."
'Vital to the economy'
The report says that the food and drink industry is a vital part of the Scottish economy, contributing 4.8 per of gross value added (GVA) to the onshore economy in 2016.
Yet 85 per cent of Scottish farmland is classified as less favoured compared with 17 per cent of English farmland.
And some 43 per cent of Scottish farmland is designated as high nature value, which attracts higher EU 'custodial support.' Distance from market makes transport costs higher north of the border.
In his foreword, Fergus Ewing says it is vital that Scottish farmers, crofters and growers are well informed and start to really think about the steps they can take to safeguard their businesses to ensure a sustainable and prosperous future.
"I, therefore, welcome this analysis by AHDB and, in particular, the spotlight it gives to the potential impacts in Scotland. I continue to press the UK Government for clarity and certainty for the sector, as I believe a vibrant and sustainable agricultural industry is essential to securing a prosperous Scotland.
"AHDB and Quality Meat Scotland, who have collaborated on this report, have an important role to play in supporting their levy-paying farmers and growers in this respect and I believe this report does just that," he says.
The report has been produced by David Swales, head of strategic insight at SAHDB; senior AHDB analyst Julie Macleod; Stuart Ashworth, head of economic services atQuality Meat Scotland; Julian Bell of SRUC (Scotland's Rural College); and Dylan Bradley of Agra CEAS Consulting.
