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Agricultural Income

AGRICULTURAL INCOME

The Scottish Government calculate two main measures of agricultural income. They are closely related and provide complementary information.

Total Income from Farming (TIFF) provides a national estimate of total income across all agricultural holdings, with a breakdown of the national value of farm outputs, costs and subsidies.

Farm Business Income (FBI) provides a sectorial insight into the incomes of farm businesses for eight different farm types, with estimates of average incomes, outputs, costs and subsidies.

TOTAL INCOME FROM FARMING (TIFF)

The initial estimate for 2016 is £749 million, an increase of £96 million on 2015, 15 per cent, or 14 per cent in real terms. With more data for 2015 now available, last year's initial estimate for TIFF has been revised slightly to £653 million. The 2015 estimate is down £122 million on 2014; that's a fall of 16 per cent, or 17 per cent after accounting for inflation.

The data show that the profitability of the agricultural sector is heavily, though not entirely, dependent upon subsidies. In 2016, the original amount of pillar 1 EU support increased two per cent (€10 million), but the weakening of the pound in the second half of the year resulted in an eleven per cent increase in overall support payments. The weak pound also meant that, after prices has initially been down on 2015, they recovered in the second half of the year, resulting in the overall value of farm output remaining fairly steady. These two elements contributed to the estimated increase in TIFF.

The chart below illustrates the components that make up the calculation of TIFF, with TIFF being the difference between total outputs (plus subsidies) and total costs.

Chart : Make-up of Agricultural Accounts, 2015 and 2016,  Source: Table 1

Chart 1: Make-up of Agricultural Accounts, 2015 and 2016 source: Table 1

Total Income from Farming Estimates for Scotland 2014-2016 contains near-final estimates of Total Income From Farming (TIFF) for 2015 and an initial estimate of 2016 TIFF and tables showing the detailed list of components of TIFF in 2007 to 2016.

 

FARM BUSINESS INCOME ( FBI)

The incomes of commercial farms in Scotland are estimated to have decreased by 48 per cent in the last year. The latest reduction in farm business income, a measure of the return to unpaid labour on commercial farms, continues a five year decline in average income.

Estimates from the Scottish Government’s annual Farm Business Survey (FBS) show that In 2015-16, the average FBI for businesses in the survey was £12,600, the lowest level over the six-year series. This represents a decrease of 48 per cent (£11,500) in real terms over the last year and a decrease of 75 per cent (£38,200) in real terms since 2010-11. When FBI is calculated without the addition of subsidy payments the value results in a loss of £25,500.

There was less spending on inputs in 2015-16 compared to the previous year, however, there was a bigger decrease in crop and livestock production on average for all farm types. This, combined with a reduction in grants and subsidy payments and less favourable market prices, especially for dairy farms, created a downward pressure on profitability from agriculture.

From the Farm Business Survey, 36 per cent of farm businesses made a loss and more than half of farm businesses (59 per cent) generated income roughly equivalent to less than the minimum agricultural wage (MAW), per hour of unpaid labour. This latter figure has increased by 11 percentage points compared to the previous year.

Chart : Average Farm Business Income of Scottish farms 2010-11 to 2015-16

Figure 1: Average FBI of Scottish farms

 

FURTHER INFORMATION

 

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