Bank Advances to Scottish Agriculture 2016

Annual update of the amount lent to the agriculture sector by the clearing banks and other financial institutions.

3. Other information relating to farm finances

The following financial data is also available from different sources, for Scotland or the UK, and may be of interest;

3.1 Total Liabilities

Estimates of the total liabilities of Scottish agriculture were published in table A13 of the 2016 Economic Report on Scottish Agriculture ( ERSA), available at the link below:

In 2015, total liabilities stood at an estimated £3.33 billion, of which £1.96 billion (59 per cent) was from bank borrowing (split slightly in favour of long-term). The remaining £1.37 billion came from hire purchase, leasing, family members and other sources. Total liabilities represented nine per cent of total assets.

3.2 Interest Payments

We receive quarterly returns of lending to Agriculture, Forestry and Fisheries from the main banks and mortgage companies operating in Scotland. The results of this, along with the annual Bank Advances survey are used to estimate the cost of borrowing to feed into estimates of Total Income From Farming ( TIFF). In 2015, the total net cost of borrowing to the agriculture industry was estimated at £103 million. A commentary on trends in interest payments over the past ten years was included in the ERSA, available at the end of section 3.14, at the following link:

3.3 Bank Borrowing by Farm Type and Tenure

The Farm Accounts Survey ( FAS) provides a more detailed insight into the pattern of bank borrowing across different farm types and tenures. The Farm Accounts Survey is representative of larger farms above 0.5 standard labour requirements, excluding pig, poultry and horticultural farms. The latest available results from 2014-15, published in detail in the 2016 ERSA, show that the average farm had external liabilities of £131,000 of which bank loans and overdrafts accounted for £78,000. Bank borrowing ranged from £14,000 for Specialist Sheep LFA farms to £180,000 for Dairy farms. Table B11(d) of the accompanying dataset, which contains results across all farm tenures, is available at:

3.4 Bank Of England figures for the UK

In the UK as a whole, agriculture has seen the largest growth in outstanding debt of any sector, at 51 per cent over the period 2010 to 2016.

Data from the Bank of England show that the outstanding Sterling and foreign currency loans by monetary financial institutions to UK 'Agriculture, Hunting and Forestry' (treated as one sector) rose six per cent between May 2015 and May 2016, to £17.7 billion. This followed increases of one, seven, eleven, nine and nine per cent the previous five years, making it the only sector to see growth in each of the last six years. Utilities and individuals are the only other sectors that have seen increases in each of the last four years, with utilities being the only sector with growth comparable to agriculture.

The wholesale & retail trade, and utilities saw the largest increases in 2016, with eleven and ten per cent increases respectively. The overall total debt was up three per cent since 2015, or down 12 per cent since 2010. These data are not adjusted for inflation.

Chart 4: Change in outstanding lending to UK businesses; comparison of May 2016 with May 2010 and with May 2015.

Chart 4: Change in outstanding lending to UK businesses; comparison of May 2016 with May 2010 and with May 2015.

See table 3 for data
Source: Table C1.2, "Total lending amounts out"


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