Supporting Scotland's Transition - Land Use and Agriculture: Technical Supporting Document

Employment

Employment rates for males and females are mostly higher in rural areas. For females aged 16 to 64 the highest employment rate is in accessible rural areas (74%) while for males aged 16 to 64 it is in remote rural areas (84%). Overall, employment rates for males aged 16 to 64 are higher than for females aged 16 to 64 in all areas of Scotland.^[31]

There is a perception that many of the employment opportunities in rural areas are low-skilled and low-paid. Whilst some sectors, including ‘agriculture, forestry and fishing’, ‘wholesale and retail’ and ‘accommodation and food services’ have a high degree of seasonal or transient employment, there is a range of high quality jobs offering job security (particularly in the public sector), good salaries, training opportunities and career progression. This underlines the importance of individuals having access to and awareness of these opportunities.^[32]

In the islands, perceptions of the availability of job opportunities in different sectors significantly vary between all island groups. Argyll islanders were most positive about jobs in fishing and Orkney Mainland residents most positive about jobs in agriculture. Jobs in forestry were felt to be fewer, with Skye and the Small Isles residents most likely to report opportunities. From a climate change perspective, 31% of island residents agree that there are job opportunities in low carbon and renewable energy. However, there is variation between the islands where the highest agreement was reported by residents in Orkney Mainland (76%), whilst the Argyll Islands (6%), and Bute, Arran and Cumbrae (10%) reported significantly lower agreement.^[33]

Small and Medium-sized Enterprises (SMEs) employ more people in both accessible and remote rural areas than in the rest of Scotland. Micro businesses (0-9 employees) account for almost half (45%) of employment in remote rural areas and over a third (35%) in accessible rural areas, compared to only 15% in large urban areas (using a 6-fold urban-rural classification).^[34]

More residents in rural Scotland are self-employed and homeworking is more prevalent. Almost a quarter of people in remote rural areas (23%) are self-employed, compared to 16% in accessible rural areas and 9% in the rest of Scotland. More employees in remote rural areas have a second job than anywhere else.^[35]

Proportionately more residents of rural Scotland are in work, with employment rates higher than in the rest of Scotland.^[36] Residence based estimates of pay indicate that rates are highest for accessible rural areas but lowest for remote rural areas.

‘Agriculture, forestry, and fishing’ is the sector that shows the greatest difference across Scotland, accounting for 15% of workers in remote rural areas compared to 12% in accessible rural areas and 0.5% in the rest of Scotland. The ‘accommodation and food services’ sector also has a much larger share of employment in remote rural areas (15%) compared to accessible rural areas (9%) and the rest of Scotland (8%).^[37]

Workforce - agricultural

The total agricultural workforce was 67,400 people in 2024.^[38] This includes 32,500 regular and seasonal employees working in agriculture, a group that has increased by 10% when compared with the five-year average. The increase was driven by a rise in the number of working business partners, particularly female working family and business partners. The majority of the workforce are owner-occupiers, made up of people who own or rent the farm and work on it. Of all working occupiers, 65% are male and 35% are female

The vast majority of working occupiers are aged 45 years and over. In 2024, only 15% of the total working occupiers were 44 years and under. Male and female working occupiers are generally similar ages. However, this estimate may not include some family members who also provide some labour.^[39]

Workforce - other sectors

The forestry sector now has more than 34,100 full time employees (from 2019 figures) of whom over 16,000 work in forestry, timber processing and supply chain activities, and over 18,000 work in forest recreation and tourism.^[40]

Aquaculture is also important, employing 2,300 people (3% of marine economy employment) in 2021.^[41] Looking at the sector more widely to include both production and processing activities, employment was estimated to be just under 6,300 in 2018, and 11,700 when including the wider supply chain.^[42]

An increase in ‘Green jobs’ is often cited as an opportunity that will come from the transition to net zero. A report for Skills Development Scotland^[43] suggests that the current number of green jobs is significant. In 2021, of the total 2.5 million jobs in Scotland, just over 100,000 were new and emerging green jobs.^[44] The data gathered reveals that there are increases in demand for jobs of this nature and that existing jobs are ‘greening’. Demand appears to be occurring across all regions of Scotland, suggesting a geographically widespread transition. Whilst a positive trend, it should be noted that women are markedly under-represented in green jobs in Scotland at 28% compared to 72% for men.

Education, skills and training

Areas across rural and urban Scotland have experienced primary school closures over the last twenty years. However, rural areas also have problems with recruiting teachers who are willing to relocate to more remote areas. School closures can have both direct and wider impacts in rural areas, where the school itself serves a greater purpose than education. In small rural communities, the school is seen as a village resource used not just by children and a key place for everyday social interaction. Losing this resource reduces parent involvement and interaction and reduces quality of life for pupils, parents and the rest of the community.^[45]

The Scottish Islands Survey 2023 found that three quarters of respondents who are parents, care-givers or guardians agree that children have access to quality primary school education. This figure drops to three in five with respect to secondary education. Three in five respondents perceive they could complete a college education in a subject of their choice while living in their island, compared to two in five with respect to completing a university degree.^[46]

School leaver attainment is similar in both rural and urban areas and has remained largely the same over time. In addition, the majority of secondary school leavers in rural Scotland in 2021-22 had a positive destination although fewer school leavers in remote rural areas go on to further education compared to school leavers in accessible rural areas and the rest of Scotland. The highest percentage of school leavers in employment was in remote rural areas (43%).^[47]

In 2022-23, almost a third (29%) of all Modern Apprenticeship^[48] starts in Scotland were in mainly rural areas, with 3% in islands and remote rural areas. In the same period, just over a tenth of employed 16-24 year olds in islands and remote rural areas (13%), and mainly rural areas (11%) were Modern Apprentices, compared to 9% in urban with substantial rural areas, and only 5% in larger cities.^[49]

Scotland faces a demographic challenge, with an ageing population and fewer employees entering the job market.^[50] Data supplied by Skills Development Scotland to the Commission for the Land Based Learning Review indicated: ‘Employment in Scotland’s Agriculture, Forestry and Fishing sector over the mid-term (2022 to 2025), the overall total requirement is expected to be around 10,200, with 400 people forecast to be required due to expansion in the sector and 9,800 people required due to replacement demand.’ Over 20,000 people are forecast to be required in the sector over the next 10 years with the majority replacing those workers who leave the labour market due to retirement and other reasons.

However, ‘land based’ skills encompass far more than just agriculture, forestry and aquaculture, but also key supporting roles such as engineering, equine and environmental conservation. This wide variety of career opportunities reflects the specialist skills and knowledge required to produce food and raw materials from our natural environment in a safe and sustainable manner, provide a range of ecosystem services such as flood protection, pollination and opportunities for recreation, and support nature restoration, climate change mitigation and adaptation.^[51]

Should people wish to develop their skills to do this work, it can still be challenging if they live in rural areas. Less than half of islanders agreed that, if they wanted to, they could access professional training while living on the islands (online or in person).^[52]

However, despite the challenges, in 2022 over two fifths (41%) of rural businesses stated that they were currently taking action to upskill or reskill their staff, or planned to. They are looking for specific skills. Food and drink businesses were more likely to be seeking skills in low carbon (60%), whilst tourism businesses were more likely to be looking to develop customer or client-facing skills (82%).^[53]

Farming and food production

The contribution made by agriculture to Scottish society and the environment is broader than the measures captured in traditional economic indicators. Agriculture plays an important role in rural communities, and, along with tourism and hospitality, contributes to the 'Scottish' brand, for example through the Scotch Beef or Scotch Lamb Protected Geographic Indication (PGI) from the Quality Meat Scotland Cattle and Sheep Assurance Scheme.

Through these wider economic and environmental impacts, the sector also has an impact on many other businesses and supply chains in Scotland, such as leisure and tourism, food and drink, veterinary services, the haulage industry and forestry.

Alongside the other most significant sectors in employment terms, (public sector, financial and other activities, and tourism), agriculture is an important part of the rural economy and most of Scotland’s land area is used for this activity. Estimated figures from 2020 suggest that total agricultural output was worth £3.45 billion^[54], with our food and drink industry being the largest user of this domestically. Arable farming (cereals, crops, fruit and vegetables) contributed the largest share of Scottish agricultural output, with a value of £1.15 billion, or 33% of total output. The next largest sectors were beef and dairy (milk and milk products), with outputs of £642 million (18% of total output) and £367 million (11% of total output) respectively.

However, this output is highly dependent on land capability, with large areas of Scotland having limited arable growing conditions or consisting of hilly or rocky land more suitable for livestock.

According to the 2024 Scottish Agricultural Census the total area of planted potatoes was 29,100 hectares in 2024, an increase of 4.1% compared with the five year average (28,000 hectares). The area used to grow vegetables intended for human consumption (excluding potatoes) was 22,000 hectares, an increase of 5.3% compared with the five-year average. The area used to grow crops for animal feed (stockfeed) was 16,600 hectares, similar to the five-year average.

Total cattle numbers in Scotland have been in a long-term decline since a high in 1974, when there were 2.68 million cattle. This trend continued in 2024, with cattle numbers falling to 1.67 million, a decline of 2.4% compared with the five-year average. If compared with 2023, cattle numbers decreased by 0.9%.^[55] However, whilst over the past decade there has been a 12% decline in the total beef breeding herd, (total herd of 382,600 in 2024), the total number of dairy cows has increased by 5.8% over the past 10 years from 169,700 in 2014 to 179,600 in 2024.

The total number of sheep decreased by 3.8% in 2024 to 6.47 million^[56] compared with the five-year average, suggesting a very slight downward trend compared to the long-term trend of the past 10 years. In 2024, the number of pigs decreased by 6.5% to 315,500 when compared with the five-year average. There was a 4.9% increase in farmed deer in 2024 to 16,000 compared with the five-year average (15,300 deer).

The food and drink sector is one of Scotland’s key growth sectors, domestically and internationally, covering a broad range of activities from farming, fishing and aquaculture to the processing, distilling, brewing and manufacturing of food and drink. It is a major contributor to Scotland’s economy, with latest figures showing that the sector generates turnover of around £15 billion and adds close to £5.4 billion in Gross Value Added (GVA). It is made up of over 17,000 businesses, which employ around 129,000 people, many in economically fragile rural and island communities.^[57]

Farm income

Average farm income, a measure of farm profit after costs, was estimated at around £35,500 in 2023-24, the lowest since 2019-20 after adjusting for inflation. This is a 51% (£37,500) decrease from the high of the previous year, (which was the highest income since 2012-13, the earliest year for which comparable data exists).^[58]

Total average farm income is calculated from the following income streams:

• agricultural activity
• support payments
• contracting activity
• diversified activity

Farms on average made a loss of £22,500 from agricultural activity in 2023-24. Averaged across all farm types, agricultural activity is usually loss-making in Scotland, with 2022-23 being the first time for more than a decade when the average farm generated profit in this way. Agricultural output decreased by 14% (£40,000) to £245,300 in 2023-24, driven mostly by decreases in crop, livestock, and milk outputs. Total input costs decreased by 1% (£4,000) from the previous year to £273,900. Decreases in feed and fodder, regular labour, and land and property costs offset increases in fertiliser and casual labour costs.^[59]

Support payments play an important role in farm income, helping around 73% of all farms to make a profit in 2023-24, (compared to 83% reported in 2022-23). Without support this decreases to 29% of all farms. On average, farms received around £46,500 in support payments and grants, a decrease in real terms of 5% from payments received in 2022-23. The decrease was mostly driven by the fixed rate of the Basic Payment Scheme, which did not increase with inflation. Without this support, the average business made a loss in 2023-24 of £11,000. Indeed, the average farm has only made a profit without support in two of the 12 years for which we have comparable data.^[60]

In addition to agricultural activity and support payments and grants, the average farm in 2023-24 made a profit (income after costs) of £5,400 from contract farming and £6,200 from diversified activities. In fact, more than half of farms have diversified activities that generate additional incomes to their businesses. In 2023-24, 59% of farms had at least one diversified activity. The most common diversified activity continues to be renting out farm buildings, (for purposes other than tourist accommodation), but others include micro electricity generation, wind turbines and providing tourist accommodation and catering. However, not every farm will have opportunities to diversify.

Average incomes of dairy, arable and mixed farms remain the highest across all farm types. However, a larger proportion of farms within these farm types were unprofitable compared to the previous year. In 2023-24, 31% of cereal and dairy farms were loss-making, up from 2% and 4% respectively in the previous year. The proportion of unprofitable lowland cattle and sheep farms increased from 20% to 68%. For LFA sheep farms, no farms in the survey made a profit without support payments, down from 8% of farms in the previous year.^[61]

Crofting and small-holding

As of 2019/20 there were 21,186 crofts in Scotland, 15,137 of which were tenanted and 6,049 owned. Many crofts are small, the average being around 5 hectares.^[62] Crofting covers around 4% of Scotland’s utilisable agricultural area.

Common grazings are a unique part of the crofting system and there are currently over 1,000 across the Crofting Counties of Scotland covering in excess of 500,000 hectares.^[63] Comprising two-thirds of all land under crofting tenure, these areas continue to be critical to crofting livestock systems and contribute towards high quality food production and food security. Additionally, they are becoming increasingly recognised for the potential environmental and ecological benefits they could provide. Through peatland restoration, carbon capture, renewable energy, and woodland creation, crofting can help tackle climate change and enhance biodiversity.

In general, crofters tend to be male, living in a two-person household and are aged over 55. However, the proportion of female crofters has continued to rise from 13% in 2014 and 26% in 2018, to 30% in 2022.^[64]

The majority of crofting activities are rooted in the traditional agricultural pursuits of livestock and crops. However, while only small proportions use their croft for other activities, new activities of forestry and woodland creation (18%), biodiversity activities (8%), glamping/camping (3%) and peatland restoration (1%) were all noted in 2022. These new activities were more likely to be carried out by crofters aged under 65. In addition to agricultural activities, crofts are also used for a wide variety of other activities such as growing fruit and vegetables; growing trees; bed and breakfasts and holiday lets; and renewable energy production. 90% of crofters who responded to the Economic Condition of Crofting 2019-2022 Survey had income from non-crofting sources. This was also the case in 2014 and 2018.^[65]

Forestry

Forestry makes a substantial contribution to the economy at both national and local levels. In 2019, forestry’s economic contribution to Scotland was estimated to be £385 million.^[66] When combined with other forestry related activity, (primary wood processing, forestry activities supply chain, and tourism), the total economic contribution is £1.1 billion in gross value added per year.

The key economic activities are production of timber and other wood fibre, and the provision of recreation and tourism assets.^[67] The majority of economic activities associated with woodland creation, management, harvesting and transportation, as well as a significant part of the processing of wood products, takes place in rural areas. Businesses range in scale from artisan furniture-makers, family-owned contracting micro-businesses and community-based biomass enterprises to UK-wide woodland management companies and multi-million-pound panel, pulp, paper and sawmills operating internationally. The forestry sector is therefore particularly important for these communities.

The forestry sector is growing and thereby increasing its demand for ‘forest floor’ jobs, as well as diversifying and requiring more varied skills. At the same time, in common with other land-based industries, forestry has an ageing workforce and is experiencing challenges in attracting and retaining young people.

Scotland has good growing conditions for productive timber species, and a highly efficient timber-processing sector. Most of the wood produced in Scotland for downstream processing and manufacture is softwood from fast-growing conifer species. Hardwood from slower growing broadleaved species makes up a much smaller proportion of the overall harvest but provides an important resource for the wood fuel market and high value artisan and niche construction sector products.

Aquaculture

In 2021, aquaculture generated £472 million GVA, 0.31% of the Scottish economy and 10% of the marine economy GVA.^[68]

Scotland exported £868 million of seafood in 2020, of which Scottish salmon accounted for £450 million. The extensive use of technology in aquaculture means it is producing highly skilled jobs in some of Scotland’s remote coastal and island communities. GVA per worker in the Scottish aquaculture sector was £107,000 in 2018, with the average wage in salmon production at £38,000. The trend towards high skilled jobs in the sector will continue with further technological progress.^[69]

Tourism

Tourism is seen as a source of job opportunities across the islands and mainland. Around three quarters of islanders perceive that the number of tourists visiting their local area has increased in the past 5 years and that it has a positive impact in their local area. However, only a minority of residents (23%) feel that there is adequate provision for the number of tourists, with significantly lower levels of agreement in Skye and the Small Isles (4%) than other islands.^[70]

Renewable energy

Renewable energy production is likely to place an ever-increasing demand on our land in the future, as part of the drive to decarbonise energy production. In fact, new statistics show that in 2022 renewable technologies generated the equivalent of 113% of Scotland’s overall electricity consumption, an increase of 26% compared to 2021.^[71] Electricity generation is greatest in mainly rural areas (56% of the Scottish total) and is increasing at the highest rate.^[72]

Natural capital

The role of nature in underpinning our economy is often underestimated, hidden, or simply not recognised. Recent research^[73] by Scottish Government shows that businesses reliant on our natural capital – like agriculture, forestry, fishing and tourism - contribute more than £40 billion to the economy and support around 260,000 jobs. We must ensure that we protect and enhance our natural capital so that we support these businesses and the jobs and benefits they provide to our communities.

Scottish Government has set out its ambition to show global leadership in rebuilding natural capital in our 2022 National Strategy for Economic Transformation, underpinning our wellbeing economy and also our response to the climate and nature crises. This ambition will require both public and private investment and Scottish Government has recently published its 2024 Natural Capital Market Framework, setting out the actions being taken to deliver our distinctive vision for a values-led high integrity market for responsible private investment in natural capital. These actions include commitments to ensure that these markets deliver benefits to communities and support a just transition.