The latest Scottish Executive figures have revealed that the area of land under cereal production in Scotland is at a 30-year low. The provisional results of the Executive's 2005 June agricultural census show a drop of six per cent on last year in total combine harvested crops. This latest drop has come as no real surprise to NFU Scotland which has stressed that its cereal-growing members have been re-evaluating their businesses in light of Common Agricultural Policy (CAP) reform.

Following CAP reform, the support paid to farmers is no longer determined by the area of crops grown each year.

Chairman of the NFUS Combinable Crops Committee David Houghton said:

"I believe we could be seeing a start of real change in Scotland's cropping activity. There has been no dramatic drop in the last year, but a six per cent fall which takes us to the lowest production area since the early 1970s indicates that farmers are looking carefully at their future activity.

"Whilst harvest this year seems to have gone well, meaning higher yields could take the final tonnage to a similar level as last year, a drop in total planted area is telling sign of a tight financial situation. The change in subsidy rules means planting decisions are now based purely on market income and farmers have reacted this year by leaving less productive areas of land alone because the income on it doesn't justify the production costs.

"We are not likely to get a sudden drop in production because farmers have fixed costs that must be covered, irrespective of whether they produce. For farmers in this position, simply ceasing activity or dropping dramatically is not possible because these costs have to be covered. However, many of us are looking at how we turn fixed costs into variable costs and options such as contract farming become all the more attractive.

"If you are not stuck with fixed machinery costs for example, and you simply hire in equipment when necessary, you have far more flexibility in business decisions. You can reduce or increase production dramatically depending on prices, emphasising the responsibility on buyers to deliver sustainable prices."

• The provisional 2005 figure for total area of combine harvested crops is 457,060 hectares, down from 486,240 hectares in 2004 and a drop of 6%. This represents the lowest level since 1973.

This includes drops of 5.5% in the area of wheat grown, 8% in winter barley, 5.4% in spring barley and 8.1% in oilseed rape. In other cropping activity, potato area fell by 4%, vegetables by 1.8% and soft fruit showed a small increase of 2%.