Farm Incomes Report Paints a Mixed Picture
31/01/08

The Scottish Government has published its annual farm income figures, which paint a mixed picture across the various sectors of the industry.

NFU Scotland’s Vice-President, Stewart Wood

The cereal and milk sectors show improved returns but the picture is much bleaker across the livestock sectors. The Union has also emphasised that the figures were calculated prior to the huge rises in inputs costs - particularly animal feed, fuel and fertiliser – in the latter half of 2007 and start of this year.

Commenting on the figures, NFU Scotland’s Vice-President, Stewart Wood said:

“We still have question marks over the accuracy of farm incomes as a measure of individual farm profitability. But as an overall barometer of what happened between the end of 2006 and first half of 2007, they look pretty close to the mark. However, as we all know, the world has moved on significantly since then.

“For first time in a decade, cereal prices - driven by increasing global consumption and tight supplies - returned to a more sustainable level. That must be maintained.

“There was a hugely important turnaround in the farmgate milk price, although still too late for many farmers who have quit. However, what is not reflected in these figures is the astronomical rise in production costs over the last few months. Fuel pries are at a record high and fertiliser prices have almost doubled. The cost of replacement dairy heifers has also soared. Remarkably, there is mounting evidence that the 7-8 pence farmgate price rise has almost been entirely eroded by increased costs.

“The figures do highlight the serious financial plight in the red meat sector and that is without incorporating the foot and mouth period. Whilst the sheep market has picked up since its FMD-related collapse we are still seeing breeding flocks disappearing off the hills in alarming numbers. The same trend is being seen across the suckler cow and sow herds.

“Supermarkets are sleep walking into a supply problem and that is hugely concerning to us and should also be a major worry for consumers. We saw the problem materialise in the dairy industry last year and it is now happening in the red meat sector. Food production is not a tap to be turned on and off, it is a long-term business. Unless the supply chain breaks out of its short-term thinking, consumer choice will suffer. This is also a political issue here that needs to be addressed if a national food policy is to deliver for Scotland.”

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