Farming returns could slump to pre-2007 levels next year, a report by investment agency Scottish Enterprise has warned.
The study was carried out for Aberdeenshire Council by the former head of the SAC rural business unit, Peter Cook. The findings showed that the impact of the credit crunch and recession in local and international economies is being under-estimated.
An analysis of likely trends suggested that returns from the typical beef finishing farm would fall from £59,000 in 2007 and £43,500 this year to £22,900 in 2009. Less Favoured Area cattle and sheep would be similar, falling from £31,000 in 2007 to £22,500 this year and £9700 in 2009.
But cropping farms are likely to be hit hardest, with returns rising from £32,900 to £67,800 this year, after last year’s record harvest prices, but collapsing to only £12,300 next year.
Aberdeenshire is one of the most important farming areas of Scotland, extending to 518,000ha and accounting for 37% of Scotland’s cereal production and 26% of beef output. The county also processes 40% of Scotland’s beef and lamb and produces more than half of the country’s pigs.
Mr Cook made the point that Aberdeenshire farming, and particularly the beef sector, is highly vulnerable because of its dependence on subsidy. Even the top third of LFA beef breeder-finishers are losing £40 a head before subsidy.
“The opening up of world trade and cuts in single farm payment are clearly major threats to an industry which is so subsidy reliant,” Mr Cook said. “The collapse of world trade talks means no medium-term changes, but the long-term direction seems set.
“The whole industry needs to invest. On-farm infrastructure has been deteriorating and poor buildings, handling systems, roads, drainage, fencing and nutrient status are holding back productivity.”