Weak pound adds millions to Scottish and NI farm incomes

The falling value of the pound following the Brexit vote helped increase Scottish farm incomes by £96m last year, and Northern Irish incomes by £45m.

This was a 15% increase in total income from farming (Tiff) for Scotland and a 22% rise for Northern Ireland, according to the provisional government estimates.

This took Tiff to £749m in Scotland – the fourth highest figure since 2000 – but still below the 2014 total of £775m – and to £244m in Northern Ireland.

The weakening of sterling helped improve UK farmgate prices for grain, beef and lamb, as exports became more competitive on the Continent, said the Scottish government.

The pound-euro exchange rate meant farmers in Scotland received a 17% increase in the value of their BPS payments – totalling £53m.

See also: Scottish land in demand despite political uncertainty

Subsidies, including coupled support, totalled £533m in 2016. In Northern Ireland, direct subsidies increased 18% to £276m.

The Scottish government said a slight drop in total costs also helped, with feed bills down an estimated £17m on 2015 and fertiliser down £33m, while fuel and labour costs remained steady in 2016.

Keep drilling down on costs

Fergus Ewing, Scotland’s rural economy secretary, said: “Historically, support payments from the EU have played a significant role in farm profits and the total income from farming balance sheets show us this continues to be very much the case.

“Given the importance of these payments, the Scottish government is pushing Westminster for further clarity on the future of rural funding.”

NFUS director of policy Jonnie Hall said: “While Tiff is the headline national-level measure of farm income, drilling down on the figures shows worrying trends continuing for Scottish farm output in general and just how challenging 2015 and 2016 have been for those producing milk, cereals and eggs.    

“There is a clear indication of a contraction of Scottish agriculture, and that is further borne out by productivity indicators that suggest we have fewer farm businesses, but they are getting more efficient in terms of input use. 

“However, Tiff figures relate to all aspects of Scottish agriculture and these headline figures can disguise significant variations between sectors, farm sizes and farm types.”

Which sectors won and lost?

The sheep sectors in both countries were the real winners, as they were more affected by the low pound because of the sector’s reliance on exports.

Sheep farms’ Tiff increased 13% (£24m) in Scotland and 15% in Northern Ireland.

Tiff for beef farmers in Scotland, however, remained steady, while it increased by 6% in Northern Ireland because of a 7% jump in output.

Milk prices continued to tumble in 2016, resulting in an estimated £126m, or 28%, being wiped off the value of Scottish dairy incomes between 2014 and 2016, to total £328m.

In Northern Ireland, the dairy industry remained the biggest contributor to Tiff, but it fell 6% to £452m.

Cereal farmers also saw a fall in Tiff, although this was 8% in 2016 compared to a 12% fall in 2015 in Scotland, while Northern Ireland growers saw a 3% fall in incomes, largely due to adverse weather affecting barley yields.

Improved ware prices boosted Tiff for potatoes by 23%, or £38m, in Scotland and by 17% in Northern Ireland to £20m.

Final Scottish figures for 2015 showed Tiff fell 16% compared with 2014, to total £653m, with subsidies, milk and barley all seeing big falls.