Almost half of Scottish farmers are failing to make enough money to pay themselves the equivalent of the minimum wage, according to a report by Scotland’s chief statistician.
The 2016 Economic Report on Scottish Agriculture highlights the devastating impact that lower commodity prices and falling subsidy payments have had on farm incomes.
The report said the average income of commercial farms in Scotland is estimated to have halved over the six-year period to 2014/15.
Estimates from the annual farm accounts survey, first published earlier in the year, show that average Farm Business Income (FBI) fell by £8,000 between the 2013/14 and 2014/15 accounting years, to £23,000.
This is the lowest level seen since the current measure was introduced in 2009/10, with Scotland’s farms tending to make less money than farms in the rest of the UK.
Converting the income estimates to an hourly income for any farm owners, family members and business partners, showed that 47% would not have made enough to meet even the legal minimum agricultural wage for paid workers, said the report.
Management and investment
It also pointed out that farm business income should cover more than just the farmer’s labour – it should also reflect their management input and provide funds for further investment.
The picture looks to be even worse for the following year, with Total Income from Farming forecast to drop from £777m in 2014 to £667m in 2015. The 2015 figures will be revised in January 2017.
The report also showed that many farm businesses are increasingly relying on sources of income other than farming – with the average income from such diversified activities being £3,000.
The most common diversification was renting out buildings, but land used for mobile phone masts was the alternative enterprise that generates the greatest margin.