Diversifications no answer to troubles

19 October 2001

Diversifications no answer to troubles

By Shelley Wright

DIVERSIFICATION is no answer to farmings current problems, according to analysis by Lloyds TSB Scotland.

Figures for 1999/2000 farm incomes in Scotland, published recently by the Scottish Executive, provide "definitive proof" that diversification does not offer the solution to farmers economic woes, says Donald MacRae, head of agricultural services with Lloyds TSB Scotland.

In the banks latest economic bulletin, Prof MacRae says diversification on Scottish farms is contributing an insignificant amount to farm household income.

While income from non-farming activities in Scotland now averages about £8400 a farm, less than 5% of that comes from activities that use farm resources.

Peter Cook, head of the SACs rural business unit, says non-farming income to Scotlands farmers is becoming increasingly important.

"About 77% of farmers now have some form of non-farming income, compared with 60% back in 1990/91. But only about a fifth generate more than £10,000 income off the farm. So we have a lot of farmers earning off the farm, but probably not enough to prevent them running down the capital base of their businesses to cope with the sustained drop in farm incomes," says Mr Cook.

Over half the £8400 average non-farm income figure was earned from employment and self-employment off the farm, with another 45% coming from investments, pensions and social security payments, Prof MacRae points out.

"The rest was from on-farm activities, such as small-scale bed and breakfast businesses, that use farm resources. But of much more importance is off-farm employment and self-employment, which provides most non-farming income."

"These figures provide definitive proof that diversification is no answer to farmings current problems," he says. &#42

See more