LAST year was undoubtedly a better period for the Scottish agricultural industry, with the total income from farming (TIFF) – the technical measure used across the European Union – rising by £90 million, just short of 12 per cent in real terms, to £627.5m.
However, figures published this week by the Scottish Government reveal huge variations. The biggest change occurred for arable farmers growing cereals where the output increased by 57.3 per cent to £333.2m. The spot price of wheat and barley virtua
lly doubled in only 12 months, but many farmers did not receive the top prices as they had locked into fixed-price contracts.
However, that £333.2m of cereals output should be put in context with the data for 1998, when total sales were recorded at £296m net of subsidies. The basic fact is that world demand for cereals is rising faster than the modest expansion in production. The biofuels industry in both North and South America is also a factor in rising prices.
Other crops, including oilseed rape and potatoes, also posted increased outputs, rising from £208.6m to £251.2m. There was also a modest increase in the horticultural sector.
Dairy farmers have been under the cosh for some years, but 2007 was a decided improvement with total output rising from £243m to £264m, driven by an 8.4 per cent increase in the ex-farm milk price. Further rises in milk prices are almost certain in the current year.
The specialist beef and sheep sectors fared less well in 2007, however. Movement restrictions imposed in late summer after the confirmation of foot-and-mouth disease in Surrey dealt a severe blow as did the diagnosis of bluetongue in sheep in East Anglia.
The value of prime cattle at point of slaughter increased by only £5m to £408m, while the output of store sheep – animals sold off the hills and uplands for fattening on low-ground farms – fell by over £1.5m to £8.73m. That total is actually almost £2m less than the equivalent output in 1998 and does much to explain why many hill farmers are questioning their future viability.
The same situation is evident in the shrinking pig sector where the gross output was relatively stable at £57.5m, but a long way short of the £72m of 1998, when there was a considerably larger herd.
Input costs were significantly higher last year with an overall increase of £111m, or more than 9 per cent, to £1.3 billion. The major increases were a near 20 per cent rise in feeds, while fertilisers rose by over 7 per cent and fuel increasing by a similar margin. Similar problems will be encountered in 2008, with all margins remaining under pressure.
Scottish farming would be largely unsustainable without subsidies and the industry collectively during 2007 was in receipt of £550m. The vast bulk of this came in the form of the single farm payment – the subsidy at the core of the 2005 reforms of the common agricultural policy.
The SFP increased modestly £393.7m. This rise, when a reduction was anticipated, was due to the fact that the payment is calculated in euros on 30 September. With sterling now almost 15 per cent lower against the euro than early last year, it would seem that SFP cheques will be higher.
A relatively weak pound makes UK exports competitive, but the counter to that is that purchases of fertiliser and machinery will hit farmers' cheque books harder than ever since the industry is almost totally reliant on imports.
The full article contains 601 words and appears in The Scotsman newspaper.
