This item was published during the term of a previous administration that ended in April 2007
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Farm incomes estimates
29/01/2004
The Executive today announced publication of Forecast
estimates for aggregate and individual farm level incomes
for 2003.
The figures show a forecast rise of 29 per cent in Total
Income From Farming and a predicted rise in income at the
farm level. Average Net Farm Income is estimated at £17,000
for 2003/4, which is up on the 2002/3 figure of £7,000.
SECTION A: Aggregate Incomes Estimates - Commentary
& Notes
SECTION B: Farm Level Income Estimates - Commentary
& Notes
TABLE 1 Output, Input and Income of Scottish Agriculture
at
Current Prices
Figure 1 Scottish Total Income From Farming and per
whole time
person equivalents, in real terms at 2003 prices,
1973 to 2003
Figure 2 Scottish Total Income From Farming and Direct
Subsidies
in real terms (2003 prices), 1994 - 2003
TABLE 2 Farm Accounts Survey - Average Net Farm
Income
Figure 3 Average Net Farm Income
SCOTTISH AGRICULTURE INCOME
1. The following are the main results from the latest
Annual Review of Scottish Agriculture. For Section A,
Table 1 gives aggregate results of income figures over the
last 3 calendar years 2001, 2002 and 2003. Long term
trends in aggregate farm incomes in real terms since 1973
are shown in Figure 1 and the relationships between incomes
and subsidies in Figure 2. Section B compares net farm
income results by farm type for the financial years 2001/2
and 2002/3 along with forecasts for 2003/4. These are
given in Table 2 and Figure 3.
SECTION A: Aggregate Measures
2. The aggregate results for 2003 are provisional, and
are based on the latest information available. The
information on outputs is normally complete, but
information on inputs tends to become available later. The
2003 estimates are therefore subject to revision in the
next Annual Review using later information.
3. The Total Income From Farming (TIFF) which measures
business profits plus income to workers with an
entrepreneurial interest is expected to show an increase of
around £106 million in 2003, an increase of 29 per cent
from last year. The underlying details of this are
presented below.
Output
4. The value of gross output is forecast to have risen
by 6 per cent since 2002. The rise is driven mainly by
estimated increases of around 20 per cent and 16 per cent
from the cereal and livestock sectors respectively. This
in turn reflects the good yields and prices paid for barley
and further improvements in values of cattle and sheep.
Milk is showing an increase of about 11 per cent. This
reflects the small price increases already passed on to
producers.
5. Some of these increases are offset by falls in the
potato and pig sectors. The output value of potatoes is
showing a 7per cent decrease, reflecting low prices paid in
the first half of the year and a decline in the area
grown. The output value of pigs is forecast to fall by 6
per cent in response to a reduction in numbers and lower
prices.
Input
6. The value of inputs has seen a reduction in 2003.
There were decreases in the cost of feeding stuffs, seeds
and in the miscellaneous expenses category (e.g. leasing of
quotas, crop protection).
7. The total cost of fertilisers and lime has increased
by 6 per cent from 2002, reflecting the rise in fertiliser
prices throughout 2003. The cost of hired labour is up by
5 per cent.
SECTION B: Farm Level Estimates
8. Estimates of net farm income (NFI) from the 2002/03
Farm Accounts Survey for Scotland are presented below for
farms which were not directly affected by FMD-related
culling (i.e. around 90 per cent of the sample). This is
to avoid producing a distorted picture of incomes for the
vast majority of farms which did not receive FMD
compensation. The analysis relates to a two-year identical
sample of 376 farms, representing full-time farms of all of
the main types in Scotland (excluding horticulture,
specialist pig and specialist poultry producers).
9. Table 2 presents the results for mean NFI in 2001/2,
2002/3 and the forecast values for 2003/4. Between 2001/2
and 2002/3 the movement in mean NFIs was downwards, except
for LFA specialist sheep and LFA cattle & sheep farms.
The mean NFI across all farm types was around £7,300 in
2002/3, compared to £10,500 in 2001/2. Dairy farms have
seen the most pronounced fall since 2001/2.
10. The NFI forecasts for 2003/4 relate to farms that
did not experience compulsory FMD culls or welfare culls.
Interest lies principally in providing a 'barometer' of
change for typical farms of different types in Scotland,
and farms affected by FMD-related culls and compensation
are arguably atypical for this year.
11. Mean NFI in 2003/4 overall (all farm types) is
forecast to rise by 134 per cent on 2002/3, to
approximately £17,000, driven largely by a resurgence in
the cereals and general cropping sectors. The substantial
growth in total crop output is complemented by marginal
rises in both livestock and milk output. Overall, total
outputs are expected to grow significantly with total
inputs only slightly up; the two effects combined give a
net change of around £10,000.
12. It should be noted that TIFF and NFI are different
measures of farm incomes, calculated over different time
periods and therefore are not directly comparable. TIFF is
an aggregate measure incorporating business profits plus
income to all workers with an entrepreneurial interest,
whilst NFI has a much narrower definition relating only to
returns to the principal farmer and spouse (i.e. manual and
managerial labour) and the tenant-type capital of the
business. Furthermore, TIFF is calculated for the calendar
year while the NFI estimates relate to farm financial
years.