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SUMMARY OF SCOTTISH
AGRICULTURAL INCOME ESTIMATES 2007
1. The aggregate results for the 2007 agricultural accounts are provisional, and are based on the latest information that was available in late 2007. In some cases, full information becomes available later than the publication deadline. The 2007 estimates are, therefore, subject to revision in the next Annual Review using more up to date information.
2. Total Income From Farming ( TIFF) measures business profits plus income to workers with an entrepreneurial interest (farmers, partners, directors and their spouses, and most other family members who work on the farm). TIFF is the preferred income measure, conforming to internationally agreed accounting principles required for both UK national accounts and Eurostat.
3. TIFF provides estimates of Scottish output values by sector, along with a summary of input costs, but at a Scotland level only. It is not possible within TIFF to specifically attribute input costs to individual sectors and this needs to be noted when analysing the figures. In other words, the output values for specific sectors (for example cereals, livestock, horticulture etc.) do not show the extent to which increases in input costs have (directly) affected that particular business sector. Separate income estimates for particular sectors are available from the Farm Accounts Survey 1 2
4. The main results of the account show an estimated increase in TIFF of around 16.7 per cent (£90.0 million) from last year. In real terms this represents a rise of around 11.9 per cent. The details behind the increase in TIFF are summarised below:
- The total of all payments and subsidies in 2007 was £550.5 million. Single Farm Payments ( SFP) were estimated at £393.7 million, an increase of £5.3 million (1.4 per cent) on the 2006 levels, mainly due to a more favourable exchange rate in 2007 (as SFP is initially valued in Euros). It should be noted that in 2007 a higher rate of overall modulation (9.3 per cent) was applied than in 2006 (8 per cent). This modulation relates to a percentage of SFP being 'top-sliced' and transferred from Pillar I to Pillar II of CAP funding rural development measures.
- The value of gross output is estimated to have increased by 12.7 per cent (£237.2 million) in 2007. The biggest increase was in the Cereals sector, mainly due to a £93.1 million (71.8 per cent) increase in barley output values.
- Cereals output increased by 57.3 per cent (£121.4 million). This increase is due to market price increases for all cereals, in particular wheat where the average wheat price rose in 2007 by 42.6 per cent to £117.60 per tonne (Table 3). The increase in cereal prices follows recent trends in world markets that have been fuelled by rising global demand and a drop in production in major producing regions due to droughts. Global stocks of wheat and other grains have been falling in recent years, which has also contributed to rising commodity prices on the world market.
- Within the Cereals sector there was an increase in area from 398,513 hectares to 403,898 in 2007 (up 1.4 per cent). However, average yields achieved in 2007 decreased to 6.3 tonnes per hectare (down 6.6 per cent).
- Horticulture output value has increased by 7.4 per cent (£13.6 million). This included increases of 9.3 per cent (£8.2 million) in vegetables, 10.7 per cent (£5.2 million) in flowers and nursery stock and 0.5 per cent (£0.2 million) in fruit. These rises were primarily due to increases in area and prices received for carrots, mushrooms and calabrese. The main driver for the increase in flowers and nursery stock was an increase in the value of protected crops.
- The output value of finished cattle and calves has increased in 2007 by £4.1m (just over 1%), mainly due to an increase in output values for cows and bulls. In 2007 the value of clean steers, heifers and young bulls decreased by £1.9m but this was offset by a £6.3m increase in the output value of cull cows and bulls. The average price achieved per head for cull animals slaughtered for the food chain in 2007 was £497.76 compared to the equivalent 2006 price of £474.24. Those animals that were put through the Older Cattle Disposal Scheme ( OCDS) received an average payment of £223.
- The total number of store cattle decreased by 3.5 per cent although prices increased slightly, with 2007 average prices for store cattle up by 2.7 per cent and average prices for store calves also increasing slightly, by less than 1 per cent.
- The value of finished sheep and lambs decreased in 2007 by just under 1 per cent (£0.8 million). The value of store sheep also decreased in 2007 by £1.7m (16.2%). (These estimates are subject to revision, as the underlying methodology is considered with respect to the impact of the FMD restrictions on the 2007 sheep and lamb output values).
- Poultry sector output values increased by 2.8 per cent (£2.0 million) in 2007. Finished pig output values remained relatively stable between 2006 and 2007 at around £57.5m.
- The value of livestock products increased by £22.9 million (8.3 per cent) in 2007. This was driven by an increase in the average price per litre for milk which resulted in an overall rise in the output value for milk and milk products of £20.5 million (8.4 per cent).
- Capital formation (i.e. the value of incoming and retained livestock) shows an increase of £13.8 million (up 24.6 per cent). This is primarily due to a partial recovery from low capital formation values in 2006 (specifically for dairy cattle and ewe lambs) and this needs to be noted when considering the increase in 2007. Changes in capital formation are driven by changes in the price and volumes that are used to calculate the value of animal stocks - essentially, the price difference between animals entering and leaving the herd/flock.
- There was an overall increase in input items in 2007 of 9.3 per cent (£111.2 million), primarily due to an increase in feed costs of £60.6 million (19.2 per cent). Fuel and oil costs increased by £5.2 million (7.3 per cent), fertilisers and lime by £9.4 million (7.1 per cent), seeds by £5.0 million (10.2 per cent) and other farm costs by £9.1 million (3.0 per cent).
- Only two input costs fell in 2007, with Leasing of Quotas falling from £27k to £11k and Landlord farm maintenance costs falling by just over 1 per cent to £6.9million.
- The value in interest paid has increased by 19.2 per cent (£20.2 million) reflecting both increases in interest rates in 2007, and an increase in lending for farming purposes up 6.3 per cent to £1,358 million. Hired labour costs have also increased by 2.7 per cent (£7.5 million), due to increased wage costs for farm workers.
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