This report contains financial results from the Farm Accounts Survey ( FAS) relating to the farming years 2006/07 and 2007/08, and provides a detailed analysis of the headline Net Farm Income ( NFI) results that were previously published on 29th January 2009 1. The information is collected annually for the Rural and Environment Research and Analysis Directorate ( RERAD) of the Scottish Government ( SG), by the Scottish Agricultural College ( SAC). The purpose of this report is to provide an in-depth analysis of the financial position of different types of farms in Scotland. This information contributes to the evidence base of the agricultural sector and is of value to policy development and other stakeholders. RERAD is very grateful to the participating farmers for their continued co-operation with SAC and for the detailed information that they provide.
Changes to the farm accounts survey sample
The farm income estimates are produced from a sample of 472 farms in 2006/07 and 442 farms in 2007/08, representing full-time farms of all of the main types in Scotland (excluding horticulture, specialist pigs and poultry farms). The majority of farms participated in both years, although there was a decrease in the number of responses in 2007/08 which introduces some sample variability into the results when considering annual trends.
Reliability of Results
The quality of information collected from each farm is very high, based on fully reconciled farm accounts. Data for each farm is also validated against a comprehensive set of quality assurance checks. Some information on non-cash items, such as input of family labour, is estimated. The survey has been designed to be representative at the national level; however results by each of the eight farm types reported by the survey ought to be treated with some caution, especially when based on small sample sizes.
Update to 2006/07 results
This report contains an update to the 2006/07 results published last year. This update is mainly due to the availability of a further fourteen farm account records for 2006/07, which were not available at the time of publication last year.
The Time Period Covered by the Survey
The survey is not carried out on a calendar-year basis but based on farms' financial years. The exact period covered by the survey, for any given year, will vary across the sample depending on individual businesses' accounting year ends, although they all centre on the same cropping period (see diagram in Annex 1). For example, the 2007/08 accounts all centre on the 2007 production and subsidy year. The spread of closing valuation dates from the autumn of one year to the spring of the next and means that (unavoidably) some of the 2007/08 accounts relate to the 2006 winter whilst others relate to that of 2007.
Measures of Income
The main income measure reported is Net Farm Income ( NFI). NFI is defined as the returns to the farmer and spouse for their manual and managerial labour, and for the tenant-type assets invested by them in the business (see flow-chart in Annex 2). It is before the deduction of any interest payments. All farms are assumed to be tenanted in order to put them on the same basis when assessing their performance, and so an appropriate rent has been imputed and charged on owner occupied holdings. The principal advantage of NFI as an indicator is that it can be compared across all farms as it takes account of the different tenure, labour supply and finance arrangements of different farms. Machinery depreciation is calculated on current values and breeding livestock stock appreciation is excluded from NFI in accordance with established practice.
NFI is a narrower income measure than the aggregate-level Total Income From Farming ( TIFF) estimate, and as a consequence the annual percentage change in NFI is more volatile, especially at relatively low levels of income.
Other income measures reported include Net Profit, Cash Income and Occupier's Net Income. Part II of the Appendix contains definitions of accounting terms.
Farm Business Income Measure
Following the public consultation on farm income measures in 2007, Scottish Government are currently developing new estimates of Farm Business Income ( FBI), which will better reflect actual incomes of farm businesses than NFI. The consultation documents are available at the following web address:
This publication does not contain data on the new FBI measure. This is to allow a fuller analysis of the components of FBI and to ensure the robustness of the figures, whilst not unduly delaying the publication of the current NFI measure. A separate publication, which will provide a detailed analysis of the new FBI measure by farm type, size and tenure, is planned for July 2009.
1. Due to rounding, sub-totals in the tables may not exactly equal the sum of the component items.
2. Some of the size groups contain only a small number of farms, and the results may not be very representative. Results are not shown for size-groups of fewer than five. Where this is the case the symbol "is used.