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Surge in Agricultural Profits
Scotland’s agricultural sector is experiencing a significant upturn with average farm incomes reaching an unprecedented £69,100 for 2022-23. This remarkable increase of £14,600 from the previous year is largely attributed to the robust performance of cereals, milk, and livestock, which have benefited from strong wholesale prices.
The Cost of Farming on the Rise
Despite the positive income figures, farmers are facing a 12 percent hike in total input costs, now averaging £262,400 per farm. This increase, observed for the second consecutive year, is driven by the rising prices of essentials such as feed, fuel, and fertilisers, impacting the profitability margins of farm businesses.
General Cropping Leads the Way
General cropping farms are at the forefront of growth, with incomes soaring by 83% to reach £167,100. Dairy, cereal, and mixed farms also reported record income levels, with dairy farms topping the chart at £248,700. However, the news isn’t as positive for livestock farms, which represent 60% of commercial farms and have seen a decline in income, continuing to incur losses on average.
Livestock Farms Face Challenges
Livestock farms, particularly those in Less Favoured Areas (LFA), are struggling to keep pace with rising costs, with only LFA cattle farms reporting an income increase from the previous year. The sector’s reliance on support payments is highlighted by the fact that only 8% of sheep farms in less favoured areas would remain profitable without this financial assistance.
Support Payments and Diversification Key to Farming Success
The importance of support payments is underscored in the farming community, with the average farm receiving £46,300 in aid. Additionally, diversification strategies, such as renting out farm buildings, have contributed an average of £5,000 to farm incomes. These figures are part of the comprehensive analysis presented in the 2022-23 Farm Business Survey, which covers the financial year and the 2022 cropping season.
Agricultural Activity Alone Turns Profitable
For the first time in nearly a decade, the average Scottish farm has become profitable based solely on agricultural activity. This is a significant milestone, as highlighted by the Chief Statistician, marking a departure from the historical trend of reliance on external support for profitability.
