SCOTTISH farmers’ borrowing from their banks has continued to increase over the past year, taking it to an eye-watering sector total of £2.2billion.
The results from the 2016 survey of bank advances to Scottish agriculture, issued this week by the Scottish Government, show that outstanding loans to Scottish farms rose by £177million in the year to May 31, 2016. Accounting for inflation, this was an increase of 8% since May 2015.
This was the seventh consecutive annual increase in Scottish farm debt, which now stands at its highest level since records began in 1972. 
However, the trend isn’t confined to Scotland, with figures from the Bank of England showing that, by May 2016, the UK agriculture, hunting and forestry sector had an outstanding debt of £17.7 billion. 
NFU Scotland chief executive Scott Walker said: “The significant increase in farm debt is a reflection of the severe difficulties that many farms and crofts are facing. This is not about Scottish agriculture investing for the future but more about farms and crofts having to take on greater levels of borrowing in order to keep their businesses ticking over.
“This year has seen huge cash flow problems caused by late support payments and lower market prices. But these new debt figures only tell part of the story. NFUS believes that many farms and crofts have been helped out this year through extended credit from their suppliers and this won’t be shown up in today’s debt figures,” he warned.
“It is vital that Scottish Government gets the delivery of 2016 direct payments correct. They also need to look very carefully at all the costly burdens they place on farmers and crofters. What these debt figures tell us is that farmers and crofters need some relief from the costs burdens they face and the last thing they can cope with is anything else that increases the cost of running a farm or a croft.”
Alistair Dickson, restructuring partner at accountants RSM, commented: “These latest figures are alarming. Farmers are generally known to be asset rich and cash poor however this increasing level of debt will be impacting on the asset rich perception. 
“Changes are afoot in respect of Brexit, but subsidies will continue to be needed. Like businesses in other sectors, unless the farmers get back to balancing their income and expenditure, there comes a point when the debt burden is too much and the farm will fail. The secured lenders may be repaid through the disposal of valuable land but many farmers are not in this situation and could be one winter away from failure,” he warned.