AVERAGE farm business income has decreased 36% to £25,800 from the high estimate of £40,300 in the previous year, according to the Scottish Farm Business Survey, published this week.

Figures are based on the latest published statistics for the period 2019-20, a period where some farm activity may have been impacted by the coronavirus pandemic.

Many farm types that performed well in the previous year experienced a drop in income in 2019-20. Figures quoted in this report relate to changes in real terms – taking account of inflation. Farms which do not receive support payments - pigs, poultry and horticulture – are not included in the survey.

Farms on average made a loss from agricultural activity of £25,500, over twice the loss made in the previous year. Agricultural output decreased by 5% on average. Input costs also increased by 2% overall. Losses to the business were offset mainly by support payments. Direct payments to farmers continued to have the largest impact on overall farm income. Income from agrienvironment schemes decreased 22% compared to 2018-19.

The average farm net worth has decreased from around £1.5 million in 2014-15 to £1.3 million in 2019-20 in real terms. The amount of assets held by farms has decreased slightly, while the amount of debt has also risen slightly. Neither shift has greatly changed the average debt ratio, which increased one percentage point compared to the previous year. As the farm debt ratio has only increased slightly, the statistics do not indicate immediate concerns with rising levels of debt.

Some farms have high business incomes but others are making large losses. In dairy farming, low performing farms are losing on average £42,400 while the high performers have an average income around £133,700.

General cropping farms had the highest average income by farm type this year. Their average income was estimated at £69,100. Dairy farms also continued to have a high average income. Both farm types experienced a decrease in average income in 2019-20. These farms are sensitive to market prices and experience fluctuating performance as a result.

Mid-income farms in general performed worse this year than last year. The average income of mixed farms decreased 77% to £8100 in 2019-20. Cereal farms have performed well over the last three years but experienced an average decrease in income to around £41,000. A 33% decrease from the high of around £61,100 the previous year. Some mid-income farm types still rely on support payments to make a profit. Cereal farms had a positive average income of around £5,700 without support. Combined cattle and sheep LFA farms received the highest average support at £56,900. Without this, these farms were making a loss of £33,500 on average. Lowland cattle and sheep farms are also categorised as mid-income and experienced an increase in income in 2019-20.