Scottish Government report highest farm incomes since 2013

Average farm income, a measure of farm profit after costs, is estimated to be £69,100 in 2022-23. This is an increase of £14,600 on the previous year.

Income from support payments, agricultural, diversified and contracting activity, all contribute to average farm income.

The breakdown of the report findings (Image: Web)

The statistical findings show for the first time since 2012-13, when these records began, agricultural activity alone is profitable for the average farm. This was mostly driven by increases in cereals, milk, and livestock output, reflecting strong wholesale prices.

General cropping farms saw the strongest growth with average incomes rising by 83% to £167,100, its highest value. Income for average dairy (£248,700), cereal (£99,700), and mixed (£85,700) farms were also at record values in 2022-23.

However, income fell for livestock farms on average. With livestock farms making up 60% of commercial farms, they continue to make losses on their agricultural activity on average, with rising costs exceeded smaller increases in output.

Only Less Favoured Areas (LFA) cattle farms saw income grow compared with the previous year. Livestock farms continue to be more reliant on support payments to make a profit.

Sheep farms in less favoured areas were the least likely to make a profit without support and just 8% of these farms would have made a profit in 2022-23 if support payments were excluded.

In 2022-23 total average output increased by 19% to £280,300 and farms on average received £46,300 in support and made £5,000 from diversification, like renting out farm buildings.

Total input costs increased 12% to £262,400 for the average farm and increasing prices of agricultural inputs such as feed, fuel and fertilisers were seen for a second year.

The results are calculated from the 2022-23 Farm Business Survey, an annual survey of approximately 400 commercial farms with economic activity of at least approximately £20,000. Farms which do not receive support payments, such as pigs, poultry and horticulture, are not included in the survey.

Commenting on the figures, NFU Scotland’s livestock policy manager, Lisa Hislop said: “Livestock farmers and crofters are pushed to the edge to become as efficient as possible. This is demonstrated in the income figures as despite a shrinking national beef herd, the industry has grown output by 29%, yet continued to have limited profitability.

“The Farm Business Survey underlines our key priority that future policy must continue to deliver both coupled and disadvantaged support beyond 2026 as outlined in the Agricultural Reform Route Map.

“We continue to lobby for the finer detail of the Scottish Suckler Beef Support Scheme reform and are engaged in dialogue with Scottish Government on the replacement for the Less Favoured Areas Support Scheme.”

Agritourism expert Caroline Millar warned that farms often need multiple family members to undertake the labour provision that is required to run the business, alongside any non family employees.

She said: “Quite often a business can be making a profit but there is only enough profit to provide an income for one person or one generation, but the farm needs four labour units to function.

“It is not enough just to make a profit and no more, a business needs to make enough to pay family members running it and working in it a salary which is comparable to what they would be receiving off-farm if they were working for another business.”

She added: “There is a dangerous sentiment just now around doing more than farming with your assets and growing your business to spread risk and give multiple family members a decent salary is seen as anti-farming and “diversification” is a negative thing.

“But if you see a market opportunity that is not core farming but won’t impact the farming business negatively and can make your business more sustainable there should be no issue in viewing yourself as entrepreneurial and taking advantage of making use of your assets.”