The president of the National Farmers’ Union of Scotland (NFUS) has said that the recent farm income figures are a “mixed bag”.

The Scottish chief statistician released figures on 2022/23 farm incomes yesterday (Thursday, March 21).

These show that average farm income increased to its highest level since 2012/13, after adjusting for inflation.

The average farm income now sits at £69,100, an increase of £14,600 on the previous year.

NFUS president Martin Kennedy said, for Scotland’s farmers and crofters, the figures are a mixed bag that illustrate the “severe volatility” that they routinely face.

This, he said, means it is a “constant challenge for long term business planning and investment”.

“Farmers and crofters have not only faced significant volatility in output prices in the past two or three years but have endured extreme volatility in input prices for fertiliser, feed, fuel and energy in the same time period,” he said.

“Whilst good to see some sectors performed strongly during 2022, their economic performance has had a complete reversal over the past year, whereas the outlook for other sectors has improved.

“All of this underlines the need for certainty in respect of future policy and support, and arguably even more importantly, better and more consistent returns from the market to avoid such volatility.

“Farmers must be able to make a reasonable profit from their core function of farming and producing food otherwise there will not be an industry in the future and food security will be the casualty.”

Farm income

The farm income figures revealed that, for the first time since 2012/13, 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.

Livestock farms had their average income fall and continue to make losses on average agricultural activity.

Rising costs exceeded smaller increases in output, and 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, and sheep farms in less favoured areas were the least likely to make a profit without support.

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. Increasing prices of agricultural inputs such as feed, fuel and fertilisers were seen for a second year.

Livestock sector

Commenting specifically on the livestock sector, NFUS’ livestock policy manager, Lisa Hislop said:

“NFU Scotland’s recent intentions survey, which secured more than 500 responses at the end of 2023, underlined the livestock producer’s ongoing reliance on agricultural support and the lack of sufficient market returns with 84% viewing future policy as the biggest concern, followed by profitably (78%).

“Despite this, confidence levels remained relatively high with a larger proportion of livestock farmers and crofters looking to increase or maintain production compared to the previous year’s survey.

“This could be a product of strong market returns in the back end of 2023, and which have gone from strength to strength. However, we cannot overlook that the strength in the beef market is also the product of a reduction in the national herd size due to years of instability.”

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,” she said.

“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.”