Input Costs Leave Room For Improvement

31 January 2012
Alyn Smith MEP, Scottish member of the European Parliament's Agriculture Committee, has welcomed the publication today of the annual "Scottish Farm Income Estimates" for 2011, as a timely reminder of some of the opportunities and challenges facing Scottish agriculture, and the vital need to retain direct payment and LFA support from the Common Agricultural Policy.
The report reveals that, while the total income from farming increased by £23 million between 2010 and 2011, and Farm Business Income (FBI) increased significantly for most categories of farm, Scottish farming still faces a real threat thanks to increasing input costs. The cost of feedstuffs rose by 18 per cent, fertilisers and lime by 29 per cent, and fuel and oil by 32 per cent. These rising costs were enough to reduce FBI in the specialist beef LFA and cattle and sheep LFA categories. Furthermore, total income from farming, at £595.7 million, was exceeded by Total Payments and Subsidies, at £634 million, for the fourth successive year, exposing the heavy reliance of Scottish farming on external support in a time of volatile markets.  

Alyn said:

"First off, a round of congratulations is due to Scottish farmers, who increased the value of their output in almost every sector of agriculture - no mean feat when you consider the difficulties faced by producers in an uncertain market with high input costs and facing a squeeze from retailers and processors. This was not just due to higher prices but due to increased throughput as well, which is testament to effective herd management, helped, I am sure, in the case of cattle by the Scottish Beef Calf Scheme, and targeted support to livestock is something we intend to continue after 2013.

"Having said that, it's clear that the difficult inherent economics of Scottish farming, particularly in LFA, makes continued subsidy from the CAP essential, especially at a time when food security is becoming a big global issue: to acquiesce in the exportation of grass-fed nutritious and indigenous food production would be an act of madness. This is a vital national interest, and my position on the Agriculture Committee, and shadow rapporteur for the Rural Development portfolio (which includes LFA) means I will be able to fight for the interests of Scotland's farmers.

"We need a continuation of simple, easy to administer direct payments, and the maintenance of the hugely successful LFA scheme. I'm not sure that the Commission's proposals fulfil these goals, so I'll be working hard to make sure that the reforms reflect our aspirations."