Credit Crunch and Farming Input Costs

SCOTLAND, UK - Initial responses to the NFU Scotland survey Credit Crunch and Input Costs – The Impact on You have highlighted uncertain times ahead on Scottish farms.
calendar icon 31 October 2008
clock icon 2 minute read

More than 120 farm businesses have responded to the survey in the first five days since its launch. Of key concern is the fact that more that three quarters of respondents plan to maintain or reduce production on their farms with only five percent of businesses planning to increase output.

Given the alarming decline in numbers of livestock being kept on Scottish farms and the likely reduction in cereal area planted for the 2009 harvest, the production of food on Scottish farms, and Scottish Government ambitions for a Scottish Food and Drink strategy, are under threat.

Discussing the initial survey responses at NFU Scotland’s council meeting in Perth yesterday (30th October), NFU President Jim McLaren said:

“This survey has given us and the rest of the industry an excellent snapshot of the decisions being taken by a wide range of Scottish farm businesses and their intentions for the next twelve months.

“The picture painted on the future of Scottish agricultural output is concerning. The vast majority of respondents are experienced producers who have been running their businesses for more than five years. However, when it comes to looking to the future, less than five percent are actually planning to increase production. With 13 percent undecided, that left 78 percent of respondents prepared to maintain existing output or decrease production in the future.

“When you sit the responses to our survey against the final figures for the Scottish Government’s June agricultural census, then it is going to take a Herculean effort by the Scottish Government and industry to halt the decline in the amount of food being produced on our farms. In particular, failure to address the significant and ongoing reduction in Scotland’s livestock base runs the risk that the volume of home produced meat, milk, eggs and cereals needed to underpin the government’s own ambitious strategy for Scotland’s Food and Drink will simply not be there.

“The major driver behind the uncertainty on Scottish farms has to be the level of costs. The survey has highlighted an increase in fertiliser prices in the last 12 months of between 60 and 150 percent with red diesel increasing by an average of 50 percent in the same period.

“Securing credit will also be seen as a factor in future decisions. To date, very few of respondents had been asked to reduce their overdraft, very few had been refused an overdraft extension but interest rates on existing loans had increased by between 0.5 and 4.0 percent. The message appears loud and clear that agriculture continues to be a low risk sector for our major banks and that farming should remain a beneficiary of responsible lending.”

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