Scottish Government

Survey Results - analysis of responses to individual questions

1 Output value

How do you see your output by value changing in 2004 crop year compared to 2003 crop year?

Table 1.1 - Change in output value - percentage of responses by output category

Chart 1.1 - Change in output value - percentage of responses by output category

11) The most popular response in half of the sectors is no change. Overall, more farmers expect a decrease (rather than an increase) in output value. The exception is the cattle sector, within which more farmers expect an increase in output value. This is in contrast to the cereal sector where only 4% of farmers expect an increase in output value.

Table 1.2 - Change in output value - responses with values by output category

12) From those respondents who estimated a percentage change, the median increases and decreases across the sectors range from 7.5 -15%.

13) Cereals

Reasons for a decrease in cereals output value included lower yields, outputs and prices. Adverse weather and unfavourable exchange rates were also mentioned. One grower indicated a decrease of 100% due to a decision to cease production of barley. The grounds for expected increases include higher yields and volumes.

14) Other Crops

The grower with the 50% decrease attributed the fall to an unfavourable market for potatoes. Reasons provided for an expected increase include higher yields and favourable forward contracts.

15) Cattle

Generally the increase in cattle output was attributed to a better market (increased stock prices). Some of the reasons for an expected decrease include reduced stock, more cattle sold to store, replacement cattle too expensive, price reduction expected and reduction in subsidy lowering the age at which cattle sold and thereby reducing their value.

16) Sheep

Generally an increase in sheep output was attributed to a better market (increased prices). Reasons for an expected decrease include reduced prices and volumes and an unfavourable exchange rate leading to lower lamb exports.

17) Milk

The reasons for an increase in milk output value were more milk quota, an increase in dairy herd and an increased yield. A decrease was expected because of lower prices and a general downward trend in this sector.

2 Farm income

How do you see your farm income (total revenue) changing in 2004 crop year compared to 2003 crop year?

Table 2.1 - Farm Income - percentage of responses by farm type

Chart 2.1 - Farm Income - percentage of responses by farm type

18) Overall, more respondents expect a decrease in total revenue (37%), than expect an increase (28%). The exception is the LFA Cattle sector (41% increase, 31% decrease), along with the LFA Sheep category (where an equal proportion of positive and negative expectations exist) and the lowland Cattle and Sheep sector (notwithstanding the small sample size). From those who estimated a percentage change, the median and most popular response was a 0-5% change.

19) A selection of reasons given for an expected increase are a better livestock market, higher prices, increased milk quota, higher volumes and an increased amount of contracting. Common reasons provided for an expected decrease include lower volumes and prices (particularly cereals and milk) and a long wait for the SFP which, when received, will be lower than current subsidies and subject to modulation.

3 Overall input cost

How do you see your overall input cost in 2004 crop year compared to 2003 crop year?

Chart 3.1 - Input costs - percentage of responses

20) 5% of the respondents to this question indicated they expected no change and 8% were unsure (however the majority of these provided details of increases and no decreases in their answers to question 4, below).

21) Of those remaining, all bar one of the respondents who completed this question expected their input costs to rise. The estimated percentage increases were within the range 0% to 15%. The vast majority of respondents indicated an expected increase between zero and 10%. The respondents generally expected the normal rate of price increases to apply across the board.

4 Specific input costs

What specific input costs do you see changing the most in 2004 crop year compared to 2003 crop year?

Chart 4.1 - Specific input cost changes identified

22) The general belief of the respondents was that the fuel increases would in turn affect other input costs including fertilisers, spray/chemicals, energy and contract work. Other common opinions were that the costs of store livestock and drying of crops would rise. Concern was raised by several respondents regarding the rising interest rate.

23) Breeding Livestock

• 12 responses, all expected an increase.
• Three of the four who estimated a percentage change selected 5%.

24) Store Livestock

• 17 responses, all expecting an increase.
• 9 estimated percentage increases ranging from 5% to 15.

25) Seeds

• 15 responses, all expecting an increase.
• There were 10 estimated percentage increases ranging from 1% to 10%.
• The majority (6) of which estimated 5%.

26) Borrowings

• 24 responses., all bar one expecting an increase.
• The median increase of those who estimated a percentage was 3.5%.
• The only respondent who selected a decrease estimated it at 50%.

27) Rent

• Only 2 responses, both expected an increase.

28) Fertiliser and Lime

• 180 responses, all expected an increase.
• The majority of estimated percentage changes were in the range 5-10%.
• The range of percentage change estimates is 0-30%.
• Higher proportions of farmers within the Cereals, LFA Cattle and Lowground Cattle & Sheep farm types are expecting increases.

29) Crop Protection

• 32 responses, all expecting an increase.
• The highest estimated increase was 10%.
• The majority of responses were in the range 0-5%.

30) Labour

• 21 responses, all expecting an increase.
• The highest and most popular response of those providing an estimated change was 5%.

31) Contract Work

• 22 responses, all expecting an increase.
• There were 10 estimated percentage increases ranging from 2% to 25%.

32) Feed

• 58 responses.
• All bar two expecting an increase.
• The estimated percentage increases ranged from 5-20%, the majority stating 10%.

33) Machinery Repairs

• 35 responses, all expecting an increase.
• The majority of expected increases are in the range 5-10%.

34) Vet and Medical

• 24 responses.
• All bar one expect an increase.
• One estimated a decrease of 10%.
• The estimated increases ranged from 2-10%.
• The majority of increases are in the range 5-10%.

35) Fuel and Oil

• 173 responses, all expecting an increase.
• The estimated increases range from 6-50%.
• The majority of estimated increases are in the range 5-15%.

36) Other

• 18 responses, all expecting an increase.
• Some of the other inputs mentioned include haulage, insurance, spares, water, rates and electricity.
• The estimated increases ranged from 2-20%.

5 Non-agricultural diversified activities

Do you (Farmer and/or Spouse) intend to undertake any new non-agricultural diversified activity in the 2004 crop year?

37) Only a small proportion of the 227 respondents who answered this question indicated that they intended to pursue any new non-agricultural activities.

Table 5.1 - Non-agricultural diversified activities

38) Some of the new activities include a building services business, windfarms, tourism/property development and RSS wildflowers & hedging.

39) The FAS (from which the respondents were obtained) does not provide details of existing non-agricultural activities. It does however include a non-farm income variable. Although by no means directly comparable to the amount of non-agricultural activity, the non-farm income variable gives an indication of the amount of non-agricultural activity that may be currently undertaken. Non-farm income could be expected to be greater than the income gained from non-agricultural activity as it will include, for example, income paid to the household for work unrelated to the farm and investment income.

40) Of the 228 respondents to this survey, 102 have some non-farm income, the average of which is around £11,000. Chart 5.1 however displays a positively skewed distribution. The non-farm income amounts range from under £10 to over £200,000. The presence of a small number of extremely large non-farm income amounts has a large affect on the average. The median amount of non-farm income accruing to these 102 farms is around £4,000.

Chart 5.2 - Non-farm income by income group¹

6 Hired and family labour

What are your plans in relation to hired and family labour in 2004 crop year compared to 2003 crop year?

Chart 6.1 - Hired and Family Labour - percentage of responses

41) The majority of respondents (76%, n=226) indicated that they expected no change in hired and family labour.

• 19% of respondents were unsure of their intentions.
• Only a few respondents indicated a change (generally only one or two within each farm type), and of these more indicated a fall (3%) than a rise (2%).
• Some of the responses were retirement, son helping out, casual labour changes, reduced work and more contracting.

7 2005 Crop year plans

Looking forward to the 2005 crop year what are your plans compared to 2004 crop year in relation to the following?

Chart 7.1 - Plans for 2005 crop year - percentage of responses

42) The majority (59%) of the 227 respondents to this question expect no change, 19% were undecided, 11% predicted a decrease and 6% an increase. Of the remainder, 5 respondents (2%) expected to consider retirement, 6 (3%) indicated a mixture of increases and decreases in different sectors, 1 stated they would develop property and 1 expected to rent out the farm and begin more contracting work.

43) In all categories, many of the respondents commented that they would be waiting to find out more about the single farm payment before making any plans for the future.

Responses by sector

44) Barley (ha)

• There were 78 responses in this category.
• 83% planned no changes and 12% planned a decrease and 5% an increase.
• The range of expected decrease was 5-40%, and the percentage increases ranged from 5-100%.
• The 40% decrease was a result of the farmer deciding to under sow 40% of the farm in grass with the intention of renting out the grazing.
• The 100% increase is a farmer re-commencing growing after a break.
• The main reason given for a decrease in barley production was the low price, and an associated move towards concentrating more on livestock.
• Increased area was mentioned as a reason for increased barley production.

45) Wheat (ha)

• There were 34 responses in this category.
• 30 planned no changes, 2 planned to decrease and 2 to increase.
• Reasons given for planning to decrease were expansion in livestock/dairy operation and a reduced cereal production due to low price.
• An increase in cropped area was given as an explanation for the planned increases.

46) Oats (ha)

• There were 8 responses in this section.
• 7 indicated no change and 1 an increase.

47) Dairy Herd (head)

• There were 31 responses in this category.
• 23 planned no changes, 3 an increase, 4 a decrease and 1 was unsure.
• Planned decreases were attributed to reduced milk price, cattle numbers and costs.
• The increases are credited to a shift in production away from cereals.
• Those selecting no change frequently commented they would monitor the milk price.

48) Suckler Herd (head)

• There were 87 responses in this category.
• 71% planned no changes, 15% to decrease, 11% to increase and 2% were unsure.
• Estimated percentage decreases ranged from 5-50% and increases from 2-50%.
• The reasons given for an expected decrease included falling numbers and reduced subsidies. The respondent estimating a 50% reduction indicated a cessation of grazing and seasonal lets.
• The most common explanation for a planned increase was an increase in grazing land.
• The respondent who intends to decrease the suckler herd by 30% is the same respondent who intends to undertake the building services business.

49) Breeding Ewes (head)

• There were 78 responses in this category.
• 73% planned no changes, 19% a decrease and 8% an increase.
• Estimated percentage decreases ranged from 5-50% and increases from 2-10%.
• The reasons given for an expected decrease included reduced numbers from a previous overstocked position, retrial, reduction in subsidies and a move towards dairy production. Two respondents estimated a 50% reduction; one indicated a cessation of grazing and seasonal lets and the other a shift towards oilseed rape production.
• Some of the reasons given for an expected increase are a shift from cereal to sheep and continued restocking post FMD.

8 Plans for next 5 years

What are your plans in the following areas for the next 5 years (2006-2010)?

Chart 8.1 - Plans for the years 2006-2010 - percentage of responses

50) There were 225 responses to this question. 46% of respondents were unsure, 28% expected no change, 10% expressed some thoughts on retiral, 9% anticipated a decrease in production, 6% an increase and 1% will consider switching production to biofuel crops.

51) Many respondents mentioned that they couldn't make any plans until they are given more information on the SFP. Others stated that they just hadn't thought that far ahead. Some mentioned that they would be retired by then. Other comments made included: option to purchase farm, take subsidy-get rid of worker-increase land to go into set-aside, perhaps less finished beef and less cereals, son will be in charge and may reduce area if land can be sold for building.

52) One respondent wanted to emphasise how difficult it is to plan for the future when details of future EC legislation take so long to filter back to the farmers eg period of time between SFP being mentioned and actually receiving notification of payment and implementation. Feels it is necessary for the producers to be consulted at the outset and kept informed. He went to many meetings over the winter/spring trying to understand the finer points of the rules and regulations of the new scheme but `experts' could not offer any definitive advice. Until scheme is implemented and he sees how the farm will be affected - no point in changing anything.

8 Plans for next 5 years

Responses by sector

53) Barley (ha)

• There were 23 responses in this category.
• 18 planned no changes, 4 to decrease and 1 was unsure.
• The planned decreases range from 10-100%.
• Of the 4 planning to decrease, the respondent who gave an estimated decrease of 100% intends to undertake a building services business; other reasons given for a decrease are a move into more dairy cows and removal of poorest areas of production.
• Some of those who selected no change did however suggest some potential future changes including selling land for buildings, a shift to contract farming and a move to spring cropping.

54) Wheat (ha)

• There were 19 responses in this category.
• 17 planned no changes, 1 to decrease and 1 to increase.
• The grower planning to increase gave an estimated percentage change of 10%; again this was the respondent who intends to run a building services business.
• The grower planning to decrease did not give a percentage but indicated they intend to double their dairy herd.

55) Oats (ha)

• There were 6 responses here.
• 5 planned no change and 1 a decrease of 100%.
• The decrease was expected by the same respondent who intends to diversify into the building services business.

56) Dairy Herd (head)

• There were 19 responses in this category.
• 12 planned no changes, 5 an increase and 2 a decrease.
• Both respondents who forecast a decrease estimated it at 100%.
• They both expressed thoughts on retrial and were pessimistic regarding the future of dairying in Scotland.
• The comments from those predicting an increase include an increase in value from the same farm size, increase in cow numbers, beef bull operation to cease and try to stay in business.

57) Suckler Herd (head)

• There were 49 responses in this category.
• 34 (69%) planned no changes, 8 (16%) to decrease and 7 (14%) to increase.
• The forecast decreases range from 10-100% and increases from 5-100%.
• Reasons provided for an expected decrease include, retiral (this from the respondent indicating 100% decrease), reduce numbers for an easier life, to reduce costs and beef bull operation to cease.
• The bases for likely increases include, more land (from the respondent stating 100% increase), commence an operation if price rises, to compensate for reduction in sheep numbers.
• All bar one of those forecasting an increase also predicted an increase in the short term.

58) Breeding Ewes (head)

• There were 53 responses in this category.
• 35(66%) planned no changes, 10(19%) a decrease and 8(15%) an increase.
• The forecast decreases ranged from 5-100% and increases from 10-100%.
• Reasons provided for an expected decreases included, retiral (this from the respondent indicating 100% decrease), reduced stock for environmental reasons, increase in dairying and associated cessation of sheep operation (100% decrease response).
• The bases for likely increases included, more land (from the respondent stating 100% increase), increased numbers however depends on continued control of prices by supermarkets, increased value from same sized farm.

59) Other

• There were 5 responses in this section.
• All indicated no changes.

9 Additional investment

Do you plan additional investment in your business in the near future?

Chart 9.1 - Additional Investment - percentage of responses

60) There were 227 responses to this question.

• 131 (57%) respondents answered no, 40 (18%) answered yes and 56 (25%) were unsure.
• More respondents from larger farms (25%) planned additional investment, than small (13%) or medium (14%) farm types (where size is measured in ESUs).
• More owner occupied farming respondents planned additional investment (15%) than those from tenanted farms (11%); however a higher proportion of respondents (27%) from farms of mixed tenure planned extra investment.

Chart 9.2 - Additional Investment by farm type - percentage of responses

61) An above average proportion of respondents from the Dairy (19%), LFA Cattle & Sheep (28%) and Lowground Cattle & Sheep (50%, however small sample of 4) farm types plan more investment.

• Common areas for additional investment are sheds, buildings & parlours, drainage, equipment, silage pits, diversification/tourism, fencing, more livestock and more land.
• 21 respondents estimated an amount of additional investment, the average value of which was £35,000.
• Assuming this average can be applied to those respondents who indicated additional investment, but did not provide a monetary amount, this is equivalent to an average additional investment (over all the respondents) of around £6,000.

10 Farming decisions

Do you expect the Single Farm Payment to alter your farming decisions?

Chart 10.1 - SFP and farming decisions - percentage of responses

62) 87 respondents (38%) were unsure, 65 (29%) answered yes and 75 (33%) no.

• An above average proportion of respondents from medium (35%) and larger farms (37%) answered yes.
• A higher proportion of respondents from smaller farms (42%) answered no.

Chart 10.2 - SFP and farming decisions by farm type - percentage of responses

63) A greater proportion of respondents from LFA Specialist sheep (42%) and LFA Cattle & Sheep (45%) farms answered yes.

• A larger proportion of respondents from Cereal (48%) and Other Crops (50%) farms answered no. This may be a function of the already decoupled AAPS payment.
• Some explanations for negative answers include, wait and see, more flexibility and maybe in the future.
• Reasons for being unsure included, depends on market, wait and see/too early to say and need more information before deciding.
• Common reasons given by those answering yes are, adapt to less subsidy, reduce costs and labour, need more information/too early to say, more flexibility to respond to market, changes in items produced, increased environmental work/move away from production and will let more land and keep SFP.

11 Is the SFP Farm Income?

Do you regard the SFP as: Farm Income/Non-Farm Income/Don't Know?

Chart 11.1 - Is the SFP Farm Income? - percentage of responses

64) The majority (205 or 90%) of the 227 respondents who answered this question regard SFP as Farm Income, 6 (3%) regard it as Non-Farm Income and 16 (7%) were unsure.

• Of the 22 respondents either not viewing SFP as farm income or unsure, only 3 were from a tenanted farm.
• All respondents farming cereals and lowground cattle & sheep regard the SFP as farm income.
• A higher than average proportion of respondents from the dairy (17%) and general cropping (21%) sectors either do not regard the SFP as farm income or are unsure.
• The small number of respondents regarding the SFP as non-farm income provided the following explanations; farms must stand on feet without subsidy, must not rely on SFP to subsidise other activities, reduce borrowing and all income should come from sales.
• Those respondents who were unsure mentioned only a couple of reasons; must make a profit without subsidy, know the SFP should be non farm income but cannot see how to survive without it.
• A selection of the more popular explanations given by those regarding SFP as farm income are, the SFP replaces other subsidies, how else to regard it?, cannot survive without subsidies, will subsidise not profitable areas, it is tied to the farm and paid into the farm business account, of course it is!

Neil Grant
SEERAD- ASD:2
June 2005

Footnote

1 <10,000 indicates a non-farm of income of between £5,000 and £10,000