By Ewan Pate, farming editor

SCOTTISH FARMING has a short-term crisis but long-term hope, according to NFUS president Jim McLaren.

He was speaking yesterday morning to the annual farm and estate conference of the Institute of Chartered Accountants at Dunkeld.

The short-term crisis he described was not foot-and-mouth, because the news of the new outbreak had not yet emerged.

He was speaking about the problems caused in the livestock sector by rapidly rising cereal prices. In Mr McLaren’s view the crisis is short-term because he feels red and white meat prices will inevitably have to rise as global markets readjust but his fears are for the short term.

“There is currently a hierarchy of catastrophe caused by feed prices with egg producers at the top,” he said.

“There is only a couple of days between feeding the hen and the egg appearing on the shelf so the effect is almost immediate. Pigs and chicken are not far behind but lamb and beef producers are also losing money.

“One pig farmer phoned me on Tuesday to say he had just loaded 200 finished pigs and would lose £3000 on them and had another load ready for later in the week.”

Warning of the impact on consumers he said, “There is the risk of local and global food shortages.

“Take milk for example—there is no tap to turn on to solve the present shortage. It needs a whole breeding cycle to build up numbers again. The same is going to happen with meat and poultry and consumers will be relying on supplies that are simply not there.”

Keith Hopkins, of EQ accountants in Forfar, and chairman of the conference, told the gathering of top agricultural accountants and lawyers that it was vitally important for professionals to understand the current situation.

“Rising cereal prices have obviously had a terrible knock-on effect but of course for other clients in the arable sector with cereals, potatoes and soft fruit there would be profits this year and it would be important for these farmers to take advice sooner rather than later.

“There are other issues such as succession and the higher capital values of farmland and particularly development land which have to be considered.”

Bill Pagan, tax specialist with Pagan Osborne in Cupar, looked back to a simpler time when all tax legislation emanated from Westminster. There are now new layers of government including the EU.

“With 27 member states, one can hardly expect the agricultural commissioner to take heed of the tax rules in each country, so when something like set-aside is introduced no thought is given as to whether or not those who set aside their land are trading,” he said.

“With Single Farm Payment similarly there is no thought of the tax consequences—whether those in receipt of SFP are trading and whether its value is a business asset.”

Mr Pagan was also critical of new legislation from Holyrood with little apparent consideration being given to taxation issues, apparently on the grounds that tax was a reserved issue for Westminster.

He quoted five examples from the 2003 agricultural holdings Act where confusion had subsequently arisen.

“There have been discussions about Scottish fiscal autonomy. Leaving aside political factors, I find it hard to gauge the impact for our farming and landowning clients.

“One benefit in theory would be that Holyrood had to take account of tax when legislating generally, but in the ultimate there would no longer be a guarantee of the reliefs of the kind to which we have become accustomed,” he said.