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Bank of Scotland agricultural survey is useful tool for facing up to the challenging times ahead

Bank of Scotland agricultural survey is useful tool for facing up to the challenging times ahead

Robert Burns left a legacy of powerful and enduring thoughts, many of which have been articulated over the past three weeks.

The publication of the annual Bank of Scotland agricultural survey, the 19th, brings to mind one of the Bard’s best : “O wad some Pow’r the giftie gie us, to see oursels as ithers see us!”

And that is precisely what the survey has done and done well in the past: to offer a friendly but thoughtful critique of the state of farming in Scotland, looking across the spectrum and posing a range of pertinent questions.

A survey of 2,000 farmers elicited 411 responses, giving a response rate of 20%.

The survey, led by chief economist Professor Donald MacRae, revealed that the year’s result showed 86% of farming businesses were profitable, based on the 2013 harvest.

However, expectations of profitability in the current financial year have fallen to a 12-year low of 51%. Confidence in the industry is seeping away.

But away from the headline picture the survey digs deeper into some of the issues facing the industry, not least revealing a negative view about the impact of CAP reforms.

In this respect it will be interesting to assess the impact of new Farm Commissioner Phil Hogan, who rejects the view that the milk sector is in crisis, and is arguing for an unspecified simplification of EU rules and regulations.

The former would bring reassurance to dairy farmers, if that is the case; the latter would delight the entire industry.

The fact that 73% of farmers have negative feelings about the CAP underlines the scale of Mr Hogan’s task.

Farmers are currently struggling with the scope and intensity of the new rules, and they will rightly turn to the Scottish Government for help. It is essential that there is sufficient advice and assistance for completion of the applications to reduce the risk of poor or inadequate returns.

Rural Affairs Secretary Richard Lochhead has already conceded that the regime is too complex.

With £4 billion of farm payments at stake, it is essential that clarity is obtained.

But, equally, farmers have to give urgent consideration to performance particularly in relation to the cost of production. Cost saving is a critical factor for producers, either through reducing business expenditure or ensuring that output matches resources more precisely. Focusing on improved performance is vital for the industry.

One of the significant aspects of the survey is the indication that investment in wind power is falling, with 7% of respondents planning to invest in the coming year compared to 11% in 2014.

Respondents say investment in both solar and wood-fuel heating are producing income more in line with farmers’ expectations than investment in wind power.

Another key issue which emerged and coincided with the publication of the BoS survey was the findings of the Agricultural Holdings Review Group, which quickly underlined that the fundamental differences between landowners, tenant farmers and NFU Scotland are very much alive.

The work of the review group was never intended to please everybody, and evidently it has not. The key question now must be whether there is enough common ground to make meaningful progress.

The survey reflected support for the concept of the “independent arbitration system”, while the vexed issue of the absolute right to buy for all tenants was rejected by 70% of respondents, including owner occupiers and tenants.

A majority of tenants were in favour of an absolute right to buy for 1991 Act tenants only. Some 74% expected no change in their rent this year.

The performance of the Scottish Government also came under the spotlight and, for the first time in eight years, this was viewed negatively.

Some 29% of farmers rated official performance good or very good, while 34% rated it as poor or very poor.

There were also less than positive vibes on new entrants, and landlord tenant relations.

But positive returns came in for the handling of SFP and generating renewable energy.

The annual survey has etched out a respected place in the literature of Scottish farming. It has proved to be a sound barometer and a thoughtful evidence-based guide to future patterns. This year is no exception.

The industry is entering challenging times but has the natural resilience to adapt, and the survey is a useful piece of research to refer to in the months ahead.