Scottish farm business income: annual estimates 2015-2016

4. Productivity (Output/ Input Ratio)

( Table 2)

The output to input ratio can be viewed as a measure of productivity, that is, how much output can be produced per unit of input. Figure 9 shows the differences in the relationship between revenues from outputs and spending on inputs which contribute to the differences in FBI. The overall average output to input ratio in 2015-16 was 1.08, meaning that for every £1 spent on inputs, Scottish farm businesses were generating £1.08 worth of outputs. The average for farms in the upper quartile (relatively high performers) was around £1.31, while for those in the lower quartile (relatively low performers) it was around £0.83; an average loss of £0.17 for every £1 spent.

Figure 9: Average output:input ratio by farm type and quartile (lowest 25 per cent, average and upper 25 per cent) for 2015-16

It should be noted, however, that a higher output to input ratio does not necessarily lead to a higher FBI when comparing across farm types. FBI depends on both the ratio between and the absolute levels of outputs and inputs. For example, the upper quartile output:input ratio of specialist sheep ( LFA) farms, £1.51, was the highest of all farm types but the FBI upper quartile of specialist sheep ( LFA) farms, £42,700, was the third lowest of all farm types. This was due to the relatively low absolute value of outputs and inputs.