Scottish farm business income: annual estimates 2016-2017

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 outputs and inputs which contribute to the differences in FBI. The overall average output to input ratio in 2016-17 was 1.16, meaning that for every £1 spent on inputs, Scottish farm businesses were generating £1.16 worth of outputs. The average for farms in the upper quartile (relatively high performers) was around £1.38, while for those in the lower quartile (relatively low performers) it was around £0.91; an average loss of £0.09 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 2016-17

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 cattle (LFA) farms, £1.65, was the highest of all farm types but the FBI upper quartile of specialist cattle (LFA) farms, £101,000, was only the third highest of all farm types. This was due to the relatively low absolute value of outputs and inputs compared to the other farm types.