Economic Report on Scottish Agriculture 2011 Edition

Balance Sheet Data

The opening and closing balance sheets for 2009/10 are shown in Tables B6(a) to B6(d) in the Appendix. These show the average results by farm type for owner occupied, tenanted and mixed tenure categories and for all tenures combined. As with the FBI results, balance sheet data will be subject to annual variations due to changes in the FAS sample. A summary of liabilities as a percentage of total assets is shown in Chart B6 below. Based on current methodology, asset valuations may be underestimated. Scottish Government, and survey contractors, have recently updated the methodology for the valuation of assets however, due to the long lead in period to produce results, the new asset valuations will not be reflected until 2010/11 results.

Table B6(a) shows that during 2009/10 the value of total assets for owner-occupied farms increased by 6 per cent from £1,125,578 to £1,192,857, due mainly to an increase in land and buildings (up £69,471). Current Assets, which includes physical working assets such as livestock and crops, fell by £18,966 (9 per cent). Total external liabilities increased by 8 per cent from £106,452 to £115,221. This combined to provide an increase in net worth of 6 per cent from £1,019,126 in 2008/09 to £1,077,635 in 2009/10, with total external liabilities totalling around 10 per cent of total assets.

Net worth (assets minus liabilities) increased across all farm types ranging from increases of 2 per cent for General Cropping to 12 per cent for Specialist Sheep ( LFA). The 2009/10 closing valuations show total external liabilities as a percentage of total assets ranging from 6 per cent for Specialist Sheep ( LFA) farms to 13 per cent for Cattle and Sheep ( LFA) farms and Dairy farms.

Table B6(b) shows that for tenanted farms net worth decreased by 2 per cent from £304,082 in 2008/09 to £299,051 in 2009/10. This was due to a large increase of £11,100 (26 per cent) in external liabilities to £53,900. Without large Land and Building assets, the fall in Current Assets seen on tenanted farms had a greater impact on Total Assets than for owner-occupied farms. Overall, total assets increased by £6,068 (2 per cent) to £352,950. External liabilities as a percentage of total assets averaged at 15 per cent, ranging from 11 per cent for Specialist Sheep ( LFA) to 18 per cent for Cereal farms.

Table B6(c) shows that in 2009/10 there was an overall 4 per cent increase in total assets to £1,087,411 for farms of mixed tenure and a 12 per cent increase in external liabilities to £139,419. This resulted in an average 3 per cent increase in net worth to £947,992. External liabilities as a percentage of total assets averaged at 13 per cent, ranging from 10 per cent for Specialist Beef ( LFA) farms to 18 per cent for Specialist Sheep ( LFA) farms.

Table B6(d) shows combined results across all tenures. For 2009/10, there was a 5 per cent increase in total assets to £978,754 while total external liabilities increased by 11 per cent to £104,151. This resulted in a 5 per cent increase in net worth to £874,603, from £835,341 in 2008/09. The average total external liability represents 11 per cent of average total assets. External liabilities as a percentage of total assets ranged from 9 per cent for Cereal farms to 15 per cent for Lowground Cattle and Sheep farms.

Chart B6 summarises liabilities as a percentage of total assets across farm type and tenure. It can be seen that, in general, owner occupied farms have a lower ratio of liabilities to assets than tenanted farms due to the fact that owner occupied farms have higher assets, which outweigh the higher liabilities.

Chart B6: Total external liabilities as a percentage of total assets by farm type & tenure, 2009/10