Economic Report on Scottish Agriculture 2011 Edition
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Farm Corporate Income and Farm Investment Income
In order to produce income measures that provide a measure of the return on capital, it was agreed in the public consultation on farm incomes, that two new measures called Farm Corporate Income and Farm Investment Income would be introduced as supporting measures to Farm Business Income.
Farm Corporate Income ( FCI) represents the return to the owners of the business on all their capital invested. It is derived by deducting unpaid labour, both manual and managerial, from Farm Business Income. This allows the profitability of sole traders and partnerships to be compared directly with that of companies. Currently it is possible to estimate unpaid manual labour from FAS data but not unpaid managerial labour and so the data are only approximate. The Scottish Government is currently working with survey contractors to produce estimates of unpaid managerial labour and improve this measure in the future.
Farm Investment Income ( FII) represents the return on all capital invested in the farm business whether borrowed or not. It is derived by adding net interest payments to Farm Corporate Income. Currently the data for Farm Corporate Income are only approximate, so too are the data for Farm Investment Income.
The tables below show how the new measures are calculated and results for 2008/09 and 2009/10.
Table B10: Calculation of new supporting farm income measures
2008/09 |
2009/10 | |
|---|---|---|
Farm Business Income |
39,271 |
34,365 |
minus Imputed unpaid labour |
29,090 |
30,800 |
Farm Corporate Income |
10,182 |
3,566 |
plus Net interest payments |
4,389 |
3,158 |
Farm Investment Income |
14,571 |
6,724 |
Table B11: FBI, Farm Corporate Income & Farm Investment Income by farm type
Type of Farms |
Farm Business Income All Sizes (£/farm) |
Farm Corporate Income All Sizes (£/farm) |
Farm Investment Income All Sizes (£/farm) |
|||
|---|---|---|---|---|---|---|
2008/09 |
2009/10 |
2008/09 |
2009/10 |
2008/09 |
2009/10 |
|
Specialist Sheep ( LFA) |
16,268 |
29,907 |
-8,994 |
947 |
-6,216 |
2,756 |
Specialist Beef ( LFA) |
29,923 |
38,335 |
-1,800 |
8,291 |
1,339 |
10,563 |
Cattle and Sheep ( LFA) |
27,896 |
44,390 |
-818 |
14,247 |
3,798 |
17,079 |
Cereals |
41,817 |
16,690 |
18,567 |
-6,606 |
22,012 |
-3,394 |
General Cropping |
60,862 |
18,332 |
34,579 |
-11,688 |
42,438 |
-5,870 |
Dairy |
78,446 |
58,746 |
33,372 |
12,846 |
40,102 |
17,376 |
Lowland Cattle and Sheep |
23,969 |
30,294 |
-4,205 |
310 |
-1,081 |
2,087 |
Mixed |
45,317 |
40,185 |
14,766 |
8,258 |
19,102 |
11,168 |
All Farm Types |
39,271 |
34,365 |
10,182 |
3,566 |
14,571 |
6,724 |
It can be seen that, once imputed labour charges for all with an entrepreneurial interest in the business have been deducted from FBI, average Farm Corporate Income was £3,566 in 2009/10, down from £10,182 in 2008/09. This ranged from -£11,688 for General Cropping farms to £14,247 for Cattle and Sheep ( LFA) farms.
Average Farm Investment Income in 2009/10 was £6,724, with General Cropping and Cereal farms both recording negative FII. Dairy farms (£17,376) and Cattle and Sheep ( LFA) (£17,079) had the highest return on all capital.
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