Economic Report on Scottish Agriculture, 2016

3.1 Total Income from Farming (TIFF) (Table A1)

TIFF is the headline national-level measure of farm income, or profit. The total net income from farming is calculated using a range of data covering each factor of output and cost for Scottish agriculture. This means obtaining volume and price data for each type of crop and livestock, collecting data on income from other sources, and estimating the cost of each aspect of production, e.g. seed, feed, fuel, or labour.

Chart 3.1: Total Income from Farming (in real terms) 1994 to 2015

Over the past ten years there has been a general upward trend in TIFF, with some fluctuations, which has increased by £236 million (55 per cent or 24 per cent in real terms) since 2005, from £430 million in 2005 to a provisional estimate of £667 million in 2015. The estimate for 2015 suggests that TIFF decreased by £110 million (14 per cent, or 15 per cent in real terms) from 2014, following another decrease of £60 million (seven per cent, or nine per cent in real terms) between 2013 and 2014. This is the second time in the past ten years that TIFF has fallen in two consecutive years.

The value of TIFF is greater than the value of subsidies, suggesting the industry would still make a small profit without them. This, however, is not the same finding as from the Farm Accounts Survey (compare section 3.3, see also chart 6.2).

Chart 3.2 shows the contributing components of TIFF, with output and total payments and subsidies showing the positive contribution and input costs, other costs and consumption of fixed capital showing the negative contribution. Initial estimates for 2015 were outputs at £2.9 billion, support at £490 million and costs of £2.72 billion.

Chart 3.2: Contributing components of TIFF 2005 to 2015 (actual prices)

Since 2005, the output value (net of subsidies ^[4] ) from agricultural businesses has increased by £1,171 million (68 per cent, 34 per cent in real terms), and total payments and subsidies have decreased £68 million (12 per cent, or 30 per cent after accounting for inflation). Over the same period, total costs have risen by £867 million (47 per cent, or 17 per cent in real terms).

The overall value of TIFF is calculated as the small difference between the large values of gross income and costs. This makes it quite sensitive to small percentage changes in these larger values. Between 2014 and 2015, gross income decreased by £153 million (five per cent) and costs also decreased by £63 million (two per cent). These small percentage changes resulted in a decrease in TIFF of £110 million (14 per cent, or 15 per cent in real terms) between 2014 and 2015.