Economic Report on Scottish Agriculture, 2016

3.10 Income from diversified activity (Tables B1, B5, B6, B7)

Most farms in 2014-15 (84 per cent) received additional income from diversified activities. Figure 6 shows the main activities undertaken and the average income from each. Of farms engaged in diversified activities, the overall average income from such activities was £3,000. The most common diversified activity was renting out buildings for uses other than tourist accommodation (41 per cent of activities), but it was income from land used for mobile phone masts that generated the greatest margins from diversification.

Chart 3.13: Average income from diversified activities, 2014-15

Chart 3.14: Distribution of income from diversified activities, 2014-15

Micro electric generation and tourist accommodation were the only activities which made an average loss (£3,000 and £600 respectively). The largest increase in number of activities in the sample was seen in micro electric generation. Losses in this category may be due to high start-up costs compared to initial income as well as high depreciation costs.

Chart 3.14 shows the distribution of income from diversified activities. Around a third of farms with diversified activities (30 per cent) did not make a profit from their activities. A further 41 per cent made up to £5,000, with the remaining 29 per cent making more than £5,000.

To examine trends in diversified activities, a matched sample of 420 farms was taken; this sample includes the same farms in each of the last five years, from 2010‑11 to 2014-2015. Over this period the percentage of farms engaged in diversified activities increased from 46 per cent to 65 per cent.

The average number of diversified activities on farms with any such activity has increased from 1.3 to 1.5 activities. The share of overall FBI coming from diversified activities has remained unchanged at 15 per cent. Chart 3.15 shows, from the matched sample, the average FBI of those farms engaged in any diversified activity and those with no diversified activities.

Average income was greater for farms engaged in diversified activities at £36,000, which has remained relatively unchanged to that seen in 2013-14, while the average income on non-diversified farms has fallen by around £6,000. The average difference in FBI between diversified and non-diversified farms is around £15,000.

The unmatched sample shows that average income from diversified activities has fallen in the latest year. However, income from wind turbines, processing and retailing of farm produce and from mobile phone masts have all increased (by around £2,000 each).

Chart 3.15: Comparison of average income of farms with and without diversified activities, 2010-11 to 2014-15