Dairy Farmer-led Group: climate change evidence

Executive Summary

This report highlights evidence on the dairy sector in Scotland and its contribution to Green House Gas (GHG) emissions. The main findings from this report are:

Context and structure:

• In 2019, milk and milk products accounted for 11% of agricultural output from 265,000 dairy cattle, mostly in southern Scotland, with a value of £377 million. Further value is also added by beef from the dairy herd which contributed around 13% of finished cattle in 2019.
• In 2018-19, the average Scottish farm had a farm business income (incl. support payments and diversification) of around £38,700. On average, specialist dairy farms had a farm business income of £66,000 including income from support payments and diversification, rising to £241,000 for the best performing 25% of associated farms.
• Over 60% of specialist dairy farms are profitable including support payments. When excluding support, over 50% are profitable – the highest of all livestock sectors.
• 8% of all specialist dairy farms made more than 10% of their turnover from diversified activities in 2016, up from 4% in 2012. The remaining 92% make between 0-10%. 21% of farmers in 2018 indicated intentions to increase renewable energy production.
• In 2018/19, Scottish consumers spent 9.5% of their in-home food and non-alcoholic drink expenditure on milk, milk products and cheese (£2.73 per person per week). Since 2001, UK milk and milk product consumption has been falling while cheese consumption has steadily increased.

Greenhouse gas emissions and biodiversity:

• Large reductions in emissions are required from all sectors of the Scottish economy to meet Scotland's legally binding 2045 Net Zero target, and the target of a 75% reduction from 1990 levels by 2030.
• Agriculture represented 18% of Scotland's emissions, or 7.5 MtCO2e, in 2018. The Scottish Government's Climate Change Plan update requires the equivalent of a 31% reduction in agricultural emissions by 2032, from 2018 levels, a pace nearly four times faster than historic declines.
• The dairy herd accounts for 1.17 MtCO2e^[1], or 16% of total agricultural emissions. Emissions per dairy cow are significantly higher than other livestock in Scotland, though emissions per kilogramme of output are lower. This highlights the imperative for the group to consider practical measures for reducing emissions.
• Evidence on technically feasible mitigation specific to the dairy sector covers feed additives, selective breeding, precision feeding, improved health, slurry storage and high starch diets, of which feed additives provide significant potential.
• Evidence suggests these measures could deliver reductions in the region of 0.27 MtCO2e, if applied to their maximum technical capacity based on current levels. This scale of reduction would not be sufficient to meet agriculture's envelopes by 2032, even if matched with equivalent reductions across all sectors. In fact, it would fall short of targets by nearly a third.
• The Climate Change Committee states changes in farming practices, woodland planting and reductions in livestock numbers are all required to achieve net zero. Their advice also highlights three key changes required to reduce agricultural emissions:

1 - diet change with their main pathway to net-zero assuming a 20% reduction in UK consumption of dairy products by 2030

2 – low-carbon farming practices, similar to those outlined above

3 – productivity measures to improve yields and reduce stocking rates

• The Climate Change Committee have also stressed that not only are the changes outlined critical for agriculture to reduce its emissions but also critical to free up the land required for other sectors to achieve the emissions reductions needed.
• In recent years, the evidence suggests that agricultural intensification has negatively impacted biodiversity, particularly due to a trend towards homogeneity leading to fragmentation and loss of habitats. There is evidence that this is particularly evident in the dairy sector. Overall biodiversity benefits from a mix of land use intensities as well as a mix of habitats.

Performance and productivity:

• Evidence suggests that Scotland is mid-table in international comparisons when it comes to agricultural productivity growth. This report sets out some potential options for increasing agricultural productivity in Scotland.
• Dairy farms typically have higher profitability and efficiency than the average farm in Scotland, with a relatively smaller proportion of their output coming from support payments.