Hill, Upland and Crofting Farmer-led Group: climate change evidence

3 Performance and Productivity

3.1 Key Metrics for Performance and Productivity

Productivity refers to the efficiency of production. One method of quantifying productivity commonly used is Total Factor Productivity (TFP). This looks at an industry's overall efficiency in converting all of its inputs into all of its outputs, and is usually presented in terms of TFP growth over time.

Productivity is a key measure of sustainable growth, and growth in productivity is usually assumed to be related to the increase and adoption of new technology. In the case of agriculture, low productivity means more inputs per unit of output, which may lead to higher pollution, lower wages and lower farm incomes.

SRUC's Boosting Productivity Growth in Scottish Agriculture report assesses the productivity of agriculture in Scotland and elsewhere. Since 2000, agricultural productivity has been growing, with average annual growth of 1.5%. Scottish agricultural productivity appears to have had stronger growth than UK agricultural productivity overall. However, it is important to note that this is from a fairly low base.

Source: Boosting Productivity Growth in Scottish Agriculture

The chart above shows international estimates of agricultural productivity growth, with variation over time. Scotland appears to sit around the middle of international rankings of agricultural productivity growth. It is important to note that the Scottish Government uses data from the agricultural census to calculate agricultural TFP internally, whereas TFP growth for the other countries is based on data published by the United States Department of Agriculture (USDA). Therefore, this comparison should be viewed with some caution.

In the case of agriculture, productivity can be heavily impacted by factors such as land quality, weather conditions and outbreaks of crop and livestock diseases. There are challenges to supporting agricultural productivity in Scotland, particularly around land and weather disadvantages, and lack of adoption of new and existing technologies.

Analysis shows a diversity of performance across these farm types and time periods with low or negative annual rates of change identified in most sectors in Scotland. Within recent years, cereals have shown the strongest growth, while LFA farm type have experienced a contraction.

Source: SRUC, Boosting Productivity Growth in Scottish Agriculture, April 2020

Additionally, there is considerable variance in performance seen within farm types. This is particularly true for the LFA Sheep farming systems, which again show disturbances from weather but also policy reform, as these sectors are heavily reliant on subsidy systems.

3.2 Options for Improving Performance

3.2.1 Measures

3.2.1.1 Implementing Established Technologies

SRUC's Boosting Productivity Growth in Scottish Agriculture report provides a high level summary of a long list of measures which would potentially increase productivity in Scottish farming; broadly covering approaches to information sharing, financial schemes and management changes. Information sharing covers, for example, knowledge exchange, education and implementation. Financial schemes covers positive and negative effects of support and grant schemes. Further details on these can be found in Annex E. It should be noted that there are limits and caveats to both uptake and effectiveness of these measures and the report was not specifically targeted at the sector covered in this report.

The SRUC report highlights that in Scotland there is generally a low uptake of current, mainstream technologies and techniques. For Scottish livestock farms, better use of well-established feeding, breeding, health, marketing and budgeting practices should lift productivity and profitability on most farms, e.g. low uptake of sexed semen in dairy, sheep and beef sectors, limited rotational grazing practices, progeny tested sires and benchmarking and budgeting skills.

In Scotland, some farm businesses have not adopted basic practices which are already existing and available. For example, practices such as variable liming, consistent weighing of livestock, and business planning are all likely to improve business productivity at low cost to the farmer; however, they have not been widely adopted. Increased adoption of existing, low cost and practical approaches such as these is likely to increase Scottish agricultural productivity.

Previous efforts to increase agricultural productivity through policy have sometimes been "over-successful", leading to negative impacts from intensification such as biodiversity loss and the "lock-in" of farmers on a productivity-debt cycle.

3.2.2 Current Uptake

The Survey of Agricultural Production Methods (2016) collected information on the usage of genetic information on holdings reporting the breeding of cattle and sheep. Holdings reporting the breeding of sheep had the lowest usage of genetic information: 77% of holdings reported not using information on genetics, 24% reported using specific breeds or traits, and 8% reported using genetic information such as EBVs.

Holdings reporting the breeding of beef cattle had a higher uptake – 23% of these holdings reported using genetic information, and 33% reported used specific breeds or traits. The highest usage of genetic information was found on holdings reporting the breeding of dairy cattle.

Discussions with researchers at SRUC also highlighted that at a UK level genomic testing in cows generally is around 1-2%. However, in the past 5 to 7 years the proportion of young genomically improved bulls (where scope for the greatest gains lies) being used has risen from around 25% to around 70% of inseminations and the benefits of that are starting to flow through to milk production.

Initiatives like the Farm Advisory Service (FAS) can provide a link between national policy and individual farmers, which can then translate the goals of policy into concrete actions.

The FAS One to Many service was procured by Scottish Government as part of the broader Scottish Rural Development Programme (SRDP) 2014-2020, and sought to improve the business and environmental performance of Scottish Agriculture through the provision of advice. There is clear evidence that the FAS One to Many delivered a wide-ranging programme, which appears to be well regarded by those who use it, as outlined in the recent Farm Advisory Service - One to Many: evaluation. However, this evaluation also demonstrated that FAS impacts are hard to measure. At present there is limited data about the extent of engagement with the programme, and limited monitoring of on-farm improvements resulting from that engagement. To ensure that the FAS can support policy delivery in the ways envisaged in this report, this gap will need to be addressed.