Glossary

Debt ratio: can explain how much of a business’s assets are financed by debt

Diversified activities: non-agricultural activities that use farm resources

Farm business income (FBI): the total income available to all unpaid labour and their capital invested in the business. Income from diversified activities are included in overall FBI

Farm types: farms are classified based on the how much of their standard output is from the crop and livestock enterprises on each farm

Less Favoured Area (LFA): land where farming is more difficult due to natural constraints, such as hills and soil quality

Minimum Agricultural Wage (MAW): is set by the Scottish Agricultural Wages Board each year. For this analysis MAW is the weighted average over the calendar year, accounting for rate change at the start of the financial year.

Off-farm income: income from activities not related to the farm business or farm diversification, such as a income from another family member’s employment

Standard labour requirement (SLR): is the number of workers required each year to run a farm, based on its cropping and livestock activities.

Standard output: estimated worth of crops and livestock