Tenanted Agricultural Land in Scotland 2014

4. Farm Profitability

The Farm Accounts Survey provides information on the accounts of about 490 holdings across eight different farm types, excluding horticulture, pigs and poultry. A key measure in the survey results is Farm Business Income (FBI), which represents return on unpaid labour and capital investment for those with entrepreneurial interest. The following results are from the 2013-14 survey, which is centred on the 2013 crop year.

Of the 490 holdings, about 95 were fully tenanted, and a further 185 had a mix of owned and rented-in land. Chart 3 shows the average FBI by tenure-and farm-type. Data for tenanted dairy farms are not shown, as there were too few included.

Chart 3: Farm business income by farm and tenure type, 2013-14 source: Table 4

It can be seen that there is no overall pattern of improved profitability with any tenure-type, with owner- occupied holdings being the most profitable non-LFA cattle & sheep farms, tenant farms being the most profitable in LFA sheep, and partly tenanted being the most profitable in cropping, mixed and

LFA cattle & sheep. These are dependent on quite small numbers of holdings (the differences are not generally statistically significant), but in the largest category, LFA cattle, there was little difference between the different tenancy types. The overall average shows higher FBI in mixed tenure farm, but this may just be indicative of more successful owner-occupied farms being the ones that rent in additional land.

The survey also provides data on assets and liabilities. The data show that tenanted

Chart 4: Liabilities as a percentage of assets, by farm and tenure type, 2013-14

source: Annual Estimates of Scottish Farm Business Income 2014

businesses, where relatively little capital is owned, have higher debt ratios in most farm-types, though on average assets still outweight liabilities by about six to one. For owner occupied farm businesses assets are on average around 12 times greater than liabilities.