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Survey shows input cost increases having immediate impact on Scottish food production

23/06/2022

All sectors already responding to soaring fertiliser, fuel, energy, animal feed and wage hikes.

PRODUCTION on Scotland’s farms and crofts is set to be scaled back as producers respond to unprecedented price increases for key inputs.

During the past year, a combination of several factors including the tragic events in Ukraine, has seen fertiliser and energy prices treble and prices for fuel and animal feed double.

On the opening day of the Highland Show, which starts its four-day run at Ingliston near Edinburgh today, NFU Scotland shared the results of a short-life intentions survey sent to members in early June to gauge the impact that the surge in input prices is having on agricultural sector output.

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A total of 340 responses were recorded throughout the 10-day period. The impact of cost increases has been immediate with 92 percent of respondents indicating that they had already altered production plans.

The survey included sector specific questions for those who farm spring and autumn cereals, dairy, beef, sheep, pigs, poultry, soft fruit, potatoes and vegetables.  For every sector, there were respondents who indicated that they were planning to reduce production or had already taken steps to do so.

According to the survey, the biggest reductions in output are likely to occur in livestock, pigs, poultry and horticulture.

For those with beef and sheep, 38 percent of respondents are cutting cow and ewe numbers; in the pig sector, 30 percent are reducing or have reduced sow numbers; in poultry, 23 percent of respondents were planning to reduce their laying flock and for those growing potatoes, soft fruit and veg, 29 percent are cutting production.

Revealing the survey results at the Highland, NFU Scotland President Martin Kennedy said: “These results must serve as a wake-up call and move food security to the top of the political agenda.  Reductions in agricultural production on this scale, if replicated across our whole industry, will have significant ramifications for our food and drink sector and all those businesses upstream and downstream who rely on farmers and crofters. Tens of thousands of jobs in the food and drink industry in Scotland are reliant on us having a critical mass of production to feed into our processing and manufacturing sector.

“The cost pressure on farmers and crofters is intense, causing high levels of uncertainty with any increases in farmgate prices for our produce failing to keep pace with the unprecedented surge in prices for all our key inputs.

“We welcome Scottish Government’s recent decision to agree to our request to bring forward the support payment schedule originally set for mid-October to September.  Payment in full into bank accounts at that time will provide farmers and crofters with some cash flow certainty and relief this autumn.

“However, we also know that many businesses are having to reassess their finances at this time, with the majority of survey respondents giving consideration to a combination of extending overdraft facilities; seeking new loan arrangements; looking to diversified incomes or dipping into savings to keep the business going. “These are very challenging times financially and NFU Scotland has met twice with all major clearing banks in recent weeks to discuss.” 

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