Scottish Agricultural Survey 2003 The Lloyds TSB Scotland Scottish Agricultural Survey 2003 by Prof. Donald J R MacRae.

Scottish Agricultural Survey 2003

The Lloyds TSB ScotlandScottish Agricultural Survey 2003

by

Prof. Donald J R MacRae


The Scottish Agricultural Survey 2003

Sample date: 2nd Dec’02 - 12th Jan’03

No. mailed: 1,514

No. responded: 456

Response rate: 30%

Random selection

Anonymous


The Scottish Agricultural Survey 2003

Representative of full time farmers

Median farm size 450 acres

All farm types represented

Geographically distributed

Owner / occupation 75%


“How prosperous do you considerthe Scottish agricultural industry to be?”

3

46

59

69 69

49

55

14

43

33

27 26

43

34

52

107

4 58 10

27

1 1 14

1996 1998 1999 2000 2001 2002 2003

per centnot . . . very


“How prosperous do you considerthe Scottish agricultural industry to be?”

1.4

1.9

1.61.5 1.6

1.3

1.71.8

1.61.7

Arable Dairy Livestock Mixed Hill

2002 2003

On a scale of 1 to 5: 1 = not, 5 = very


“How optimistic are you about the future of agriculture in Scotland?”

34

23

32

41 42 43

21

29

23

36

21

2001 2002 2003

per centnot . . . very


“How optimistic are you about the future of agriculture in Scotland?”

2.1

2.3

2.2 2.22.3

1.7

2.02.1

2.0

2.3

Arable Dairy Livestock Mix Hill

2002 2003


Opinions of types of farmers


“Was your business profitable in your last complete financial year?”

54

63

50

68

49

5963

77

60 61

48

6365

86

70 70

57

70

Arable Dairy Livestock Mixed Hill Overall

Opinions of types of Farmers

2001 2002 2003% responding “YES”


“Did your pre-tax profit exceed your personal drawingsin your last complete financial year?”

40

44

51

3840

43 43

29

42

46 4548

35

61

57

48

53

4946

40

5153

51

2001 2002 2003

Arable Livestock Hill All 0- 201- 301- 501- 1001+ Dairy Mixed 200 300 500 1000

Farm type Farm size

% responding “YES”


“What is your forecast of the following product prices (ex-farm) in autumn next year?”

Forecast

2002 2003

Milk pence per litre 20.5 18.1

Finished cattle pence per kg lw 104 102

Avge. all pig price pence per kg dw 108 87

Lamb pence per kg dw 186 215

Feed barley £ per tonne 66 62

Malting barley £ per tonne 78 81

Feed wheat £ per tonne 74 67


“What will bank Base rate be in 12 months time?”

2002 estimate = 4.81%

(December 2002 actual 4.00%)

2003 estimate = 5.02%


“What will be the level of retail price inflation (RPI) in 12 months time?”

2002 estimate = 2.72%

(December 2002 actual x%)

2003 estimate = 2.94%


“Do you expect your business to be profitable in this financial year?”

48 49 47 47

36

47

56

84

5256

43

59

5248

5549

5651


Opinions of types of farmers

2001 2002 2003



4

19

19

20

25

33

34

44

13

15

12

13

16

18

26

26

Land

Buildings

Increased livestock

Quota

Motor vehicles

Tractors

Improvements

Plant/equipment

% of respondents

estimated in last year's survey

actual

Investments anticipated for 2002and actual investment made in 2002


13

5

8

14

13

16

27

19

12

13

13

15

16

18

26

26

Increased livestock

Land

Quota

Buildings

Motor vehicles

Tractors

Improvements

Plant/equipment

% of respondents

anticipated for 2002

anticipated for 2003

Investments anticipatedfor 2002 and 2003


Increase Decrease Exit Balance % % % (increase minus

decrease & exit)

-6

+3

+15

-11

-25

“In the next five years, what are your plans for the following?”

-23

-10

-5

-14

-5

Exit

Arable acres

Dairy herd

Beef herd

Sheep flock

Pig herd-7

-12

-11

-6

-16

Decrease %

5

11

31

23

15

Increase


“Do you usually prepare a detailed budget for the next financial year?”

40 % ‘YES’

“What source/s of financial information do you useto run your business?”

% of respondents

• Monitoring actual cash position from regular bank statements 78

• Year end tax accounts 62

• Regularly updated management accounts 39

• Monitoring actual monthly cash flow against budgeted cash flow 30

• Other 15


“Which of the following do you currently use for business/financial advice?”

% using

• Accountant 81

• SAC 41

• Bank manager 35

• Agricultural consultant 18

• Other 9

• Farm secretary 8


% of respondents saying ‘NO’

• Options for successful collaboration with other farm businesses 47

• Making the best use of farm business assets 37

• Availability of grants and subsidies 35

• Medium and long term business planning 33

• Controlling overheads 27

• Improving farm technical performance 26

• Financial planning and budgeting 21

“Do you receive adequate advice/guidance on the following?”


“How many hours, on average, do you workin the farm business per week?”

107

40

34

8

1

0 to 20 21 to 40 41 to 60 61 to 80 81 to 100 101+

Hours worked

%

Average = 58 hours

“How many hours a week do you spend completing returns for government agencies?”

Average = 3.5 hours (last year 3.8 hours)


Farm type

last year last year

Hill -21 69

Mixed -15 68

Livestock -12 58

Dairy -18 73

Arable -15 65

Overall -15 66-14

-13

-18

-20

-10

-6

66

67

63

56

69

80

% NO % YES

“Do you plan to be farming in 5 years time?”


“In how many years do you plan to retire?”

21

24

1917

19

0 to 5 6 to 10 11 to 15 16 to 20 21+

Years to retirement

% Average = 13.0 years


“Is there a successor to yourself in placeto carry on the farm business?”

48

63

33

50

61

4945

68

4945

52 50


Opinions of types of Farmers

2002 2003% responding “YES”


46

23

31

36

6 6

2927

32

1 2 3 4 5

per cent in favour

2003 2003

“What is your attitude to a Government/EU funded retiral scheme for farmers?”

strongly against strongly in favour


“If a Government /EU farmer retiral scheme was available, would you use it to retire?”

54

4851

5861

5450

6460

51

46

54

Arable Dairy Livestock Mixed Hill All



“Do you currently operate any of the following?”

% YES

• Limited partnership 30

• Contract farming 12

• Share farming 2


very bad bad no effect good very good

“What effect do you think the following will have on the agricultural

industry in Scotland?”

'Modulating' or capping payments to large farm

businesses

23

26

23

12

16

The 'decoupling' of support payments from

production

3230

1715

6

Replacing support payments by 'Rural

Development' programmes

33

26

17

11

3


“What effect will the following have on Scottish agriculture?”

Euro (Single Currency)

58%

26%

16%

Positive None Negative

Farm Assurance Schemes

52%

12%

36%

Positive None Negative


30

45

57

52

71

75

57

82

28

37

44

60

67

75

61

82

0 20 40 60 80 100

Lack of demand

Interest rate rising

Weather problems

Food safety scares

EU policy changes

Supermarket power

Increasing input costs

Imports to UK

last year

this year

“What factors are most likely to limit the prosperity of Scottish agricultural businesses in the future?”

%


“How important will the following be to the future prosperityof Scottish agriculture?”

1.7

2.5

2.7

3.1

3.2

3.2

3.3

3.4

3.6

3.7

3.7

4.4

1 2 3 4 5

1. EU agricultural policy (1)

2. UK agricultural policy (3)

3. Exporting (2)

4. Marketing co-operation (4)

5. Auction marts (6)

6. Co-operatives (7)

7. Scottish NFU (5)

8. Machinery rings (8)

9. Assurance schemes (9)

10. Diversification (11)

11. ‘Green’ Image (10)

12. Organic farming (12)

Ranking On a scale of 1 to 5: 1 = not, 5 = very

not important very important

(ranking last year)


“Are you in favour of farm scale GM crop trials?”

% responding “YES”2001 642002 622003 62

“How important for the future of agricultureis the ability to use GM technology?”

3.1 2.9 3.1

2001 2002 2003



“Do you believe that substantial reform of the CAP is necessaryfor the long term future of Scottish agriculture?”

55

75 7467

74 7164

1996 1998 1999 2000 2001 2002 2003



“Should quotas / premium rights be continued in the long term?”

6674 72

65 6167 64

1996 1998 1999 2000 2001 2002 2003



“Are you in favour of the UK joining the single European currency (Euro)?”

1998 64

1999 73

2000 55

2001 52

2002 57

2003 55


“Are you in favour of enlargement of the European Union?”

27% responded “YES”73% responded “NO”


“Please indicate your preference for the future of Scottish agriculture:”

6

14

45

17

18 (16)

(22)

(44)

(14)

(4)

(% last year)

No subsidies / free market

Low subsidies / almost free market

Moderate subsidies /partially controlled market

Fairly high subsidies / controlled market

High subsidies / highly controlled market

%


“How should subsidies / support be paid?”

11

7

35

24 23

910

36

2421

2002 2003

all as price support

mostly price support

equal mixture of pricesupport & direct pays

mostly direct payments

all as direct payments

%


“Do you support the pre-emptive ‘Right to Buy’ for tenanted farmland?”

“Do you support an absolute ‘Right to Buy’ for tenanted farmland?”

37

70

45

Owner Tenant All

% saying ‘YES’

10

35

16

Owner Tenant All

% saying ‘YES’


49

24 24

2 1

1 2 3 4 5

% on a scale of 1 to 5: 1 = decrease a lot 5 = increase a lot

Decrease a lot no change increase a lot

“What change will the introduction of a pre-emptive ‘Right to Buy’ have on the availability of any kind of tenancy agreement?”


“Do you believe that sufficient preventative measures are in placeto prevent a re-occurrence of foot and mouth disease (FMD)?”

77%

23%

No

Yes

“If ‘NO, why?”

8%

92%

Other

Lack of Meat ImportRegulations


“How effective was the recent ‘direct action’ by the NFUS in securing a farmgate increase in milk price?”

5

15

27

39

14

1 2 3 4 5

% On a scale of 1 to 5: 1 = not, 5 = very

not at all effective very effective


“What is your attitude towards further ‘direct action’in all product areas?”

6

12

33

25 24

1 2 3 4 5

% On a scale of 1 to 5: 1 = not, 5 = very

strongly against strongly in favour


68%

1%

19%

8%4%

Scottish Conservatives

Scottish Labour

Scottish Liberal Democrats

Scottish National Party

Other

34%

5%

34%

18%9%

“Which political party will you vote for in the Scottish parliamentary election in spring 2003?”

First vote Second vote(80% answered) (68% answered)

“Has Scottish agriculture benefited from devolution?”

29% YES 71% NO


“What is your estimate of the trend in the total numberof farm businesses over the next five years?”

8

33

42

15

1

6

33

45

14

2

0

10

20

30

40

50

-30% -20% -10% -5% 0% 5% 10% 20% 30%

% change in number of farms in 5 years

2002

2003

% of respondents2002 average 14% fewer farms2003 average 15% fewer farms


Results• 51% made insufficient profit in 2002 to cover personal drawings.

• 70% were profitable in last complete financial year.

• 51% expect to be profitable in this financial year.

• Investment to fall in 2003 compared to 2002.

• 2003: expansion in beef, dairy static, contraction in arable and sheep, significant fall in pigs.

• 2003: optimism for future falls: pronounced falls in dairy and arable.

• Strong opposition to ‘decoupling’ and ‘rural development’, opposition to ‘modulation’.

• 55% support Euro entry.

• 40% usually prepare a detailed budget for the next financial year.

• 78% monitor actual cash position from regular bank statements.

• 41% use SAC for business/financial advice (81% an accountant).

• 47% receive inadequate advice/guidance on collaboration with other farm businesses.

• 77% believe insufficient preventative measures in place to prevent FMD, principally meat imports.

• 18% oppose ‘direct action’ in all product areas, 33% neutral, 49% support.

• Strong support for Scottish Conservatives, switching to Lib Dem. and SNP in 2nd vote in Scottish election.

• Absolute right to buy not supported but division in pre-emptive right to buy.

• 50% have no successor in place to carry on the business.


Conclusions• Industry income increased slightly in 2002.

• Optimism for future falls across all types except hill.

• Next 5 years: 15% fewer farm businesses.

• 21% plan to retire within 5 years.

• Expansion forecast only in beef.

• Demand for advice/guidance on working with other farm businesses.

• No belief in FMD control measures.

• Strong opposition to ‘decoupling’ and replacing support payments by rural development programmes.

• Support for ‘direct action’ evident.

• Little support for current largest political party.

• Support for pre-emptive ‘right to buy’.

• High potential for structural change.

• Farming prospects stall despite improving profitabil

Scottish Agricultural Survey 2003 The Lloyds TSB Scotland Scottish Agricultural Survey 2003 by Prof. Donald J R MacRae.

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