Anyone seeking examples of the volatility facing the farming industry need look no further than the latest Bank of Scotland Agricultural Survey.
It is 19 years since chief economist Donald MacRae launched his first survey and, over the period, it has proved to be a remarkably accurate barometer of farmer sentiment across all sectors.
This year’s results, revealed this week, show 86% of farming businesses were profitable in the last complete financial year.
“Remember, though, that nearly all of these financial years will refer to the 2013 harvest which was good, with reasonable prices. Milk and beef prices were also strong,” said Prof MacRae.
In fact the percentage of businesses in profit was the second highest in the 19 years of the survey.
The position was very different when farmers were asked about their expectations for this financial year.
The figure of 51% anticipating that their businesses would not be in profit is a 12-year low, taking it back to the wake of the 2001 foot-and-mouth outbreak.
Confidence levels had also fallen, with more than half the respondents saying they were more pessimistic than optimistic about the future.
Some of this will stem from poor prices for milk, potatoes and cereals, along with only modest strengthening in beef and lamb, but the survey goes on to clearly show the new CAP as a major factor.
The survey, which was completed last month, found significant uncertainty around the CAP reforms.
Just less than 70% of farmers rate the reforms as poor or very poor, while two-thirds said the implementation of the CAP rules was unclear.
An 80% majority of farmers expect the reforms to have unintended consequences for their business.
The majority (73%) also expect the new CAP to have a largely negative impact on their business.
Output from across almost all farming sectors looks set to fall sharply as a result of the reforms, according to survey respondents.
Beef farming is expected to take the greatest hit as a result of the new rules, with 60% of farmers anticipating a fall in output.
There is an anomaly here, however, because despite their overall assessment of a fall in output a summary of farmers’ individual plans shows expansion over the next five years in the number of dairy cows, beef cows and ewes.
Notably, the biggest increase is expected for beef herds during this time, with 33% planning to increase their beef herd, 31% their sheep flock and 28% their dairy herd.
Prof MacRae said: “These are clearly testing times for Scottish farmers.
“The fall in confidence in this year’s survey reflects the current backdrop of depressed agricultural prices.
“The broadly negative views toward the implementation of CAP, coupled with the support for certain areas of the reforms, may appear to conflict one another but this is understandable as the industry continues to grapple with the scope and complexity of the new rules.”