It will come as no surprise to most farmers in The Courier area to know that profitability is sliding but it might be of some comfort to know that the situation is the same nationwide and across a diverse range of enterprises.
Graham Redman of Andersons Farm Business Consultants told a Perth meeting last week that Total Income From Farming (TIFF) in UK terms had fallen significantly from £5.6bn in 2013 to £4.7bn in 2014, with the trend expected to carry on to a lesser extent into 2015.
In 1995 the TIFF figure was £7.5bn.
The picture is not quite so gloomy, however, once TIFF is divided by the total number of farming entrepreneurs.
There are, put simply, fewer of them, so their share is larger with some achieving incomes not so far short of those achieved 20 years ago.
The reason for the present malaise in TIFF is not hard to find, according to Mr Redman.
Input costs, many of them oil related, are in fact dropping but not as fast as output prices. The result is erosion of profits.
Interestingly, the variation between the type of farming undertaken is not nearly as great as the variation between the performance of the farmers themselves.
“The variation between the bottom 5% and the top 5% is very large in each sector, with the greatest variations in the pig and poultry sectors where subsidy is minimal.
“There is no such thing as a single cost of production figure for pigs or for that matter any other commodity,” Mr Redman said.
The gap between the best performers and the poorest is becoming wider, he noted, with a sizeable number of UK businesses making a loss even in a relatively good year.
There is also a worrying loss of competitiveness when UK farming is compared to international competitors such as the US. It can’t be blamed on membership of the EU because countries such as Germany and the Netherlands are performing much better.
Mr Redman measures this in Total Factor Productivity which is the efficiency of conversion of inputs into outputs.
“In the UK farmers have become more efficient at making more from less since the 1980s,” he said.
This had led to improvements of efficiency of only 1.4% per annum in the UK meaning a serious loss of competitiveness.
There were a number of reasons for this but Mr Redman focused on deficiencies in agricultural research and knowledge transfer.
He said: “The link globally between research funding and Total Factor Productivity is well proven.
“In the UK we are very good at “blue sky thinking” but this is not enough. We need far more applied research.
“Better public funding in this area will attract higher levels of private funding to everyone’s benefit.
“When it comes to knowledge transfer we have levy bodies such as those working under the AHDB (Agricultural and Horticultural Development Board) and we have a well organised agricultural press.
“In the Netherlands, however, the AHDB equivalent has far more resources available and that has made a big difference,” he said.
Mr Redman also pointed to the loss of agrichemicals as being a major cause of the lack of competitiveness when the EU was compared with the rest of the world, particularly the US.
Structural changes and policies, such as those caused by the new CAP, also had an effect.