New research shows that the amount of money Scottish farmers owe to banks has reached its highest level since records began – a figure which largely represents the UK industry as a whole.
The data, published by the Scottish Government, shows that outstanding loans to Scottish farms rose to more than £2.3 billion by the end of May, up £113 million.
This is the highest level of debt since records began in 1972.
Additionally, farms are estimated to have £1.1 billion of liabilities from hire purchase, family loans, and sources other than banks. Statisticians estimate that around half of all liabilities are long term loans.
The data mirrors the overall picture in the UK. The latest figures from the Bank of England (BoE) revealed that the UK agricultural, hunting, and forestry sector had an outstanding debt of £18.5 billion, with debt levels up 57 per cent since 2010.
Roddy McLean, director of agriculture at Royal Bank of Scotland, said the figures reflected his bank’s experience: “This has in part been driven as businesses invest in new technologies and further diversification, while the weakness in sterling through Brexit has helped push sales.”
Meanwhile, Rural Economy Secretary Fergus Ewing said there is a positive to be gained from the data.
He said: “It is vital that Scottish farmers can continue to access capital to invest in their businesses. These statistics show that banks are still lending to farmers, which is a sure sign of confidence in the sector.
“Although debt levels have increased to their highest level since the 1970s, the situation reflects the overall UK picture, with the Bank of England showing that agriculture is one of only two sectors to have seen consistent increases in lending in recent years.
“However, with many farmers relying on subsidies for a large part of their income, we must be wary of farmers getting into excessive and unmanageable debt.
“I would encourage any farmer who is experiencing financial hardship or is looking for help on increasing the sustainability of their farm, to contact our farm advisory service for support.”