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Total outstanding bank debt of Scottish farms up 5%

Rising levels of Scottish farm debt were ’bad news’ for the industry, NFU Scotland has claimed.



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The total outstanding bank debt of Scottish farms increased 5 per cent over the past year, according to the latest statistics released by Scotland’s chief statistician.

 

A survey of the main banks and other lending institutions showed outstanding loans to Scottish farms rose by £113 million in the year to May 31, 2017.

 

Total outstanding loans to the agricultural sector amounted to £2.32 billion.

 

NFUS chief executive Scott Walker said: "It is bad news that once again the level of bank borrowings of Scottish farms has risen. This is the eighth consecutive annual increase and underlines the lack of profitability across farming.

 

“Food and drink is Scotland’s largest manufacturing sector and requires a strong farming sector. We need to forge a new partnership between farming and the rest of the food and drink supply chain.

 

There is ambition to double the size of Scotland’s food and drink industry by 2030. Without successful farming this will never be achieved.”


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This was the eighth consecutive annual increase in Scottish farm bank debt. After remaining steady for a decade during the 2000s, debt levels have now risen to their highest since records began in 1972.

 

In addition to bank loans, farms have an estimated £1.1bn of liabilities, related to hire purchase, family loans and other sources. About 50 per cent of total liabilities are long term loans, a percentage which has been slowly increasing over time.

 

In 2003 about 40 per cent of debt was long term. Liabilities equate to about 8 per cent of assets.

 

The data reflects the overall UK picture.

 

Figures from the Bank of England showed that, by May 2017, the UK ’agricultural, hunting and forestry’ sector had an outstanding debt of £18.bn, having seen a 57 per cent increase in debt levels since 2010.

 

The only two other business sectors that had seen an increase since 2010 was utilities, which increased 63 per cent, and wholesale and retail at 8 per cent.

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