Farm incomes are estimated to have halved between 2010 and 2014, despite more than £2 billion of agricultural support from the Scottish Government and Europe over that period.
Scotland’s Rural Affairs Secretary Richard Lochhead has expressed his disappointment over the figures released by the country’s chief statistician.
They show average farm business income (FBI) fell by a quarter (£8,000) between 2013 and 2014, to £23,000; the lowest level of FBI since the measure was introduced.
Income has been falling since a peak in 2010. Since then, commercial farms have seen a decrease of 55 per cent (£28,000) from an average of £51,000.
Mr Lochhead said the figures showed that ’while the food and drink industry was booming farmers were struggling’.
“Scotland’s farmers are the backbone of one of the country’s most successful sectors – food and drink – and yet they don’t appear to be reaping the rewards to the same degree as the rest of the supply chain, and that needs to change," he said.
“If billions of pounds of farm support through the Common Agricultural Policy is failing to halt such a decline it is clear that Europe needs to place a greater focus on dysfunctional supply chains and markets.”
Mr Lochhead added ministers were continuing to work with the industry to improve profitability and give producers a fair return.
NFU Scotland director of policy Jonnie Hall said the income figures highlighted the need for CAP payments to be more targeted at active farmers and crofters.
Mr Hall said: “Continually rising input costs, both cost of production and compliance, and low and often volatile market returns have prolonged the cost-price squeeze that Scottish agriculture has faced for a number of years.
“In years gone by, direct support payments went a long way in plugging that gap. However, the gap is widening while support is reducing - from a reduced CAP budget and an unhelpful Euro exchange rate.
"This may yet be compounded further as the full extent of redistribution of CAP support reveals itself as we see the new area-based payments bed in.”
Mr Hall agreed there was also a need for farm businesses, processors and retailers, and policy makers to focus on cutting costs and ensure fairer margins throughout the entire supply chain.