Scottish Agriculture: Past,
Present and Future
Alan Renwick and
Andrew Midgley
Presentation to SAC – AgResearch
Rural Futures Conference
Edinburgh, September 2009
1
Scene Setting
• Overview of Scottish Agriculture
– Typology
– Output
– Policy
– Agriculture and the Environment
• Future opportunities and challenges
2
Key Factors Shaping
Scottish Agriculture
• Physical Constraints
– Soils
– Topography
– Climate
• Policy Drivers
–
–
–
–
International
EU
UK
Scotland
• Institutions
• Markets
3
Agriculture in Scotland
• Typology
–
–
–
–
Lowland Arable
Improved Grassland
Upland Grassland
Crofting
Land Use Scotland (m/ha)
Crops, 601,510
Grass,
1,218,170
Rough Grazing,
3,431,930
Total Cattle
Total Sheep
Total Pigs
1,852,090
7,095,190
435,720
4
Crofting
• Whilst important socially and culturally,
covers nearly 10% of Scottish agricultural
land with around between 10,000 - 12,000
crofters on nearly 18,000 crofts.
5
Agriculture in Scotland
Other Agricultural
Activities
3%
Non-Agricultural
Activities
7%
Capital Formation
3%
2008
Gross Output £2.31 bn
Cereals
17%
Other Crops
10%
Livestock Products
15%
Horticulture
9%
Store
Livestock
3%
Total Income £630 m
Support £578 m
Finished Livestock
33%
Agricultural Output 2008
Source: RERAD
6
Market Returns and Support
• Although periods of
higher prices improve
profitability, many sectors
currently not economically
viable without support
Costs and Returns LFA Farms
Support
Costs
Returns
Composition and Distribution
of Support
Composition of Support
600
500
Other
400
Other Agri Environmental
Schemes
Environmentally Sensitive
Areas
300
Land Management
Contract Menu Scheme
200
Less-Favoured Areas
Support Scheme
Single Farm Payment
100
0
1
8
2006
1999
1992
1985
1978
1971
1964
1957
1950
1943
1936
1929
1922
1915
1908
1901
1894
1887
1880
1873
1866
Thousand heads
Some Trends
Scotland: Cattle Numbers 1866-2007
3000
2500
2000
1500
1000
500
0
Scotland
9
Trends
Sheep Numbers Scotland 1866 - 2008
10.0
9.0
million head
8.0
7.0
6.0
5.0
4.0
3.0
2.0
1.0
0.0
1860
1880
1900
1920
1940
year
1960
1980
2000
2020
10
Spatial variation in decline
Source: Retreat from the Hills – Rural Policy Centre (2008)
11
Some Key Policy Dates
• 1973 – Accession
• 1984 – Milk quotas
• ~ 1988 – Stabilisers,
voluntary set-aside
• 1992 – MacSharry reforms
• 1999 – Agenda 2000
• 2003 – Mid Term Review
• 2005 – Decoupling
• 2008 – CAP Health Check
12
Importance of Policy
MacSharry
Foot and Mouth
Join EU
Decoupling
13
Importance of Policy
Set-Aside
Zero
Set-Aside
14
Policy Shift
• 1980s
– shift in support from pure production
– move away of Government from Research and
Development and Extension
• 1990s
– widespread introduction of agri-environment
schemes
– Support for Organic agriculture
– Regulation – Nitrate Vulnerable Zones
• Post- Productivism
15
19
73
19
74
19
75
19
76
19
77
19
78
19
79
19
80
19
81
19
82
19
83
19
84
19
85
19
86
19
87
19
88
19
89
19
90
19
91
19
92
19
93
19
94
19
95
19
96
19
97
19
98
19
99
20
00
20
01
20
02
20
03
20
04
Total Factor Productivity
130
120
110
100
90
80
70
Source: Barnes (2005)
16
Efficiency (ranges)
0.95 - 1.00
0.95 - 1.00
0.90 - 0.95
0.85 - 0.90
0.80 - 0.85
0.75 - 0.80
0.70 - 0.75
0.65 - 0.70
214
0.90 - 0.95
Specialist
cereals
0.60 - 0.65
10
0.85 - 0.90
0.80 - 0.85
0.75 - 0.80
0.55 - 0.60
0.50 - 0.55
0.45 - 0.50
0.40 - 0.45
0.35 - 0.40
0.30 - 0.35
0.25 - 0.30
0.20 - 0.25
0.15 - 0.20
0.10 - 0.15
0.05 - 0.10
Frequency
6
0.70 - 0.75
0.65 - 0.70
Efficiency (ranges)
0.60 - 0.65
0.55 - 0.60
0.50 - 0.55
0.45 - 0.50
6
0.40 - 0.45
0.35 - 0.40
0.30 - 0.35
0.25 - 0.30
0.20 - 0.25
0.15 - 0.20
0.10 - 0.15
0.05 - 0.10
8
0.00 - 0.05
10
0.00 - 0.05
Frequency
Variation in Cost Efficiency
12
Mean: 0.58
Median: 0.52
8
Dairy
4
16
Mean: 0.31
Median: 0.23
12
0
4
2
0
17
Efficiency
•
•
•
•
Scope for cost efficiency improvement across
the Scottish farming industry.
Positive relationship between historic support
and inefficiency eg Sheep versus Dairy
Most efficient farms have not been the most
profitable under EU commodity regimes
Source Revoredo-Giha and Leat
18
A Diversified Industry
Farm based enterprises = 377.
Concentrations near urban
Based on the number of farms,
areas & favourable natural
there is below average
& infrastructural resources
representation in the NW and NE
and above average in the SW and SE.
Source: Watts, Revoredo-Giha,
Over half from horticultural &
Leat (2008)
beef and sheep units, poultry common
as well.
19
Production as an Input
• The food and drink sector is a key
contributor to the Scottish economy with
annual sales currently of some £7.5bn,
Gross Value Added of some £2.7bn and
exports of £2.8bn. The sector employs
49,000 people of whom 20,000 are in rural
areas
– Source: Rural Scotland: Better, Still Naturally
(2007)
20
Supply Chain and Trade
Source DTZ
Scotland’s agricultural
sector heavily dependent
upon trade
21
Not just food
Key ingredient into
Drinks industry
Source DTZ
22
Food and Drink
Manufactured Exports
Food and Drink Manufactured Exports, 2003-2007
5000
4500
4000
3500
£ millions
3000
Drink
2500
Food
2000
1500
1000
500
0
2003
2004
2005
2006
2007
Year
23
Agriculture and Environment
• Complex interaction
between agriculture
and the environment
– Too much or too little?
Andersen E. (ed.) (2003). Developing a high nature value farming area
indicator. Internal report. EEA, Copenhagen
24
Environmental Accounts:
Public Good (Bad) Provision
Total +ve (£m)
Total -ve (£m)
Annual impacts on society
Landscapes and habitats
Linear features
Biodiversity
Rivers
Lakes
Bathing Waters
Estuaries
Abstraction
Provision of waste sink
Agricultural waste
Total annual (income) impacts on society*
£854
£2
£307
...
...
...
...
...
£35
...
£1,199
...
...
...
£62
£27
£11
£3
£62
...
£8
£172
Annual impacts
sectors
Drinking water
Pollution incidents
Flooding
Soil erosion
Total impacts on other sectors
...
...
...
...
£0
£129
£1
£234
£9
£373
Net (measurable) income to society*
Impact on other sectors
Overall net impact on income*
£1,027
...
...
£373
...
Measurement of annual flows from agriculture
Net impacts
on
other
£654
Measurement of present value costs from air emission
Total +ve (£m)
Total -ve (£m)
Climate change
...
£1,413
Air quality
...
£656
...
£2,069
Measurable present value costs due to air emissions
25
Looking Forward
Some Opportunities and Challenges
• Increased demand for food –
• Market volatility
• Environmental constraints
• Land-use competition
26
Market Changes
• Growth in
international demand
• Development of local
food agenda
• Challenges if further
trade liberalisation
27
Some challenges linked to
Environment and Health
A few examples
– Climate Change
– Water Framework Directive
– Pesticide Ban
28
Climate Change
• Potential advantages in climate
change
• However
R isk o f H a e m o n c h u s co n to rtu s
20 08
2020
2050
2080
– Extreme weather
– New pests and diseases
• However it is policy targets and
mitigation that may be seen to
pose the biggest challenge
E m e rg in g
p r o b le m
in U K
P re d ict e d to
in c re a se to N e w
Z e a la n d le v e ls
£/t
CO2e
Mitigation at
positive cost, but
NOT socially
worthwhile
– 80 per cent reduction by 2050
– 1.3 mt reduction from Land use
sector from 2006 to 2030
0
Mitigation at positive
cost, but socially
worthwhile
Emission
reductions
Mitigation at negative
cost, privately worthwhile
29
Water Framework Directive
SEPA estimate that despite
Scotland's water
environment generally
being in good condition there
are a number of local level
problems which mean that
over 40% of Scotland's
waters failed the
environmental standards
required to support good
ecology in 2007. SEPA
anticipate 67% of our water
bodies achieving at least
good status by 2015.
•
SEPA (2008). Draft River Basin
Management Plan for the Scotland River
Basin District
30
Land-use Choices
• During post-productivist period alternative
land-uses (renewables etc) were seen as a
solution to agricultural decline and less need
for food production – diversification
opportunities
• However, re-emergence of food security
issues mean that greater competition for
land and harder to balance between the
alternative policy objectives
31
Land use challenges
• Example – renewable
energy
• Areas most suitable for
SRC are also key
arable areas
Source: Towers (MLURI)
32
Domestic Policy landscape
Strategy
Economic
Food and
Drink/Agriculture
Forestry
Energy
Climate change
Biodiversity/
Environment (not GHG)
Transport
Tourism
Headline objectives relating to land use
Growth in GDP, productivity and population. Reduction in inequality
and GHG emissions
Sales of £10 bn by 2017 (up from 7.5 billion in 2006. Increase
production capacity/value adding. Rural stewardship
Growth in forestry area from 17.1 to 25% by 2025
50% electricity produced by renewables by 2020/ 20% renewable
road fuels by 2020
GHG emissions down 80 per cent by 2050 (34/42% by 2030)
Halt of decline in Biodiversity/ Water to achieve good ecological
status by 2015
Improved transport infrastructure
50% increase in revenue by 2015 (20 % numbers rest from spend)
33
Summary
• How to satisfy growing demand and meet
environmental and other challenges
• How do you manage transition?
• Neo-productivism?
– Or just return to productivism
– Or productivism with Corporate Social
Responsibility?
34
Productivity increases ….
happened before
Scottish Agricultural Output 1550 - 1850
1.8
1.6
1.4
Index
1.2
1
0.8
0.6
0.4
0.2
0
1550
1600
1650
1700
1750
1800
1850
Year
Source: Estimated by Douglas
35
Acknowledgements
Andrew Barnes, Steven Thomson,
Cesar Revoredo-Giha, Philip Leat
36