Large proportion of Scots farmers are ‘risk-averse’

Nearly 40 per cent of Scotland’s farmers are “risk-averse”, according to a survey on how Brexit might affect business planning.

New analysis of a survey of nearly 2,500 farmers, crofters and smallholders showed that 39 per cent fell into this category, while 44 per cent were defined as “risk-cautious” and only 17 per cent as “risk-takers”.

Economists from Scotland’s Rural College (SRUC), which carried out the survey with the James Hutton Institute on behalf of the Scottish Government, say the agricultural economy requires some level of risk taking for the industry to grow.

Risk-taking farmers appear to be more likely to have increased their intensity of production or their level of on-farm diversification.

In addition, they are more likely to have invested in new technologies and new capital. On more environmental-led approaches, the differences were less extreme, especially in aspects around woodland expansion, which may indicate different approaches to public good activities.

Of the farming characteristics, the older farmers were more likely to associate with the risk-averse type, with a higher proportion of risk-takers under the age of 45.

Professor Andrew Barnes from SRUC, the survey’s lead researcher, said: “Risk-taking activity can lead to higher levels of investment and therefore increasing on-farm efficiencies.

“On more greener activities there is less evidence. However, while risk taking may lead to more sustainable growth, the high level of debt within Scottish farming may support more risk-cautious approaches to investment. Nevertheless, supporting farmers to move away from being risk-averse, which comprises 39 per cent of the sample, should be encouraged though support and advisory schemes.”

Rural Economy Secretary Fergus Ewing said: “We know that the dual effects of COVID-19 and Brexit on businesses in our remote and rural areas will be considerable and we understand the need for stability during so much uncertainty. We want farmers and crofters to become more productive, profitable and sustainable, adapting to new practices and willing to innovate in order to secure business viability for future generations.

“The Knowledge Transfer and Innovation Fund will help us to grow a sustainable, vibrant and innovative rural economy and has awarded around £6 million to 36 projects to do this. One such project is the Monitor Farm Programme which is helping to achieve this through practical demonstrations and sharing of best practice. The Scottish Government’s Farm Advisory Service provides farmers and crofters with the most up-to-date advice they need to run efficient, environmental and climate change friendly businesses.

“Investment in the agricultural sector is essential for farmers and crofters to respond to challenges that may lie ahead. This is why we aim to continue CAP and other support in line with the principles of stability and simplicity. We made the loan payments under the basic payment scheme from 1st September, three months ahead of England, with the second tranche of payments being made next year.”

The full report can be found at www.ruralbrexit.scot

Posted by SRUC on 15/10/2020