PDF file: Annual Report 2002/2003 - Scottish Crop Research Institute

Director’s Report
nomic and social rôle of plant breeding. Further contractions
took place in the UK plant-breeding and
agrochemical industries.
TIFF Much cited but often the cause of confusion
over the performance of agriculture, the Total Income
From Farming (TIFF) figure refers to business profits
and income generated by production with the agricultural
industry, including subsidies, to those with an
entrepreneurial interest in the agricultural industry
(e.g. farmers, growers, partners, directors, spouses, and
most other workers). Always stressed is the fact that
TIFF is remarkably sensitive to small changes in the
values of outputs and inputs, compounded by the
provisional nature of data for 2002. Moreover, payments
for livestock destroyed for FMD and associated
welfare purposes were excluded from TIFF on the
grounds of being exceptional losses as defined in the
European System of Accounts 1995. TIFF is derived
by deducting interest, rent, and paid labour costs from
Net Value Added (NVA) at factor cost (i.e. at basic
prices plus other subsidies (less taxes on production
e.g. agri-environment payments, set-aside)). NVA at
factor cost is regarded as a reliable measure of value
added by the industry because it includes all subsidies
but it makes no allowance for interest, rent or labour
costs. According to Agriculture in the United Kingdom
2002, TIFF was estimated to have risen by 15% (14%
in real terms) to £2.356 billion compared with its
level in 2001. The TIFF figure for 2002 was estimated
to be 56% (62% in real terms) below its peak in
1995, after more than doubling between 1990 and
1995. NVA at factor cost increased over 2001 by 5%
to £4.990 billion. Diversification was encouraged as a
way to increase rural incomes. According to the
aggregate balance sheets in terms of assets and liabilities
for UK agriculture, at current prices the net worth
in 2002 was, provisionally, £106.968 billion compared
with an updated figure of £102.767 billion for
2001. Net worth was reckoned to have reached its
highest level in real terms since 1980, as have total
assets, and liabilities were at their lowest level since
1980, too.
Productivity Productivity of the UK agricultural
industry can be assessed in various ways. It is neither
adequate nor reasonable simply to measure the volume
of output, labour productivity, profitability in a
single financial year, its relation to imports etc.; rather
it should be a measure of resources utilised to convert
inputs into outputs. Typically, productivity measures
are based on the ratio of the volume of outputs and
the volume of inputs. Productivity is regarded as the
key determinant of the economic sustainability of UK
agriculture, an underestimated industry that underpins
the food chain and related environmental and
social benefits. Comparisons at international, national,
and regional levels, or from year to year are fraught
by complexities arising not only from obtaining reliable
data but also by factors regarded as exogenous
such as climate, topography, location etc. Total factor
productivity in terms of the volume of output leaving
the industry per unit of all inputs, including fixed capital
and paid labour (a significant, but difficult to
quantify, portion of agricultural labour is unpaid), has
increased by 43% since 1973. This growth reflects
increases in labour productivity (volume of NVA) per
unit of paid and entrepreneurial labour) which has
more than doubled since 1973. Throughout the
1990s, output remained static but inputs (most especially
labour costs) have decreased in line with
improved automation and a massive drop in the numbers
employed. Using volume indices 1995=100, provisional
productivity measurements for 2002 were
96.2 for final output (gross output less transaction)
within the agricultural industry; 142.0 for NVA per
annual work unit of all labour (full-time equivalent);
and 111.7 for final output per unit of all inputs
(including fixed capital and labour). The paid labour
costs, which include payments-in-kind, National
Insurance contributions, redundancy payments etc.,
were estimated to be £1.907 billion in 2002, compared
with £1.909 billion the year before. Minimum
wage legislation does not apply to the self-employed
that constitute much of the agricultural and horticultural
workforce, were it to do so, then much of UK
agriculture would collapse, along with the profitability
of enterprises further up the food chain.
Farming Incomes in the EU From 2001 to 2002,
there was great variation in the percentage changes in
income derived from agricultural activity across member
states of the EU. According to the much-troubled
Eurostat, see Eurostat-Statistics: Statistics in focus,
December 2002; Indicator A which is based on NVA
at factor cost (deflated by the GDP price index) and
measuring agricultural income per annual work unit
(full-time worker equivalent), there was a decline of
3% overall in the EU, and declines recorded in ten of
the fifteen member states. Rises were noted in Finland
(7.3%), Greece (5.7%), UK (3.9%), Spain (1.2%),
and Luxembourg (1%). Declines were recorded in
France (-0.9%), Sweden (-1.5%), Italy (-1.6%),
Portugal (-2.2%), Austria (-2.8%), The Netherlands (-
7.5%), Belgium (-7.7%), the Republic of Ireland (-
11.4%), Germany (-18.0%), and Denmark (-26.3%).
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