Sample economy nearing meltdown Cautionary tale in SAC draft report

This warning comes in spite of the region's strong farming businesses, where dairying has increased to account for 32% of the Scottish herd and a high productivity per worker per acre factor is coupled with

larger than average farm units.

Funded jointly by Dumfries and Galloway Council, SNH, D&G Groundbase, and the local enterprise company, this interim report follows a similar survey for Borders Council.

Four reports for rural councils in Scotland are due for publication.

Alarm is increasing in the

Highland area as the knock-on effect of the farming crisis and its implications for employment in the wider community become clearer and move closer to home.

Highlighting the scale of the

problem, the SAC compiled two typical farm models for the region based on reasoned assumptions.

The first was a livestock enterprise with 100 beef cows and 700 ewes on 600 acres.

Margin before rent, interest and personal drawings was #37,564 in 1995, and estimated at #11,914 this year and #24,642 in the year 2003.

The second was a dairy enterprise with 100 cows on 250 acres. The 1995 figure was #44,532, falling to #16,091 this year, and rising to #18,890 by 2003.

The lay reader may well conclude that a margin of #12,000 seems a good result for a beef and sheep unit after all the bleak news of BSE,

collapsing sheep markets and a strong pound.

However, tenant farmers in the region who have overdrafts know this represents a loss before

personal drawings.

Those who are below-average performers, about half, or who do not farm on the scale of the model farms will be reassured that they are not alone in facing escalating overdrafts.

The survey also clearly shows this is not news to Dumfries and

Galloway farmers. Some 81% of respondents expected profits in their 1997 audited accounts to be down 50% on 1996, and forecast a further drop of between 50% and 100% for the current year. Practical proof of the SAC model farm predictions.

The prospect of improving

margins in 2003 is a case of ''live old horse and you will get corn''.

Survival until 2003 is the question which taxes many farmers' minds, and 96% of respondents intended to continue farming for the next five years.

Predictably, dairy farmers intend to expand to survive, while beef producers are opting for retrenchment.

Most favoured a 20% cut in cows, lower cull rates, less stores and more fattening.

Sheep farmers do not intend to alter the size of their breeding flocks, but again are opting for fewer stores and more fattening.

If beef and sheep farmers stick to their guns it will have serious implications for the region's auctioneers.

Typically, there was an attitude of retrenchment, self-sufficiency, belt tightening on personal drawings and a desire to seek diversification, new skills and off-farm incomes.

Fortunately, only one-third of farming households sampled was entirely dependent on farming for their income, and 15% derive more than half their income off farm.

The SAC also intends to examine the issue of part-time employment and will ask if such jobs are being taken on by the farmers or their spouses.

That is very relevant as there may be few prospects of meaningful

further employment outside

agriculture as the crisis deepens.

This is particularly appropriate in a region that already has high unemployment, low incomes and twice the Scottish average of self-employed.

Anecdotal evidence, such as rural garages and small engineering businesses struggling to cope with rising overdrafts as farmers struggle to pay their bills, points to a gloomy future.

SAC stresses that this draft interim report is merely the first stage of data collection. The next stage will be to examine in detail the downstream and wider community

implications.

After a period of consultation on local solutions to the problems, it hopes to publish the full report by the end of June.

q Rog Wood is a tenant farmer at Sanquhar and an independent member of Dumfries and Galloway Council.