Autumn 2015

Supporting growth with efficiency

LandscapeIDEAS AND INSIGHT TO SUPPORT YOUR BUSINESS

Autumn 2015

AGRICULTURE’S NEW VISION 06 FUTURE-PROOFING FARMING 08 CHARITY FOCUS 13

Autumn 2015

Your farm.Your future.

C O M M E R C I A L B A N K ING

Our experienced relationship managers can provide specialist farm finance to help nurture your ambition.

They understand that your farm is more than just a business and will work alongside you to provide guidance and support for your everyday funding needs.

If you are considering switching banks and would like to know how we can support your decisions, please contact your local relationship manager on page 15.

bankofscotlandbusiness.co.uk/agriculture

All lending is subject to status.

Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority under Registration Number 169628. We subscribe to The Lending Code; copies of the Code can be obtained from www.lendingstandardsboard.org.uk

F oremost in most minds just now is the arrival, or non-arrival, of BPS payments. At the time of writing, there was still no definite date, and that was why earlier in the year we set

up a £500m emergency fund to help farmers hit by the change. We know it will help many and so please don’t be afraid to ask your relationship manager about accessing the funds and available support.

We also know, though, from talking to Scottish farmers and from the great stories of resilience and efficiency we’ve come across for this issue of Landscape, that farmers continue to prove ever-resourceful. We feature Dairy Farmer of the Year runner-up Brian Yates, who banks with Bank of Scotland – a fantastic example of what can be done in the face of volatile prices and costs.

Congratulations also go to another one of our customers, Rod Smith, for a world wheat yield record – an achievement that highlights what a strange year of weather it’s been.

While commodity prices are lower this year, statistics also show that the gap between the cost of land and the revenue that can be generated from farming that land seems to be getting wider. It’s challenging for profitability and means many farms will be looking at ways to add value, create new income streams or reduce costs.

The good news is that farms can get the support they need to make that happen. In the UK, agriculture is one of the few areas where lending is growing and more accessible, and we’ll strive to support the ambition of farmers across the country no matter what challenges the economic situation may bring.

Donald MacdonaldCo-Head of Agriculture

Bank of Scotland

Sandy HayCo-Head of Agriculture

Bank of Scotland

The good news is that farms can get the support they need to make things happen.”

ContentsIndustry Review Volatile summer weather, dairy crisis payment, farmland values, greening guide delay, GM ban, capital allowance cut and food space race.

04

New Vision for Scottish AgricultureThe Scottish Government’s blueprint for the future of Scotland’s farming sector is now open for discussion.

06

Future-proofing Farming NFUS President Allan Bowie on how Scottish farms can become more resilient for the future; John McKenzie’s business is flying high thanks to Bank of Scotland.

08

Increasing EfficiencyGerard Keenan of Keenan Systems on efficiency and quality; the Yates make incremental improvements to their dairy farm.

10

Innovation & Diversification Culligran Estate near Beauly has harnessed its natural asset, water, to diversify into hydro.

12

Help is at HandThe charity RSABI provides financial and emotional support to farming families in crisis.

13

Economic OutlookBank of Scotland Chief Economist Donald MacRae believes farmers can respond to the challenges ahead.

14

Key Agriculture ContactsHow to contact the Bank of Scotland Agriculture team.

15

Autumn 2015 Landscape 03

ContentsLandscape Autumn 2015

04 Landscape Autumn 2015

Industry Review Harvest; Dairy Support; Farmland Value; Greening

The volatile world of agriculture continued to polarise the farming community this summer. The bad weather delayed the harvest, with some areas still not harvesting by mid-October, while protests and low wholesale costs continued to make headlines of the milk industry.

T he value of farmland has increased, although not as rapidly as in recent years, but it has still proven to be

a greater long-term investment than many other major investment types. Meanwhile, the delay to the Scottish Government greening guide is creating a disadvantage to Scottish farmers, while failing to tackle gold-plating and red tape.

The summer that never wasInitially, the late harvest created fears that the delay would affect crop quality, though it has transpired to be a bumper year for cereal crops. There’s an expected 4% rise on 2014’s final figure in Scotland, meaning the highest yield in 20 years.1

However, by mid-October some regions had still not harvested, with concerns about how the delayed start will affect the crop

quality. Scottish Government, NFU Scotland and other stakeholders were monitoring the position.

Improved weather in early autumn proved an advantage for the start of seed-drilling throughout the whole of the UK. On the

Summer rains cause volatility

The increased yields, not just in Scotland and the UK, but in France and the rest of Europe, could knock down prices.”

downside, farmers were being warned that the increased yields, not just in Scotland and the UK, but in France and the rest of Europe, could knock down prices – a situation made worse by existing stocks from last year’s record harvest.2

Dairy handout – windfall or insult?An EU crisis payment of £26.2m to the whole of the UK milk sector has been announced to support struggling farmers, with £2.3m going to Scottish farmers, but will the payment in December make a difference?

Scottish dairy farmers are likely to receive a payment of around £2,340 each3, more than farmers in England and Wales (£1,820) and Ireland (around £2,000).4

NFU Scotland CEO Scott Walker commented: “While the total sum is

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Autumn 2015 Landscape 05

significant…the sum per dairy farmer is insignificant when set against the losses many dairy farms are making.”3

As well as payments, Defra – on behalf of both Scottish and UK agriculture – has promised to help farmers further by working with the EU to develop a futures market and to make the supply chain fairer.

Farmland increases in valueThe value of farmland in Scotland has increased by 2% during the past twelve months, according to the Knight Frank Scottish Farmland Index. Compared to the 213% rise in the past decade, this growth may seem minor, but it needs to be viewed in context of the political backdrop, which included the independence referendum and UK election.

The results also show that in the past ten years, Scottish farmland would have proved a better investment than gold and the FTSE 100. The Knight Frank report also highlighted that 42 farms were on sale for more than

Sources:1 http://www.fwi.co.uk/business/scottish-cereal-output-hits-20-year-high.htm2 http://www.farming.co.uk/news/article/117383 http://www.heraldscotland.com/business/farming/13785748.Defra_allocates_Scotland___2_3m_of_EU_s_emergency_support/4 https://www.fginsight.com/news/dairy-farmers-in-england-and-wales-to-receive-aid-worth-1800-on-average-65535 http://www.nfus.org.uk/news/2015/october/gold-plating-and-red-tape-still-feature-scottish-greening6 http://www.farminguk.com/News/Food-producers-urged-to-join-forces-with-British-space-industry_37187.html7 http://www.farmingmonthly.co.uk/business/farm-finance/10185-businesses-claim-record-allowances-for-investment-in-plant-and-machinery/8 http://www.fwi.co.uk/arable/wales-bans-gm-crops-to-protect-organic-farming.htm

£1m in the first six months of 2015, 11 more than in the same period of 2014.

Delayed greening guide causes concernThe delayed launch of the Scottish Government’s guide to greening has put Scottish farmers at a competitive disadvantage compared to farmers across the rest of the UK, according to NFU Scotland.5

NFU Scotland President Allan Bowie commented: “By adding in red tape and building in gold-plated rules, [Scottish Government] has failed to recognise the huge environmental strides that have already been taken on Scottish farms while businesses still struggle to remain efficient and productive. This latest greening guide will be…a blow at a time when margins are wafer thin.”

However, the organisation was quick to reflect the 2016 guide as being a “more concise and readable document than its 2015 equivalent.”

In the past ten years, Scottish farmland would have proved a better investment than gold and the FTSE 100.”

Satellites for Agri-Food is a series of events linked to new multi-million pound funding. The programme is aimed at companies who work together on satellite-based projects that could bring savings and efficiencies to farming and food productivity.

Space technology is being used more

and more to boost food production, using systems such as satellite-controlled farm machinery, yield mapping, geo-traceability and supply logistics.6

For more information, visit interact.innovateuk.org/-/satellites-to -improve-agri-food-systems

BEAM ME UP FOR SPACE-AGE FOOD

The Welsh government has followed the lead of the Scottish administration with a proposed ban on GM crops.

The two countries plan to take advantage of new EU rules that allow member states to opt out of growing EU-authorised GM crops. It would mean farmers not being allowed to grow Monsanto’s GM maize variety MON 810 – already grown in Spain and Portugal – and other GM maize varieties awaiting approval.

Wales says it wants to protect its organic farming sector and Scotland wants to protect its ‘clean, green status’.

Two-thirds of EU member states have opted out of growing GM crops altogether.8

NO GM FOR SCOTLAND AND WALES

Investing in new equipment and machinery is almost essential for those farm businesses wanting to expand or improve production and efficiency. Now, though, a key capital allowance is to be cut back.

The Annual Investment Allowance (AIA) gives 100% tax relief on qualifying expenditure in the year of purchase, but is to be chopped from £500,000 to £200,000 from the end of December.

Although tax relief can be claimed over the AIA limit, it has to be spread over the life of the asset rather than benefiting the farm immediately.7

FARMS HIT WITH CUT IN AIA

cut in the amount of qualifying expenditure through Annual

Investment Allowance.

60%

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06 Landscape Autumn 2015

Feature Future of Scottish Agriculture

“Productive, prosperous and profitable futures” is the vision for Scottish farming outlined by Scotland’s Rural Affairs Secretary, Richard Lochhead, MSP. That aim forms the basis of a Government blueprint for comprehensive improvements which encompasses everything from regulation and education to marketing and technology.

A new vision for agriculture

T he Future of Scottish Agriculture, a discussion document to help direct the strategy of the Scottish agricultural

sector, was launched by the cabinet secretary this summer at the Royal Highland Show. The Scottish Government is seeking views from relevant parties on the wide-ranging themes covered in the publication – see the Speak Up For Scotland panel, opposite.

“Scottish agriculture underpins our booming food and drink industry and is the essential glue that holds together our rural communities. Our farmers and crofters are also the custodians of Scotland’s magnificent natural environment,” explained Richard Lochhead.

Re-evaluating the futureThe document sets out nine outcomes, backed by action points, that add up to a

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Autumn 2015 Landscape 07

Scottish agriculture underpins our booming food and drink industry and is the essential glue that holds together our rural communities. Our farmers and crofters are also the custodians of Scotland’s magnificent natural environment.”

vision of the ideal future for Scottish farming. Among the recommended improvements are increased efficiency in feed, fertiliser and energy; partnerships with processors, manufacturers and retailers to increase value; diversification and co-operation to lessen risks and make the most of opportunities, and “proportionate and effective” regulation.

The importance of training, education, skills sharing, research collaboration and advice is a common thread throughout the document. These are seen as essential to maximising green knowhow, harnessing innovation and encouraging a new generation into farming.

Speaking on the day of the launch, Brian Pack, whose recommendations for cutting red tape in farming were formally accepted by the Scottish Government this summer, welcomed the discussion. He said he hoped people with

an interest in agriculture would get together to debate the points made in the document and would make their views known.

NFUS New Generation Group chair Iain Mackay said at the launch that the industry needed the younger generation to question and challenge the status quo, while Julie Fitzpatrick, Director of Moredun Research Institute, said the Scottish vision was “both ambitious and achievable”. She added that the co-operative, joined-up approach in Scotland would be the key to making it work.

Explaining the importance of The Future of Scottish Agriculture, Richard Lochhead concludes: “[Now] is the ideal time to take stock and consider what we want the future of Scottish farming to look like and how our hardworking farmers and crofters can best use our land to produce more food for the nation, both now and in the future.”

The Future of Scottish Agriculture has been a hot topic throughout the country over the past few months. When discussion closes at the end of the year, the aim is to create a workable strategy that incorporates the concerns, hopes and suggestions of the farming community. To register your interest in following the discussion and to have your say, email agriculturevision@scotland.gsi.gov.uk To see the full discussion document, visit www.gov.scot/Topics/farmingrural/Agriculture/The-Future-of-Scottish -Agriculture

SPEAK UP FOR SCOTLAND

WHAT DOES THE FUTURE OF SCOTTISH FARMING LOOK LIKE?

The ambition of The Future of Scottish Agriculture is to create a Scottish agricultural sector in which: • Farmers enjoy strong and

sustainable growth in profits because they focus on the market and are more competitive and efficient.

• The industry works as part of the wider food and drink sector to increase profits and strengthen Scotland’s reputation as a ‘land of food and drink’.

• Farms boost their performance using innovative techniques and best practice, with the help of Scotland’s world-leading research institutes.

• Scotland is recognised as a world leader in green farming.

• Farming, and the wider agri-food supply chain, is more resilient to shocks and challenges.

• High levels of training, education and skills mean farmers can improve their profitability and become greener.

• Agriculture is recognised as an exciting and rewarding career with a range of routes into the sector.

• Scottish society values the contribution agriculture makes.

• Scotland takes a leading role on issues affecting agriculture in the UK, the EU and beyond.

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Feature NFU Scotland

08 Landscape Autumn 2015

Future-proofing farmingHow can Scottish farming businesses become more resilient for the future? Allan Bowie, President of the National Farmers Union Scotland (NFUS), believes the answer lies in pursuing a premium by building the Scottish brand.

R ecent price volatility due to global surplus has made the last couple of years financially challenging for

Scotland’s farmers. “The market economy is brutal at the moment, especially for our lamb exports – many hill farmers will be wondering whether it’s worth going through another winter,” says Allan.

“Our less intensive farming systems here in Scotland make us more susceptible to volatility. Though intensification is already happening on suitable arable land in the lowlands, the climate and the nature of the uplands place limitations on how intensively we can farm; Less Favoured Areas represent about 85% of agricultural land here in Scotland, while England has the reverse of that.”

Scottish farming also faces additional legislative restrictions, as Allan points out. “The potential to use biotech may be limited by Scottish Government policy,

“For example, a lot of Scottish barley is going into our iconic whisky industry, at a premium. The Scottish whisky and salmon industries have built a premium brand in the local and international markets – I think we can do more of that across lamb, beef and other farming produce. We already have Protected Geographical Indication (PGI) status for beef, for example.

“We need to convince consumers in the UK and abroad that Scottish produce is worth more because ours is ‘high nature’ farming – we farm less intensively in the uplands and we’re looking after the environment. There are local and international markets out there – assuming we get the marketing right – that will recognise this and pay a premium for it.”

Future-proofing Scottish farming therefore requires building this Scottish brand and raising consumer awareness of what makes it unique. “We do need added value, and as farmers we do need to take more ownership of the Scottish brand, so that any margin goes back to the producer,” believes Allan. “That way we can invest for the future with resilience, confidence and profitability so that the next generation can continue farming.”

Working togetherWhat can individual farmers do to ensure they tap into a premium Scotch brand? “As farmers, we have to deliver consistent quality, which I think we are doing,” says Allan. “And we need to lift our heads from the grindstone a bit and think ahead. Many of us are just trying to get through this harvest, this season.

“However, we need to work in collaboration with other farmers to get the processors and end consumers to realise we have a great story here. We can’t just wrap it in a Saltire and expect the consumer to pay more. We need to go beyond the farm gate to sell our story better, so that shoppers understand why it’s worth paying a bit more.”

Many businesses do that very well already, says Allan, pointing out that diversification into tourism and social media gives opportunities for direct contact with consumers. “Especially in dairy, young people have been Tweeting and Facebooking , saying: ‘It’s our future, believe in us’.”

We need to work in collaboration with other farmers to get the processors and end consumers to realise we have a great story here. We can’t just wrap it in a Saltire and expect the consumer to pay more.”

while tree planting targets means there is pressure to use grazing land for forestry.”

Premium for ‘high nature’Parts of Scottish farming will never be able to compete purely on production volume and price, but farmers can respond positively believes Allan. “As Scottish farmers, we must box clever – rather than try to produce more tonnes to sell cheaper, we need to ensure we get a premium for what we produce. That will give us a chance of surviving in the market.

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Case Study The Flying Farmer

Autumn 2015 Landscape 09

Flying farmer’s high level of supportJohn McKenzie, aka The Flying Farmer, has proved that a bit of co-operation and a lot of creativity can take you to places you never expected.

Although Scotland’s Year of Food & Drink campaign provides a helpful boost in marketing the Scottish brand, Allan feels more can be done. “When I speak to politicians, I say we shouldn’t just have one year of food and drink, it should be every year. NFU Scotland has also been heavily involved in discussions with Scottish Government about their food and drink policy, which is currently out for consultation and focuses on securing this premium market and making sure farmers have a margin.”

Allan concludes: “I would like Scottish farming to be the lynchpin of a vibrant rural economy, with sustainable farming businesses less reliant on subsidy.

“We know we have to be competitive, but we know we cannot compete just on price. So it comes back to getting the right standards to fetch the right price. We need to be consistent in what we do. We need the people, the research, the technology and the financial resources to allow us to do that as well as a market that is responsive to the benefits of Scottish farming.”

Allan BowiePresidentNFU Scotland

Allan Bowie farms in North East Fife and Clackmannanshire, majoring on growing cereals. Allan was appointed Vice President of NFU Scotland in February 2009 and became President in February 2015.

We need to convince consumers in the UK and abroad that Scottish produce is worth more because ours is ‘high nature’ farming – we farm less intensively in the uplands and we’re looking after the environment.”

W ith the help of his father, former Dingwall and Highland Auction Marts head Kenny

McKenzie, John has been breeding a range of livestock, including a Belted Galloway herd, British Saddleback pigs, continental heifers, Zwartble sheep and alpacas.

In 2009, John embarked on projects to promote local energy production and savings, both within his own farm which harnesses the wind, rain and sun, but also with other businesses to develop renewable energy schemes.

His latest venture is the GlenWyvis whisky distillery, which won the Scottish Craft Distillers’ Gold Award for Innovation in October. “It’s actually the resurrection of two old distilleries that used to be here,” explains John. “The intention is to rent the land, the borehole and the farm’s renewable energy sources to operate the distillery as a standalone business.”

John also flies helicopters – taking supplies to St Kilda, making

aerial films and transporting passengers across the country – with the carbon produced while flying offset by his commitment to green energy.

Bank of Scotland has supported John with the installation of renewable energy systems and to plant trees and hedges, and earlier in 2015, Neil Boyle, Relationship Manager at Bank of Scotland, restructured the business’ finances so that John could drive forward with the distillery plans.

“John is a highly driven individual with a clear strategy around how he wants his business to develop,” says Neil. “He‘s constantly looking to boost efficiency and diversify in a sustainable way.”

“I have a real relationship with my bank manager,” says John. “He understands my business and wants to see it grow. Neil has even met me to pass on paperwork when I’ve landed with VIPs at a local hotel. That’s service.”

All lending is subject to status.

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10 Landscape Autumn 2015

Increasing Efficiency Gerard Keenan

T he real challenge for farms over the last decade has been pricing. Costs are under your control to

a certain extent, but we have a global problem when it comes to low and volatile prices for the food we produce.

I’ve seen from my meetings with farmers around the world that no country has a competitive advantage. Margins and profitability are weak in every country, including the US and New Zealand.

When you know that pricing is an issue everywhere, you can turn your attention to what’s in your control and what you can

Gerard KeenanExecutive ChairmanKeenan Systems

Keenan Systems was founded in Ireland in 1978. The company’s scientists, agricultural economists, nutritionists and engineers now produce systems and machinery for farm productivity and feed efficiency.

do without major investment. If you look at the most efficient farms versus the typical, I can see that they’re getting more from their feeds and forages. It could mean as much as 20% more milk and beef from the present levels of concentrates. Efficient farms are either using fewer inputs to get the same level of production, or are increasing fertility and longevity to reduce costs and improve output. There is a third key area, though – and this is quality and consistency. The gap between those hitting the specification and those missing it is widening. Take quality

When price is outside your control, it’s quality and efficiency that counts

Farmers are constantly innovating and proving what’s possible through technology and diversification, says Gerard Keenan. But, in a world where low-price contracts put even the most efficient farmer under stress, where should farms be focusing their energies?

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Autumn 2015 Landscape 11

Increasing Efficiency Brian and Sheila Yates

Small steps for a big differenceChange doesn’t have to be revolutionary to be effective, as Brian and Sheila Yates have proved at their dairy farm near Castle Douglas in Dumfries and Galloway.

B rian’s father originally came to East Logan in 1971 to farm dairy Shorthorns, but Brian

himself has since moved to Friesian and now Holstein cows, with 270 milking cows and 340 followers on the 147 hectare farm. His aim is simple: to keep farming and to ensure the farm is a viable succession opportunity for his own son.

As part of that ambition, Brian makes carefully planned, incremental improvements to the farm’s efficiency. “We were at a crossroads 10 years ago,” he says. “We either had to get out of the business or invest. I’m very glad we decided on the latter.”

That investment has been supported by a keen eye for efficiency. Brian has installed a biomass boiler and a new young stock shed which makes better use of slurry and nutrients, and now reseeds more regularly to get better silage quality.

He is always looking at ways to improve the genetic merit of his herd and uses feeding technology from Keenan Systems to ensure further efficiency. “Keenan Systems have been a huge advantage in

supporting our plans, and it’s been good to work with a company that knows so much about increasing efficiency,” says Brian.

“We’ve reaped the benefits of all these small changes. Efficiency has allowed us to create more output without increasing cow numbers or employing extra labour.”

Without his bank, he adds, he probably wouldn’t have been in farming today.

“I have a lot to thank Bank of Scotland for. My bank manager had a farming background and could see the bigger picture when we were in need of investment.”

as your guiding principle and you become a valued supplier, which puts you in a better position to choose your customers.

The farmers who are achieving this have shown to be open to ideas from all sorts of sources and made improvements little by little. They weren’t waiting for a big win, but were continuously improving.

Changing how we do things is a challenge, but, in fact, it’s only about building on what we already know and do. The real difference now is an urgency born of market and economic stresses.

Farms should be asking their advisors for specific help in the areas of feed maximisation, fertility and longevity and quality. They should be looking at what the top 30% are achieving and asking how they can start the journey towards that model.

My bank manager had a farming background and could see the bigger picture when we were in need of investment.”

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Case Study Culligran Estate

12 Landscape Autumn 2015

Water powers the future for Highland estateHow should a farm business decide its direction when it comes to diversifying and building resilience? Often the answer is to maximise an existing strength – whether that’s a skill, a location or an asset. For the Culligran Estate, that strength is water.

C ulligran, at Beauly near Inverness, is a 5,200ha estate with stalking, fishing, a deer and sheep farming

business and five holiday lets.“Highland estates face many challenges,”

says owner Frank Spencer-Nairn. “I wanted to improve our viability and provide security. It’s always been my ambition for the estate to stand on its own feet.”

The Neaty Burn runs through the middle of the property and had the head, flow and access needed for a hydroelectric scheme. It seemed a tailor-made opportunity for the estate, providing they could make the economics work.

“I was familiar with the hydro industry,” explains Frank. “A major part of SSE’s 55-year-old Affric/Beauly scheme is already on my estate. The fact that there was a high voltage power line nearby seemed to offer the prospect of a simple grid connection,

and I put in a lot of research time to assess the project’s feasibility.”

A new company, Torrential Potential, was set up and the £2.5m capital cost was funded through equity and borrowing from Bank of Scotland, drawn down over 10 months. The project is a joint venture with Frank as majority shareholder and his accountant, James Hair, and hydro developer Gilkes Energy as the other partners.

“We were able to secure funding under the European Investment Bank scheme and the client fixed the rate on £1m over 10 years,” explains Bank of Scotland Relationship Director, Paul Healy. “The project came in on time and budget, which is exactly what a bank likes to see!”

The 700KW hydro scheme has been transformational for the estate – ensuring its future and giving Frank scope to consider other investments. It’s a result that will benefit not just the estate, but the local economy.

The main challenges, says Frank, were researching the seasonal flows, carrying out the feasibility study and applying for licences and grid connection.

“A huge number of legal agreements had to be drawn up, but we just needed patience, determination and teamwork to see us through to success,” he says. “Wherever we could, we worked to minimise the risks. Hydro is a well-proven technology and my partners have a track record and a good reputation.”

Although Frank and his family were existing Bank of Scotland clients, funding for the hydro scheme was originally to come from another bank. When it became clear that this second bank wasn’t going to be able to help the estate, Frank’s advisors turned to Bank of Scotland.

“I think we really showed we had an appetite for the project,” says Paul Healy. “We could also give Frank the confidence that we understood the complex project, that we could provide the funding on an asset rather than project basis within the timescale and that we could secure competitive prices.”

We could give Frank the confidence that we understood the complex project, that we could provide the funding on an asset rather than project basis within the timescale and that we could secure competitive prices.” Paul Healy, Relationship Director, Bank of Scotland

All lending is subject to status.

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RSABI Supporting Farmers

Help is at handRSABI, formerly known as the Royal Scottish Agricultural Benevolent Institution, was founded nearly 120 years ago to help Scottish tenant farmers in need. It’s evolved into a thoroughly modern-day charity that supports people in crisis in a range of ways, as its Chief Executive Officer Nina Clancy explains.

family issues surrounding succession, as well as discussing debt, financial difficulties and navigating the welfare system.

Our helpline calls have increased in recent times, partly due to a greater awareness of our service, but also because farming is undoubtedly going through very difficult times, with many unable to take the strain. That’s why we can also provide visits in person by one of our RSABI case officers who will sit down and talk through the available options.

Financial support We also provide two kinds of financial support: recurring grants to our ‘annual beneficiaries’ – people no longer able to work due to chronic illness or old age and who’re struggling to get by – and one-off grants for those in temporary emergency situations.

CRISIS? RSABI IS HERE TO HELP

Feeling like you’re trapped with nowhere to turn? Or are you a family member, friend or professional who knows someone that could use help and support for whatever reason? RSABI is here to help. Phone the helpline on 0300 111 4166 (Monday to Sunday, 7am to 11pm) or email rsabi@rsabi.org.uk

You can support the charity financially with a donation or by joining the supporter scheme as an individual, business or corporate member. Or you can offer your time and professional skills as a volunteer. Visit www.rsabi.org.uk

SUPPORT RSABI

We plan to up the number of annual beneficiaries and one-off grants in 2016, and ultimately we’d like to help thousands of people, not hundreds.

To increase the number of people we help, in 2016 our case officers will be developing a network of professionals well-placed to refer people to us – such as bank staff, Citizens Advice, district nurses and NHS staff, social workers and local authorities. At the same time we are also keen to recruit volunteer professionals willing to support farmers alongside our case workers.

Farmers face some tough challenges but we are determined to help people overcome their problems and so continue farming. There’s reluctance from many in the farming community to ask for help when they need it, but sometimes a gentle leg up early on can make a huge difference.

Bank of Scotland and RSABIBank of Scotland’s corporate support of RSABI is invaluable, and has developed into more of a partnership. We benefit financially thanks to the volunteering and hard work of the bank’s staff who have raised over £10,000 by taking part in the Great Glen Challenge in the past few years. The bank’s Adam Henson Lunch also helped raise over £8,500.

Bank staff also keep a look out for those in need, encouraging people to contact the charity for help. Additionally, RSABI employees now have a greater understanding of the banking world through our relationship with the bank, helping us deal with those people in need of support.

W e’ve moved on from just helping Scottish tenant farmers in need and now assist anyone from the

land-based sectors – agriculture, fish farming, forestry, rural estate work, crofting, game keeping – experiencing a crisis, whatever it is.

Our message is – no matter how hopeless things may seem, there is help and support on hand if you ask for it. Our help can extend in three ways: through our confidential helpline, non-financial support and financial assistance.

New phone helplineEarlier this year we re-launched our phone service as a fully-fledged helpline which is available seven days a week from 7am to 11pm. As well as providing a sympathetic ear, we can also signpost callers to relevant advisory services.

We are on hand to talk through emotional wellbeing, mental health and

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14 Landscape Autumn 2015

Autumn 2015

Resilience in the face of tough economic challengesA lthough the global economy

continues to grow, with projections for 2015 at 3.0%, there are signs of

a slowdown in China and continuing low growth in the Eurozone. The impact of that on Scottish farmers is principally felt through the prices of food and agricultural commodities. At present, there seems to be no upward trend in food prices in the offing.

Export challengesTurning our attention to the UK, despite some evidence of growth slowing, the economy is still growing at a faster rate than many of its peers. Inflation remains low at around 0%. We have seen the pound strengthen against the euro, which has made life difficult for exporters. Beef prices have recovered slightly but are still below the level of last year.

In Scotland, the economy is still growing, with the latest official figures showing that GDP rose 0.1% in the second quarter of 2015. Despite slowing compared to last year, the forecast for the Scottish economy is growth of 2.3% next year.

A squeeze on profitsOn the face of it, this is good news for the Scottish agriculture sector as consumer confidence continues to increase, supporting consumer spending. However, the overall trend for agriculture prices remains negative. If we look at the year to end August, for example, the index of output prices fell by 5.3%.

On the positive side, we see evidence of the fall in prices for beef and lamb beginning to bottom out which is particularly good news for the Scottish

farming industry where beef makes up a significant proportion of the sector overall1. However, trends in most other products remain depressed. Meanwhile, inputs are being pegged back, to some extent, by the low level of inflation and the reduction in oil prices, which is keeping energy prices low.

More positive outlook2015 has been a difficult year. The weather has been a particular problem, with the harvest delayed and quality problems affecting cereal production, especially spring barley. Fortunately, mid-autumn gave better harvesting conditions. Yields overall appear good and prices, if not actually increasing, have stopped falling.

Farming is a resilient industry and, looking ahead, I am expecting the decline in agricultural commodity prices overall to stop and for certain individual commodities, such as beef, to increase. Energy costs and

inflation are likely to remain low and an increase in interest rates is not now expected until 2016.

1www.nfus.org.uk/farming-facts/what-we-produce

Yields appear to be reasonable and prices, if not actually increasing, have stopped falling.”Donald MacRae, Chief Economist, Bank of Scotland

2.0

1.5

1.0

0.5

0

Agrimonitor Indices of Agricultural Inputs & Outputs Bank Base Rate and RPI

2012 2013 2014 2015

J M M J S N

Bank Base Rate % Index: 2010 = 100

Base RateOutput IndexInput IndexRPI

J M M J S N J M M J S N J M M J

135

130

125

120

115

110

105

100

Economic Outlook Donald MacRae

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Autumn 2015 Landscape 15

Key contacts

South and East Scotland

Co-Head of Agriculture

Sandy Hay – 07769 648387 Sandy_Hay@bankofscotland.co.uk

Relationship Director

Paul Healy – 07736 359431 Paul.Healy@bankofscotland.co.uk

Relationship Managers

Stewart McNaughton – 07900 678002 Stewart_McNaughton@bankofscotland.co.uk

Barry Watson – 07795 354802 Barry_Watson@bankofscotland.co.uk

Gavin Hay – 07920 765670 GavinHay@bankofscotland.co.uk

Andrew McPhail – 07785 314672 AndrewMcphail@bankofscotland.co.uk

Julie McLaren – 07900 678072 Julie_McLaren@bankofscotland.co.uk

North and West Scotland

Co-Head of Agriculture

Donald Macdonald – 07769 648355 DA_Macdonald@bankofscotland.co.uk

Relationship Directors

David Strachan – 07769 648335 David.Strachan@bankofscotland.co.uk

Philip Reid – 07879 604436 Phil.Reid@bankofscotland.co.uk

Douglas Allan – 07768 612670 douglas_allan@bankofscotland.co.uk

Relationship Managers

Bill Murphy – 07900 980722 Bill_Murphy@bankofscotland.co.uk

Neil Boyle – 07717 714318 Neil.Boyle@bankofscotland.co.uk

Steven McGrath – 07919 113234 Steven_McGrath@bankofscotland.co.uk

David Murray – 07748 146923 DavidMurray@bankofscotland.co.uk

Please contact us if you would like this information in an alternative format such as Braille, large print or audio.If you have a hearing or speech impairment you can use Text Relay (previously Typetalk) or if you would prefer to use a Textphone, please feel free to call us on 0345 300 2755 (lines open 7am-8pm, Monday-Friday and 9am-2pm Saturday).

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The information contained in this newsletter is for general purposes only and is not intended to constitute legal or professional advice. You should seek specialist advice should you have specific queries. This newsletter is based on information from third parties and is believed to be correct. However, neither Bank of Scotland plc nor it employees, officers or agents warrants its accuracy or completeness or accepts responsibility for any losses or damages whatsoever caused by reliance on information contained in this newsletter.

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The Lloyds Banking Group includes companies using brands including Lloyds Bank, Halifax and Bank of Scotland and their associated companies. More information on the Lloyds Banking Group can be found at lloydsbankinggroup.com

LinkedIn: Bank of Scotland for Business

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Spread the costs.Reap the benefits.

CO M M E R C I A L B A N K I N G

To keep business growing, it’s vital that your investments are made with a healthy cashflow always in mind. Our Hire Purchase facility lets you spread the cost of what you buy over a period of up to 60 months* and can fund a range of assets such as farming vehicles, equipment or machinery.

To discuss the right finance option for you, contact your local relationship manager – see page 15.

bankofscotlandbusiness.co.uk/agriculture

All lending is subject to status.

*Longer terms may be agreed for certain agricultural assets. Calls may be monitored or recorded. Please note that any data sent via e-mail is not secure and could be read by others. Authorised by the Prudential Regulation Authority and regulated by the Financial Conduct Authority and the Prudential Regulation Authority. Hire Purchase and Leasing facilities are provided by Lloyds Bank Commercial Finance. Lloyds Bank Commercial Finance Limited is part of Lloyds Banking Group and is authorised and regulated by the Financial Conduct Authority for activities relating to certain types of consumer credit which are regulated under the Consumer Credit Act 1974 and by the Financial Services and Markets Act 2000. We are not deposit takers and are not regulated by the Prudential Regulation Authority. The provision of credit or leasing services by us is subject to your meeting our Credit approval. Please ensure that you only apply for credit or leasing services that you can comfortably afford. The Lloyds Banking Group includes companies using brands including Lloyds Bank, Halifax and Bank of Scotland and their associated companies. More information on the Lloyds Banking Group can be found at lloydsbankinggroup.com

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