Farmer past and intended investment behaviours: evidence from the large scale farmer intentions survey

Investment in farm capital underpins Scottish Government goals for a sustainable and productive industry. We examine the intentions and past behaviours for on-farm and off-farm investments. Using the farmer intentions survey - a survey of 2,494 Scottish farmers conducted in 2018 - we find that large numbers of farmers have declared an increase in the capital value of the farm and have mostly reinvested in their buildings and machinery over the last five years - with most of the investment in the medium to very large farm sizes.
Very large farms are investing the most in capital around agricultural production and medium sized farms have invested the most in agroforestry. On average 18% of farms have increased their off-farm investments.
As regards intentions to invest, a large proportion of the farms who did not invest in the last five years have no intention of investing in the next five years. Looking at the factors which drive investment in agricultural capital, we find this is characterised by higher incomes and larger farm size, but also succession factors as well attitudes to risk taking.
In addition, those farmers who declared a more positive attitude towards Brexit also intended to increase farm capital investment. We also find a greater intention to invest in agroforestry across all farm sizes compared to the last five years which may be indicative of changes expected in the replacement of the CAP.
Framing an agricultural policy for Scotland should focus on encouraging sustainable investment in both agricultural and environmental capital to encourage efficiency gains and meet climate and biodiversity targets in the future. Barriers exist to investment and these are structural - in terms of size and income - but also behavioural - e.g. attitudes towards investment, as well as generational - in terms of succession and entry into the sector