FARMING debt in Scotland has hit a record high over the past year with the total amount of money owed to banks and other lending institutions up to £2.32 billion – a rise of five per cent.

Figures from Scotland’s chief statistician show the increase on last year’s figure was £113 million to the end of May – the eighth consecutive annual rise.

Debt levels have now risen to their highest since records began in 1972 after remaining steady for a decade during the 2000s.

As well as bank loans, farms also have an estimated £1.1bn of liabilities from hire purchase, family loans and other sources.

Around half of all liabilities are long-term loans, a percentage that has been slowly increasing over time, statisticians said.

The figures for Scotland come after problems with a new IT system caused delays getting European subsidies to farmers.

However, the data reflect the overall UK picture, with figures from the Bank of England showing that by May 2017 the UK agricultural, hunting and forestry sector had an outstanding debt of £18.5bn, with debt levels up 57 per cent since 2010.

Scott Walker, chief executive of the farmers’ union, NFU Scotland, said: “It is bad news that once again the level of bank borrowings of Scottish farms has risen.

“This is the eighth consecutive annual increase and underlines the lack of profitability across farming.

“Food and drink is Scotland’s largest manufacturing sector and requires a strong farming sector. We need to forge a new partnership between farming and the rest of the food and drink supply chain.

“There is ambition to double the size of Scotland’s food and drink industry by 2030. Without successful farming this will never be achieved.”

Rural Economy Secretary Fergus Ewing said the figures showed confidence in the agricultural sector.

“It is vital that Scottish farmers can continue to access capital to invest in their businesses.

“These statistics show that banks are still lending to farmers, which is a sure sign of confidence in the sector.

“Although debt levels have increased to their highest level since the 1970s, the situation reflects the overall UK picture, with the Bank of England showing that agriculture is one of only two sectors to have seen consistent increases in lending in recent years.

“However, with many farmers relying on subsidies for a large part of their income, we must be wary of farmers getting into excessive and unmanageable debt. I would encourage any farmer who is experiencing financial hardship or is looking for help on increasing the sustainability of their farm, to contact our farm advisory service for support.”

Last week, it emerged that the Scottish Government was facing a fine of up to £700,000 after issues with a £178m IT system resulted in Common Agricultural Policy (CAP) payments to farmers being delayed for a second year. This was on top of potential penalties of around £5m resulting from late payments in 2015 caused by delays introducing the new computer system.

The Scottish Government’s director of agriculture, food and rural communities, Elinor Mitchell, told Holyrood’s Public Accounts Committee that 90.4 per cent of payments due to farmers were paid by the June deadline. But the European Commission rejected an extension request put forward by Scottish Ministers.

Ewing will make a statement to Parliament later encouraging more farmers to apply online for CAP funding under the Single Application Form (SAF), in a bid to modernise the process and make it more efficient.

“The drive to move online has been under way for several years and last year, more farmers and crofters than ever chose to make their application online,” he said.

“For SAF 2018 we will be encouraging online take-up by the remaining paper customers and will be offering support to help them apply and manage their land information online,” added Ewing.

“Achieving this will reduce the time spent manually processing claims and checking and correcting errors, ultimately making the payment process more efficient and easier.”