AS the prices of energy, grain and fertilizer skyrocket, it is no surprise to hear that Scotland’s farmers are facing a perfect storm amid the cost-of-living crisis.
Nick Mackenzie is a fourth-generation dairy farmer who founded Black Isle Dairy in the east Highlands.
He started his farm with the help of his father and now runs it as a family business alongside his wife, Jo. Together they run a dairy farm with an ice cream shop, as well as supply milk to local cheese producers.
Speaking exclusively with The National, Mackenzie spoke of the cloud the energy crisis had cast over his farm and the uncertainty that his business was facing.
He said: “Feed costs have gone up significantly, fuel costs have gone up. Electricity hasn’t hit us yet but they are going to double or more which is a real concern for us.
"I’m unsure but I’m hoping it will be ok in terms of costs. It just depends on how much electricity rises and for how long. It’s going to squeeze everything we do.”
One of the most shocking cost rises for the farm has been fertilizer which, amid factory closures and sanctions on Russian producers, has doubled in price from £14,000 in 2021 to £28,000 this year.
Mackenzie said that without change the industry would “sleepwalk into a complete disaster” but that in the meantime, all he could do was adjust to the demands of the current crisis.
He added: “We do have some solar panels, and we're looking to offset as much of our energy costs as possible. We’re just making sure we're as energy efficient as possible, checking which bits are making money, what's using a lot of energy.”
With the looming jump in electricity prices, Mackenzie spoke of what this would do for the production side of his business as ice cream refrigeration costs are set to soar.
He said: “It's certainly going to affect ice cream prices - we're probably going to have to push them up again. Because the electricity costs of heating, cooling and freezing stuff is going to be significant.
“We've been hit with the cost of our ingredients going up. The costs of packaging has risen and electricity is going to go up significantly.
“We’ve got to try and keep control of our costs, but not make the ice cream so expensive that we can't sell it.”
The issues the farm is facing aren’t solely related to energy prices, with Mackenzie saying the business was “playing catch up” off the back of Covid as staffing issues had hampered the beginning of the summer business.
And while staffing issues hadn’t arisen from Brexit, departure from the EU had severely impacted the supply of ingredients and packaging which are shipped over from Italy.
Mackenzie estimated that Brexit had made the cost of ingredients and containers from Italy jump by 10-15%.
For the future of his business, Mackenzie says that the biggest issue he is facing is uncertainty.
He adds: “It's just very difficult to plan. Just making a clear plan of where to go because we're not really sure how much the likes of electricity is going to cost us to produce the product.
“And if it gets to the stage where our product becomes too expensive to sell, then we kind of have to knock that on the head, which obviously we don't want to do because the business has grown steadily.”
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When asked what the industry needed to face the upcoming crisis, Mackenzie said more clarity from the Scottish Government was required on the direction of its agricultural policy.
He said: “We need some clarity. We need to know where the Scottish Government is taking its agricultural policy, to see that it is going to support production.
“We need to see the framework going forward. It’s another area of uncertainty that will certainly be affecting farmers.”
“They are taking their time with this but I realise they don’t want to rush it. England has got a framework in place, even if it’s the wrong one.”
He added: “If we don’t get some guidance, we’re going to be stuffed.”
A spokesperson for the Scottish Government acknowledged the challenges that Scottish farmers have faced through Covid and Brexit while "recognising that many are also facing hugely challenging increases in energy bills and price rises across the board".
They added: “We have committed to support active farming and food production with direct payments - which provides certainty to the industry - and we delivered 2021 Common Agriculture Policy (CAP) payments to schedule with over £564 million issued to date.
"In addition, this year, to support farmers with the cost of living, the Scottish Government has brought forward the advance payment start date to as early in the year as is practicably possible. The intention is to support businesses, as far as possible, with immediate cash flow challenges.”
“Looking to the future, we have been working alongside industry to co-develop our future agriculture transformation policy, ensuring that farmers, crofters and land managers have what they need as we move towards the new Scottish Agriculture Bill which will be brought forward in 2023 and will provide a replacement for the Common Agricultural Policy. A consultation on this work will be launched soon"
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