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Economic analysis

Supporting Scottish farmers, whatever the weather

Scottish farmers have faced a challenging few years, combatting changing weather and rising costs. Following our continued sponsorship of the Royal Highland Show, our Chief Economist Seb Burnside explores what we’re doing to help.

Diversification and investment

The Royal Bank of Scotland’s continued sponsorship of the Royal Highland Show reflects the importance the bank places in supporting this vital sector of the economy.

Scottish farming has had a lot to cope with in recent years. Last Spring (2024) was one of the wettest on record, while this year’s Spring was the driest since 1964. Changing weather means changing yields and prices, and this means that come rain or shine, farming businesses need to find ways of remaining commercially resilient. So how are farmers responding?

Diversification and investment are twin tactics that the Scottish agricultural sector is pursuing. Based on the latest available data from the Scottish Agricultural Census, 2024 Scottish farms have reported a 20% increase in profits from ‘other activities’. Those ventures are often in the leisure sector and capitalise on the trend of consumers wanting experiences that connect product and place. 

Scottish farms are also adapting their practises to ensure they're getting the best possible results, and this often requires investment. Advances in everything from sensor technology, drones and of course AI, are putting more data at the farmer's fingertips and improving their ability to analyse it. As a result, investment by farming businesses is on the up, rising 11% last year. 

As the biggest bank for agriculture in Scotland, Royal Bank of Scotland is playing a key part in helping farmers.

Making growth sustainable

Investment can potentially also help combat the current source of cost pressure: wages. The strength of wage growth has been a boost to Scottish households this year, with pay packets growing by nearly 6% annually. But rising pay and other employment costs need to be met with higher output to make growth sustainable in real terms and that's where we come up against a productivity challenge. 

Scotland's farming sector employs 67,000 people, making it roughly twice as important to the Scottish economy than the sector's share at the UK level. But even that statistic underplays its importance when you consider how much of the £5.2 billion food and drink manufacturing industry it supports. This makes Scotland the UK’s leading producer of food and drink by value added and creates another connection into the consumer side of the economy. 

From supply chain challenges and geopolitics, to rapidly changing technology and increasingly unpredictable seasons, Scottish farmers are being affected by a large number of factors that impact their businesses. As the biggest bank for agriculture in Scotland, Royal Bank of Scotland is playing a key part in helping farmers to manage this volatility. 

Our Royal Bank of Scotland colleagues at the Royal Highland Show

Thrive and grow

Through a combination of lending and specialist relationship management we’re supporting farmers’ efforts to diversify and adapt. In doing so, we want to not only help Scottish farmers weather uncertainty, but to thrive and grow as a vital part of the UK economy. 

A lot has changed since Royal Bank of Scotland became the Royal Highland Show’s partner back in 1981, but our ability to understand the challenges and opportunities Scottish farmers face means we will continue to adapt and change to succeed with the sector.  

This article was adapted from an article in The Herald newspaper.

The material published on this page is for information purposes only and should not be regarded as providing any specific advice, or used by consumers to make financial decision. Terms and conditions apply to any products or services mentioned.

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