Farmers are feeling more confident with their businesses thanks to new investments and hiring intentions despite an uncertain political outlook, a new report shows.
Business confidence in the agriculture sector – based on the outlook for sales, orders and profits – has increased since the start of the year, according to the latest 'Business in Britain' report from Lloyds Bank.
This is thanks to an increased level of investment and hiring intentions in the sector over the past six months.
The report also highlights that almost a quarter of agricultural businesses do not expect to see any impact if a trade agreement is not reached with the EU.
It follows comments by the NFU just days ago describing a 'no deal' Brexit as the "Armageddon scenario" for the farming industry.
Indeed, the report highlights that agriculture businesses are more confident than they were at the start of 2018, rising 25 points to 32 per cent in the past six months.
The net balance of farmers looking to grow investment in the next six months rose by 14 per cent, up 19 points compared with January, with 57 per cent of farmers who do plan to invest saying that they would buy new machinery and equipment.
And the net balance of farming businesses looking to hire more staff increased to 27 per cent, up 42 points since the start of the year, when a net balance of 15 per cent of farmers expected their staff numbers to go down.
The share of farming businesses that reported difficulties hiring skilled labour was flat, with 45 per cent of farmers agreeing that this remained a challenge.
Farmer confidence
The Business in Britain report, now in its 26th year, tracks a range of performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative.
Agriculture was ranked in the top three sectors for business confidence, with the second highest points increase over the last six months.
Business confidence was highest in the Energy sector (41 per cent), followed by Transport (37 per cent).
Uncertainty around Brexit is now the single greatest risk to farming businesses over the next six months, according to 36 per cent of farmers.
The proportion of farmers reporting emerging technology as their greatest risk increased to 14 per cent, while those citing weaker UK demand fell sharply from 30 per cent in January to nine per cent.
Uncertainty around negotiations
More than a quarter (27 per cent) of farming businesses expect a positive impact on their business if no trade agreement is reached with the EU.
Nearly a fifth (18 per cent) expect a negative impact, while almost a quarter (23 per cent) do not expect any impact at all and 32 per cent said they didn’t know.
Andrew Naylor, Head of Agriculture at Lloyds Banking Group said: “While it’s encouraging to see overall confidence has increased amongst agricultural businesses since the start of the year, the sector has a clear split in opinion over what will happen if no trade agreement is reached with the EU.
“For many farmers, stepping away from the EU’s Common Agriculture Policy presents an opportunity to start afresh and focus on British interests, while the impending publication of the new Agricultural Bill, detailing government plans for the farming sector post-Brexit, continues to create uncertainty.”
