Farming businesses could add £820m to UK economy if productivity is improved

Research has uncovered that investing in workplace culture, employee benefits packages and rewards for good performance have the biggest impact on improving productivity
Research has uncovered that investing in workplace culture, employee benefits packages and rewards for good performance have the biggest impact on improving productivity

Small and medium businesses in the agricultural sector could add up to £820 million a year to the UK economy if they introduced a series of productivity improving measures.

The UK’s productivity is under increasing scrutiny following the latest ONS figures, which identified a 0.5% fall in productivity in the first quarter of the year.

Despite this productivity gap, research found SMEs in the agriculture sector are uncertain about the actions they need to take to boost business productivity.

But small farming businesses could add £820 million to the economy. The figure has been calculated by identifying the difference in productivity between SMEs which introduce productivity-improving measures, and those that have considered but not yet implemented the measures.

This potential productivity gain is scaled up, based upon the number of SMEs in the agriculture sector, and the number of businesses which have said they have considered implementing each measure.

Political uncertainty

Even though more than half (55%) of SME decision makers in the sector believe improving productivity is important, 45% don’t know what productivity means in practice, making it difficult for them to identify the steps to improve.

NatWest’s research analysed the productivity of SMEs across all industries to identify potential changes firms can make to close the productivity gap.

Investment in workplace culture, employee benefits packages and offering rewards for good performance were the measures most likely to have the greatest impact on improving productivity.

Despite these potential gains, the research identified that Brexit and political uncertainty mean just 20% of senior decision makers in the agriculture sector see tackling productivity as a key business priority.

Less than a fifth (17%) of agriculture SMEs said that they invest in employee benefits above the statutory minimum and only 18% invest in workplace culture.

Similarly, just 12% offer rewards for good performance, such as a bonus, showing there are significant gains to be made.

When comparing agriculture to other key industries, it is manufacturing which has the most to gain from productivity improving measures, with the potential to add an additional £3.9 billion to the economy. In contrast, the legal sector has the least to gain at £580mn per annum.