Farmer confidence drops significanty post-Brexit, survey suggests

Farmers in Yorkshire and the North East are positive about the short term outlook of their business, but confidence falls significantly post-Brexit, according to a new survey.

With just eight months to go before Britain leaves the EU, a survey of Yorkshire’s farm and agri-food businesses shows a current positive outlook is set to fall significantly.

The survey, carried out by the NFU in the North East, shows that while 71% of farmer respondents and 82% of food, drink and wider supply chain companies surveyed are very or fairly positive about their business prospects, this drops to just 37% and 51% respectively once outside the EU.

The findings were unveiled on the first day of the Great Yorkshire Show (10 July), which showcased the feeling of worry many are feeling in the local farming industry.

Asked to indicate the key issues affecting their confidence, 49% of farmer respondents said their most pressing issues were related to uncertainty and volatility - in terms of business costs and farmgate prices.

Other key issues included future trade regime (8%); labour supply/retention (8%) and cashflow/profitability (8%).

Uncertainty over what a domestic agriculture policy will look like is reflected with 11% citing uncertainty over future support as a pressing concern.

For companies, the top two issues were skills/labour availability – cited by 31% of respondents and consumer confidence/falling demand – cited by 18% who questioned whether people may be less willing to spend post Brexit.

Resilience

The survey also asked respondents whether they have changed anything to make their business more resilient ahead of Brexit.

39% of farmer respondents have taken steps and of those, 31% have worked to reduce costs/debt, 23% have diversified their business and 17% have changed their farming practices in some way.

More than a third of wider supply chain businesses (37%) have made changes with the most common response (31%) being an investment in automation or other business efficiency.

23% have changed their recruitment policy or workforce requirements and 14% have invested in expansion. Other changes introduced included sourcing local/UK suppliers (14%) and changing marketing strategies (14%).

Thinking about what could be done to support business prospects as we leave the EU, the majority of both farmer respondents (44%) and wider supply chain companies (33%) said a focus on financial incentives such as productivity grants was the most likely to have a positive impact on business confidence going forward.

However the need to spend more on R&D was also highlighted by 16% of farmers and 18% of companies – with a further 22% of companies wanting to see further skill development within the local workforce.

'Stumbling block'

Adam Bedford, NFU North East regional director said it is "encouraging" to see a proportion of Yorkshire's farming businesses taking steps to make themselves more resilient in the face of change.

“But the point was made by most that continued uncertainty is a real stumbling block to effective decision making,” he said.

“This is something we are raising with increased urgency in Westminster as well as stressing the importance of getting the right framework to encourage business confidence particularly during the transition period.

“Current productivity grants delivered through the Rural Development Programme for England (RDPE), whilst beset with problems such as launch delays and a recognised underspend, are now starting to deliver benefits for farm businesses.

Mr Bedford added: “We would like to see these schemes continued through the transition to help support micro and small businesses, farm diversifications and to boost farm productivity. The design of any new measures for the future must encourage uptake and confidence across the industry if they are to be effective.”

Access to export markets

The final element of the research looked at the importance of retaining access to export market, with 45% of farmer respondents supplying produce destined for export and 43% of companies surveyed either currently or planning to export.

Of those farmers producing for export markets, 87% said export markets were either very or fairly important to their business. Exporting companies were asked if Brexit was expected to affect their export operations or plans – the result was roughly a third each answering yes (36%), no (27%) and don’t know (36%).

“Comments from our exporting companies underlined the need to finalise new trading arrangements and bring an end to uncertainty,” said Mr Bedford.

“This is something we very much echo from a farming perspective with important sectors for the regional economy – most notably sheep – very reliant on a buoyant export trade.

“We regularly meet with the Secretary of State and hope the findings of this snapshot research will help drive the message home.”