Increased volatility and falling commodity prices across the sectors have seen farmers’ confidence drop to lower levels as seen last year, a new survey by the NFU has revealed.
Confidence specifically in the arable and dairy sectors has declined significantly from last year, but farmers across the industry have told the NFU that the three-year forecast is much more positive.
Members told the NFU, as part of its sixth annual confidence survey, that they expected negative impacts on their businesses in the coming year relating to regulation and legislation (69 per cent); CAP reform (51 per cent); output prices (56 per cent) and input prices (46 per cent).
Output prices are the second most important factor affecting confidence, as members have seen their margins squeezed as a result of the fall in farmgate prices greater than the reduction in their costs.
The survey also shows that in the past two years twice as many farmers have seen their profits declining, with 49 per cent of respondents reporting declining profits. Some 7 per cent think the business may not survive – the highest figure in any year so far. These figures become more worrying in the dairy sector where almost 20 per cent of dairy respondents declared that their business may not survive, a rise from 3 per cent in 2014.
NFU president Meurig Raymond said: “This year has seen British farming face massive challenges, not least of all falling farmgate prices, particularly within the dairy and arable sectors. Given the levels of volatility we have seen across the industry it is no surprise that we have seen farmer confidence in the negative. It shows very clearly that we are absolutely correct to urge Defra and RPA to make every effort to speed up delivery of BPS payments and that we press processors and retailers for a fairer return for the high quality food farmers supply.
“Regulation remains the key blocker for our members’ confidence. This gives a clear message that government must to do all that it can to ease regulatory pressure. Confidence is critical because it influences investment and production intentions. If we want our farms to compete in an increasingly global market place and make the most of emerging export opportunities, we need government action rather than rhetoric when it comes to reducing red tape. This is why NFU is calling for action in 2016 to reduce the frequency of farm inspections and improve their coordination.
“Our research has shown that looking forward, farmers have a generally optimistic outlook on their medium-term prospects. The government has a golden opportunity, in its 25year Food and Farming Strategy, to map the course for a more confident and profitable industry. The NFU urges government, retailers and the public to back British farming to ensure this optimism is not misplaced.”
More farmers said they want to invest in diversification, training and energy efficiency in the three years to come. Those intentions are backed by the higher levels of borrowing in agriculture registered for the first nine months of the year.