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NFU survey reveals decline in confidence among arable farmers

09:05 26 December 2015

NFU president Meurig Raymond.

NFU president Meurig Raymond.

Farmer confidence is on the wane, with nearly half seeing profits fall, a new report has found.

Increased volatility and falling commodity prices across the sectors have seen farmers’ confidence drop to lower levels than last year, the National Farmers’ Union (NFU) confidence survey shows.

Confidence specifically in the arable and dairy sectors has declined significantly from last year, but farmers across the industry said 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%), Common Agricultural Policy (CAP) reform (51%), output prices (56%) and input prices (46%).

Farmers have seen their margins squeezed as a result of a fall in farm gate prices greater than the reduction in their costs, and in the past two years twice as many farmers have seen their profits declining, with 49% of respondents reporting declining profits.

Some 7% think the business may not survive – the highest figure in any year so far. In the dairy sector, the figure rises to 20% of dairy respondents, a rise from 3% in 2014.

NFU president Meurig Raymond said: “This year has seen British farming face massive challenges, not least of all falling farm gate 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 Basic Payment Scheme (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 co-ordination.

“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,” added Mr Raymond.

The survey also found more farmers saying that they want to invest in diversification, training and energy efficiency in the three years to come.

These intentions appear to be backed by the higher levels of borrowing in agriculture registered during the first nine months of the year.

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