Confidence ‘slow to return’ to agricultural and rural sector

GROWTH may be restricted in the farming and rural sector as a result of lower investment over the next 12 months, according to a new survey.

The Rural Economy Index, by the Country Land and Business Association (CLA) and Smiths Gore, examined more than 100 businesses in the countryside during the first quarter of 2012 to provide a snapshot of rural economic life for agricultural and non-agricultural sectors.

The survey found that while business confidence is increasing, with over four-fifths (85%) reporting the same or higher sales in all sectors, lower levels of investment in a fragile rural economy remain a worrying factor for more than a quarter of both business types. Rural businesses, such as property and tourism enterprises, reported higher confidence with almost one third feeling more optimistic than last year and 15% expecting to increase employment.

Agricultural businesses surveyed said that employment will remain stable, with four-fifths (79%) looking to maintain job numbers at the current level. Forty one per cent reported stable profits, with a third (34%) anticipating higher profit margins.

CLA East regional director Nicola Currie said: “Rural areas were last to enter the recession and there are no significant signs of recovery yet. However, confidence is returning but it is slow and happening in a very fragile trading environment.”

She added: “A lack of investment over the next 12 months could have a detrimental impact on business growth and the potential to diversify. The results from the Index highlight the need for the Government to implement its growth strategy as soon as possible.”

Jason Beedell, Head of Research at Smiths Gore, said: “The Index shows that a significant proportion of rural businesses are still experiencing challenging trading conditions with only about a third of businesses expecting a better 2012 than 2011.

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“Local and national government can take action to make doing business easier – such as the recent pro-development National Planning Policy Framework and reducing red tape. But we would like to see more action, especially from local government.”