Invest in the future for the best chance of success

William Hargreaves, director of the rural team at Savills 

William Hargreaves is director of the rural team at Savills - Credit: RMG Photography

The rural sector is experiencing a period of major transition and – although it can sometimes be difficult to make business decisions at times of uncertainty – it’s important to focus on the future.

The industry currently faces three crucial challenges – producing enough home-grown food to meet demand; providing solutions to help tackle the climate crisis; and balancing the need for biodiversity with offering members of the public more leisure opportunities as they increasingly holiday at home.

The silver lining is that far from being the country cousin in the nation’s GDP, rural is very firmly front and centre. So, while it may be tempting to put capital decisions on hold – the end of the year presents a good opportunity to take stock.

The only reason for farmers not to invest in their business is if they are planning to retire. Even those embarking on radical diversification need to contemplate how to capitalise on that new direction.

Here are a few things to consider for the new year:

Balance

For many it may well be impossible to meet all of the demands mentioned above. Instead, those who own and manage rural businesses should take a good look at which of the three their farm or estate is best equipped to tackle. The aim is to avoid a lumpy investment policy and to keep a balanced cash flow.

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Plan

It’s important to have a rolling five-year plan to identify both current cash commitments and when you’ll need to replace equipment. This can be adapted as necessary but helps pinpoint whether things can be done more effectively. Estates need to know exactly what their requirements are – and increasingly, those will include proof of green credentials and carbon-cutting measures.

Share

Whatever your future plans, it’s always worth examining whether you are spending efficiently. Do you need new machinery or should you be employing contractors to do the work instead? Perhaps you should be sharing the cost – and risk – with a neighbouring farm?

People

Investment also plays a part in attracting and retaining good people to work for you. It’s not just about wages, it’s about providing the right tech and conditions to create a good working environment. It’s also important to know your customers. Once upon a time that might have been someone signing the BPS cheque. Now, it could be a national supermarket, a local farm shop or a honeymooning couple in a yurt.

Unfortunately, we will need to accept that the current demands will prompt some landowners to leave the fray. However, that will also create more space for new rural businesses – leading to more entrepreneurial ways of farming and diversifying our beloved countryside.

For advice on the rural sector in Suffolk contact William Hargreaves at Savills on 01473 234802 or WHargreaves@savills.com