Uncertainties over Brexit become a growing concern

While Brexit might have ousted common agricultural policy reform as the third biggest worry for farmers over the past 12 months, the two main concerns of the industry still revolve around farm prices – for both farm produce and bought-in inputs.

That was the finding of the annual agricultural survey carried out by Johnstone Carmichael, one of Scotland’s largest independent chartered accountancy firms.

But while Brexit was fuelling uncertainty across the board, the industry was split on where decisions on future policy should be taken.

Of the 215 respondents to the survey, just over a third were in favour of the decision-making process being held by the Scottish Government while a similar figure wanted the UK to control the process – the remainder weren’t worried by who held the reins.

And while responses to the questionnaire revealed that farm businesses were preparing themselves for the changing landscape, the majority either foresaw negative impacts from the UK’S exit from Europe, or were unsure of how it would affect their business, with the current uncertainty seen as a major impediment to planning

However, the survey did highlight some hopes – with some believing that red tape might be cut while and others viewing shifts in the exchange rate as beneficial.

Johnstone Carmichael partner Neil Steven said that the agricultural sector remained an important part of Scotland’s rural economy – both as an income generator in its own right and as a critical supplier to associated industries such as beer and whisky, dairy products and abattoirs.

“This year, Brexit has emerged as a key concern for farmers – particularly in relation to how it could affect subsidies, input costs, staff availability, land values and selling prices,” he said.

However he also revealed a surprising degree of optimism, with 35 per cent judging themselves to have a positive outlook and only 15 per cent negative, a figure which compared with 19 per cent and 54 per cent respectively in 2016.

However, half of the agribusiness population remained unsure of what the future holds.

“Additional income sources have helped to bolster the sector, principally through diversifying and investing in alternative enterprises such as renewable energy services – making use of on-farm resources and generating rental income for the landowner,” said Steven.

The survey also showed that few farmers relished the UK government’s proposals to “make tax digital” – which included making quarterly reporting of tax positions online compulsory – with Steven stating that any further delay to the temporarily shelved plans would be welcomed.

Looking to the longer term, there was a slight increase in the number of farm businesses confirming they have a succession plan in place – up to 47 per cent from 45 per cent last year, but Steven said this left a concerningly high number without plans.

“The sector and its financiers need to consider how businesses could be structured and operated to better accommodate diversity in capital ownership, giving the younger generation the opportunity to get a footing within the industry,” he said, adding that the next generation often had the ideas, energy and aspirations to make a career within the industry, but often struggled to have the financial capability to convert that into success.