UK farm incomes set to plunge over next 10 years

UK total income from farming (TIFF) is likely to fall from the current figure of around £5 billion a year to somewhere between £2bn and £4bn by the middle of the next decade, a leading firm of agricultural consultants has predicted.

While admitting that many uncertainties remained over the outcome of Brexit, Anderson Farm Consultants this week said that using their current assumptions and modelling methods the headline figure looked set to take a dip of this magnitude by 2027.

Speaking at the organisation’s spring seminar in Perth, head of business research Richard King said that the industry faced a period of unprecedented change – and that farmers would be forced to adapt to survive.

“Clearly, no business person can stand still for long without losing out – and as the agricultural environment changes, farmers will make different choices regarding how they farm,” said King. While much would depend on the trade deals agreed, he said some sectors of the industry were likely to fare better than others – and on land where options were available, it was likely that there would be a shift in enterprises.

But he also pointed out that some sectors were likely to “become trickier” and these enterprises were likely to see a slump.

Looking at what he termed possible “secondary” reactions within the industry, King said that there would have to be a reduction in “unnecessary” spending.

“The industry is also likely to indulge in smarter buying with more negotiation on prices, while the removal of middle-men in the supply chain could also be on the cards.” he said.

King said that there was also likely to be less in the way of machinery purchases, particularly in the early years, and labour use would have to be more critically examined – as would some of the rents being paid for additional land taken on.

This point was backed up by the organisation’s senior agricultural economist, Michael Haverty, who said that over the past decade short-term land rents had risen to “irrationally high” levels.

“Many farmers paid unprofitable levels to secure land – costing them additional work and heavy financial losses in many cases. There is likely to be a move away from paying this silly money which was simply a result of people not doing their sums properly,” said Haverty.

Looking at how farmers should react on the wider front to the challenges going forward, he said that the UK would struggle to be the lowest cost producer for any given commodity.

“We therefore need to compete on different territory,” said Haverty.

“The safety, provenance and quality of UK food are all strong selling points at home and abroad. DEFRA has indicated that it will introduce a new food standard to embody these qualities – but the industry will have to play its part in promoting ‘brand UK’.”

He said that across the supply chain it was critical that the industry kept promoting and differentiating UK produce and that there was more transparency at all levels to instil trust.