Confidence, specifically in the arable and dairy sectors, has declined significantly from 12 months ago, but farmers across the industry have told NFU that the three-year forecast is much more positive.
As part of our sixth annual confidence survey, members told the NFU that they expected negative impacts on their businesses in the coming year relating to regulation and legislation (69%); CAP reform (51%); output prices (56%) and input prices (46%).
Output prices are the second most important factor affecting confidence, as members have seen their margins squeezed as a result of the fall in farmgate prices greater than the reduction in their costs of production.
The survey also shows that in the last two years twice as many farmers have seen their profits declining, with 49% of respondents now reporting declining profits (42% last year). Some 7% think their business may not survive – the highest figure in any year so far . Those figures were even more worrying in the dairy sector, where almost 20% of dairy respondents declared that their business may not survive, 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 farmgate 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 delivery of 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 coordination.
“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 25-year 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.”
More farmers said they want to invest in diversification, training and energy efficiency in the three years to come. Those intentions are backed by the higher levels of borrowing in agriculture registered for the first nine months of the year.