A UK-conducted study has found that Brexit remains a big concern for farmers and the agri-industry.
The agri-business survey, carried out by Virgin Money, highlighted the resilience of the agri-industry during the Covid-19 pandemic, but indicates that Brexit is still a big concern.
Through the survey, 35% of farmers reported that the pandemic is continuing to have a negative impact on their business, mainly due to labour absences and delays in supply chains, with 9% reporting a positive impact.
And, almost half expect a negative impact from Brexit, an increase from two years ago.
The online questionnaire, sent to all Virgin Money's existing agricultural customers at the beginning of February 2022, received almost 300 responses.
The aim of the survey was to monitor any changing trends since it conducted similar research in 2020, and find out how farmers are being affected by such things as the pandemic, Brexit and environmental, social and governance (ESG) factors.
Main survey findings
- 51% of farmers report that the pandemic is having very little impact on their business, an increase of 4% from the last survey;
- 35% said that the pandemic continues to have a negative impact, down from 43% in 2020;
- Almost one third of businesses are still struggling with labour absences, as well as delays in their supply chains;
- Those who thought Covid-19 had a positive impact on their enterprise has gone up from 5% to 9%. This is largely driven by increased demand from supermarkets, demand for holiday lets, more people wanting to buy local produce and direct selling from their own farm shops;
- Customers remain nervous about the implications of Brexit and awareness of its impact is higher this time than in the last wave of research - 43% didn’t know what the impacts would be in 2020, whereas this has dropped to 27% in 2022, with almost half now expecting a negative outcome;
- There is a lot of concern about reduced support payments and a perceived lack of understanding of the [agri] sector by both the UK and Scottish governments;
- An absence of clarity is a key issue, with uncertainty over the future of exports, both to the EU and new markets, how to deal with labour shortages now that the EU’s freedom of movement has been withdrawn and what impact lower standard imports will have on profit and competition;
Brian Richardson, head of agriculture for Virgin Money, said while the survey findings highlight where customer concerns lie, the industry seems to be making good recovery following the pandemic.
"In some ways, the uncertainty has possibly forced farmers to look at their businesses with a more open mind and, hopefully, this will stand them in good stead for the future.
"However, it is clear that challenges remain for the sector, and we are committed to continuing supporting our customers through these difficult times.”
According to the research, ESG factors are now more on the radar, with the well-being of employees being of most importance, followed by reducing carbon emissions.
- Only 51% are confident about reducing emissions, 40% about restoring eco systems and 41% about receiving government subsidies tailored towards environmental management.
- Half of respondents do not expect agricultural policy to change the amount of land they farm in the next three years and less than a third have diversified their business in the last six months, although this is a 5% increase since the last survey.
- Those who have diversified are mostly choosing to rent out holiday lets, either by refurbishing existing buildings or constructing new ones. Some are also becoming wedding venues or creating camp sites and commercial storage.
- Others have bought new businesses such as butcheries, a second farm or a farm shop.
- Of the 300 respondents, 78% had a turnover of between £100,000 and £2.5 million, with 25% having a turnover of between £1 – £2.5 million.
- Interestingly, the vast majority (91%) do not export any of their products.