Confidence low as industry struggles with difficult year

DESTRUCTION: The flooded fields near Staindrop

DESTRUCTION: The flooded fields near Staindrop

First published in Farming

THE weather and rocketing input costs have dented farmers’ shortterm confidence to invest in their business, according to a new survey from the NFU.

Farmers remain relatively optimistic about the long-term future of farming – but confidence in the red meat and pork sectors looks to remain weak.

Phil Bicknell, NFU chief economist, said the results came as “no surprise” given the exceptional year many farmers have experienced.

“The challenging year we’ve had makes it easy to forget that farming has been something of a success story in recent years, increasing its contribution to the economy, creating jobs, and seeing improvements in farm profitability, as well as underpinning one of the most successful British industries, food and drink,” he said.

Results from the survey show that last year’s relatively optimistic outlook has faded. Only 22 per cent of farmers surveyed were confident about the year ahead, compared to nearly one in two 12 months ago.

Some 42 per cent of farmers told the NFU that their farm businesses were in for a tougher year, up from 30 per cent in 2011.

Mr Bicknell said: “The drop in short term confidence is repeated across the sectors. For arable and horticulture, declines in crop output and quality, alongside difficult autumn planting conditions, have undoubtedly shaped farmer attitudes. The lowest levels of confidence, however, are seen in the livestock sector.

“Rising animal feed costs have been welldocumented in recent months, and the confidence of pork, dairy and red meat producers has tumbled as costs have risen. While other sectors show confidence rising in the long-term, over the next five years this remains weak for red meat and pork. Tight supplies already characterise these markets and both sectors need greater confidence if we’re to see them able to respond.”

The longer term outlook is generally more positive – results for the horticulture, poultry and arable sectors all show signs of increasing optimism over the next five years.

Across the channel there is a similar picture. According to a recently published CopaCogeca confidence survey, the mood of French farmers has worsened, partly explained by high production costs and the poor economic situation. In Germany the positive mood among farmers can be attributed to an improved analysis of the future fiscal situation, while their views on current economic developments are less positive compared to the first quarter of 2012.

Mr Bicknell said: “Many farmers will be looking to harvests across the world throughout 2013 to improve commodity supplies and reduce some of the pressures on feed costs. However, policy makers will also shape industry confidence in the coming year. Two issues remain key.

“Firstly we need to see continued work for better regulation across all sectors to remove additional and unnecessary burden on farming businesses. Second, it is essential our government negotiates a CAP deal for British farmers which ensures they remain on a competitive level playing field with farmers and growers across Europe.

“Securing farmer confidence and long-term investment in this country will mean this industry can play its full part in providing the raw ingredients for the £80bn food and drink sector and continue helping the country on its way to economic recovery.”

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