Farming industry downturn and agriculture policy
Just recently in 2022, the farming industry has been in a serious downturn, and it really doesn’t look like it will turn out to be much better any time soon.
Economists have predicted that in 2023 the economic activity for farming will be a much slower year for growth than 2022 was. Agriculture policy changes factors, and soaring costs of materials and fertiliser are all likely to have a more profound influence on the rural economy.
This is the analysis from land agent Strutt and Parker, and Rhodri Thomas, who is the head of rural policy at the organisation seems to think despite this, there are new and exciting times ahead for farmers.
“Land managers would be wise to be proactively thinking about their options to identify where the best opportunities might lie,” he commented.
So now is the time to act according to the land agent, to gather information and data that will support them to make the best decision possible to counter the coming challenges of 2023.
https://farming.co.uk/news/7-trends-for-farmers-and-landowners-to-watch-in-2023
These seven key trends have been identified by the land agent, and it’s suggested that farmers and landowners should pay special attention to them, in what is likely to be a very difficult period for all in question
- Higher working capital requirements
- Energy crisis mitigation
- Nature recovery
- Rise in bad debt
- Property management challenges
- Grants
- Increased volatility
Higher working capital requirements and Energy crisis mitigation
1. Higher working capital requirements
The 2022 harvest is likely to be very profitable if growers had purchased all their input materials before the coasts had risen in 2023, and it’s likely they will benefit from much improved grain prices.
Input costs are going to be the primary factor that will put a squeeze on profitability for the 2023 harvest, and cash flow may be somewhat restricted due to this. Benchmarking and budgeting are going to be important skills in this situation.
2. Energy crisis mitigation
Landowners can benefit from the energy crisis situation in the delivery of large and small scale renewable energy projects.
Developers of such large scale renewable energy projects are prepared to pay good money to rent acres of land(approx £1,000 per acre) plus a percentage of the turnover the site makers.
Battery storage sites are good money too, with rents being double(approx £2,000.MW), and any types of roof mounted solar equipment can help farmers reduce the amount of energy they may need to pay for.
Exported energy can also be another way for farmers to generate revenue.
Nature recovery and Risen in bad debt
3. Nature recovery
Green campaigners are lobbying policymakers in government to recognise nature recovery and sustainability to be just as important as cutting down ton greenhouse gas emissions.
And it’s been suggested by research that wildlife can have a positive effect on crop yields, and smaller land sizes can generate better profits.
4. Risen in bad debt
Government figures have suggested that more and more businesses are folding due to harsher economic pressures, therefore it’s very important to know who your client base is, and manage the risks of your business even closer than before.
Identify if your buyers are experiencing cash flow problems, and chase payments much more proactively.
Property managements challenges, Grants and Increased volatility
5. Property managements challenges
Landlords need to be mindful of the effect that the economic situation can have on tenants. Cost of living crisis is going to mean that tenants are going to be stretched much further financially than ever before, and could struggle to pay their rent.
6. Grants
Farmers will be encouraged to get all the financial help they are entitled to in the form of grants, and funding. Ultimately it will prove to be a good way to future proof your business.
English farmers have the opportunity to apply for a grant of up to £250,000 to expand their slurry storage to a maximum of 6 months capacity. The deadlines for applications is the 31st January.
The Rural England Prosperity Fund is also coming that will aid farmers who are looking to diversity, and Scotland has funding available for carbon auditing and soil tests.
7. Increased volatility
The effects of climate change like heatwaves, flooding and disease risks are becoming worse. Climate change is bringing increased uncertainty in farming, livestock and forestry,
It’s not just simply a case of unexpected or freak weather that has the possibility of ruining a harvest for many farmers.
The forestry sector is also experiencing the arrival of the spruce bark beetle, and oak processionary moth in England, so woodland owners have advised to be extra diligent and plan accordingly.
Source: farming.co.uk
