By Paul Spackman
We seem to have had a run of surveys over the past couple of weeks - from Defra's farm rent figures to DairyCo's farmer intentions survey. The latest comes from our friends at the NFU who have found that one in four farmers feel the credit crunch will significantly affect their business - up from one in six last December.
OK, so the sample size wasn't huge - 179 farmers filled in the online survey - but it's probably a timely reminder that now is not the time for complacency.
It's hardly surprising that farmers are starting to feel, or at least worry more about the effects of the recession. Whether it's the tighter availability of credit from the banks, shifting exchange rates affecting the value of agricultural products and inputs, or reduced consumer spending on organic, or premium cuts of meat, one way or another, agriculture will be affected.
Many people understandably thought farmers would be sheltered from the worst of the downturn, but I doubt anyone really believed we would be immune from its impact - especially when you consider the depth and severity has been likened to the dark days of the 1930's recession. The longer the latest recession goes on, the more people it's likely to affect...
The positive thing is that farming is different from other sectors of the economy - who'd want to be working in the motor or construction industry at the moment? Everyone has to eat, and with a rising world population the fundamental drivers for land and commodity prices are generally still pretty positive - notwithstanding the day to day volatility we're increasingly seeing. The strong sales the likes of Tesco and Sainsbury saw in the first part of the new financial year illustrated the strength of the food sector - albeit with some changes in spending patterns.
Having spent some time in 'bankers alley' at this year's Cereals event, it's pretty clear the main banks acknowledge the fundamental drivers for farming are positive, but they themselves are faced with a much tougher credit environment after many got their fingers burnt 18 months or so ago. This won't improve overnight and many economists predict economic recovery will be a long haul.
For farmers, especially tenant farmers who lack the security that land offers, this more cautious approach by banks and their uncertainty about when the economy will pick up will affect the availability and cost of credit. By how much seems to vary between the banks, and individual businesses. But let's hope they recognise the underlying long-term strength of the farming sector and fingers crossed the next survey makes for more positive reading!
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