Farmers are beginning to re-invest in their businesses with last year’s single payment scheme fiasco now behind them, a new survey for NatWest bank suggests.

An independent study found that of nearly 500 agricultural businesses questioned in England and Wales, farmers were most concerned about commodity prices, government regulation and the buying power of large supermarket chains.

But 15% believed they would look to develop some form of diversification, suggesting they were ready to make capital commitments, said NatWest’s head of agricultural policy Ian Kenny.

Confidence

“It looks as though the hesitancy that prevented re-investment has started to lift and there is more confidence emerging. This is backed up by just 2% saying they thought they would have to sell their businesses altogether, and only 4% saying they would be forced to sell assets.”

But despite a note of optimism in the figures, farmers were still wary of further pressures from the SPS, he said.

“A quarter of farmers felt the SPS, and the question of full or partial payments being made, was likely to have a great impact on their businesses in the short term.

“Despite improved beef, sheep and grain prices, there is possible uncertainty over dates for the 2006-2007 single payment and farmers should still think about giving their cash flows some flexibility.