Farmer confidence up but CAP concerns growing

Red tape, high input costs and CAP reform top the list of concerns for farm businesses in the coming year, but farmer confidence is at a four year high, a survey has revealed.

The annual NFU farmer confidence survey which canvasses opinion on business prospects showed 74% of respondents feared legislation would have the biggest negative impact on their businesses in 2014. Two thirds (68%) thought high input prices would be the major threat, according to the NFU figures.

CAP reform was also a growing concern for farmers. In previous surveys, CAP reform had not been in the top three concerns but half of farmers in this year’s survey described it as potentially the most damaging factor to their businesses.

However, despite the concerns, confidence was up across all sectors compared with 2012. The survey asks respondents to gauge how confident they felt on a scale from -100 to +100. Overall the score was +19 – the highest figure since the first confidence survey was conducted four years ago and 35 points higher than the same time in 2012.

NFU economist Lucia Zitti said that confidence was up after a more positive harvest than 2012 and its wet weather. Of the sectors dairy farmers were found to be feeling most positive, Ms Zitti said. “Short term confidence among milk producers was the highest of any sector after higher milk prices and lower input costs,” said Ms Zitti.

“But dairy producers were less confident in the longer term as they didn’t expect these conditions to last,” she said.

The lowest confidence, both in the short term and longer term was among beef and sheep producers who put confidence at +7 for the coming year but 0 for the longer term.

NFU chief economist Phil Bicknell said: “Looking down the track, farmers can see that there are clear issues that will harm their productivity and impact on their business.

“Almost three quarters of those questioned put regulation at the top of the list. To me, that is a clear message that government must do all that it can to ease regulatory pressure. A lot of frustration remains in this area with farmers reporting little perceptible difference of burden on the ground, despite initiatives like the Red Tape Challenge and the Farming Regulation Task Force.”

Mr Bicknell said the government had to act to make the initiatives credible,

“We need to start seeing positive outcomes and farmers benefiting from the changes. While in Europe, policies like the neonicotinoid restrictions have been pushed through without agreement from all member states and could have significant impact on arable farmers in the coming years.

“Input costs have consistently featured second on the survey list over recent years as DEFRA figures show that farming’s total cost base has gone up by 21% since 2010. Fertilisers and feed are up by 22% and 44% respectively with added volatility also creating challenges,” Mr Bicknell said.

“Overall, it seems that the improved weather had a positive impact on short-term confidence. This is clearly good news, but we need to be looking to the long term if we’re going to meet the food production challenges that lie ahead.”
Phil Bicknell, NFU chief economist

“And this year, CAP reform is added to the top three factors likely to have a negative impact for agricultural businesses. With CAP moving higher up the issues rankings, this is a strong signal of farmers’ pessimism over the new agreement.

“Budget cuts, the uncertainty surrounding new agri-environment schemes and the commercial impact of the new mandatory ‘greening’ rules have already negatively influenced farmers’ perception of the new legal framework more than a year ahead of its implementation,” he said.

Mr Bicknell added that confidence was critical because it influenced investment and production intentions.

“Overall, it seems that the improved weather had a positive impact on short-term confidence. This is clearly good news, but we need to be looking to the long term if we’re going to meet the food production challenges that lie ahead.

“If we want our farms to compete in an increasingly global market place and make the most of emerging export opportunities, we need government action that addresses uncertainty, incentivises consistent investment patterns and produces action rather than rhetoric when it comes to reducing red tape.”

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Confidence survey 2012