POSITIVE VIEW OF FUTURE

24 April 1999




POSITIVE VIEW OF FUTURE

How positive are you about the future of farming? Seven thousand farmers were asked that in a recent ADAS survey. Lucy Stephenson reports on the results.

FARM incomes may have plummeted in the past two years, but most of you are positive – some even bullish – about farmings future according to the results of an ADAS Farmers Voice Survey.

Of 7,000 questionnaires sent to livestock and arable farms in England and Wales, ranging from less than 100ha to over 300ha, 2,500 were returned. The results reveal some surprising attitudes – and a huge profitability gap across farms.

The situation for some is bleak, but the survey reveals a positive outlook for farmers who can adapt. The challenge to each business is to get the timing of planned changes right, according to David Welton, head of the new ADAS Professional Services Division.

He was concerned that 35% of the respondents in the survey either wont change or are not sure how to respond to the current situation. He predicts half of all farm businesses will cease in the next 15 years, many on retirement.

Two-thirds of those surveyed expect to develop non-farming sources of income, but few have done so yet. Planning permission and lack of capital are cited as the major barriers to business development.

The profitability gulf

&#8226 More than £200/ha marks the difference in profitability between the top 25% of arable farmers and the average because of better yields and lower costs.

&#8226 Only 1% of all farmers increased their profits last year.

&#8226 But 50% of farmers wont make enough to cover their personal drawings in the year ahead.

&#8226 19% of cereal producers actually made a loss last year.

Whats the policy?

&#8226 Its no surprise that the majority of farmers think agricultural production should be subsidised. Yet 25% would be happy to see support for production phased out by 2005.

&#8226 Status quo prevails on other issues: the majority want guaranteed minimum prices and area payments.

&#8226 Opinion was evenly split over whether set-aside should remain.

&#8226 65% of farmers think there should be funding to develop farm based non-agricultural alternatives.

&#8226 90% of farmers want payments for environmental work.

&#8226 70% dont want support targeted only at agriculturally disadvantaged areas.

A farming future?

&#8226 Most farmers have weathered the storm: But from the ADAS survey 21% are likely to leave farming altogether.

&#8226 The average age of farmers responding was 51; only one was under 30. Average planned retirement date is 64.

&#8226 And fewer businesses will continue in the family. Five years ago 50% were sure of family succession; now its only 32%. 34% dont expect family succession, and the family age structure of the remainder means theyre not sure.

Who will survive?

&#8226 Lower rent and finance charges lifts profits for the top 25% of arable farmers £55/ha above average.

&#8226 57% of all farm businesses expect to survive the current crisis or improve their position.

&#8226 However, 43% of businesses are at risk within the next two years. Of these, 8% are immediately at risk.

&#8226 33% of farm businesses have no borrowings, but 58% have seen their net worth fall.

Adaptation is the key – but how?

&#8226 44% are actively reducing their variable costs, while 54% will defer machinery replacement.

&#8226 19% will reduce their permanent labour force.

&#8226 The most favoured diversification route is industrial lettings. Coming close behind are industrial crops and agricultural contracting, followed by holiday lettings, organic foods and office lettings, and finally horse riding and caravanning and camping.


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