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More than 80% of farmers believe that higher input costs have not been reflected in better farmgate prices, with a quarter warning that they are “very likely” to cut production if processors and retailers do not pay fairer prices in future.
The finding is from a Virgin Money survey of more than 300 of its farming clients in April and June of this year, which also suggests the squeeze on income is having an impact on farmer investment plans.
While over half (51%) of farmers said they had invested in their businesses in the past 12 months, only one-third (34%) anticipate doing so next year, indicating the uncertainty many farmers feel about the economic landscape ahead.
See also: Rising input costs farmers’ toughest challenge for 2023
Virgin Money’s head of agriculture, Brian Richardson, said: “What stands out from the responses is the challenge for farmers of not being able to pass on higher input costs, and the potential squeeze that will have on farm incomes in the coming year.
“From the number and detail of the responses, we can see the importance of having clarity on new support policy and how that will be funded going forward.”
Investment plans
Drilling down into farmer investment plans in a bit more detail, it is clear that government grants – using money previously allocated through the Basic Payments Scheme – is increasingly important, with 38% of farmers saying their future investment is dependent on securing some of that cash.
As for the areas of investment, automation and equipment are of greatest interest (at 67%), followed by precision farming (55%) and renewables (33%).
Diversification continues to be a fundamental strategy for farmers, with 26% having created some diversification in the past 12 months.
Tourism is the main focus, with farmers taking advantage of the growth in staycation holidays.
The survey also suggests that 61% of Scottish farmers have carried out a carbon audit, compared with 38% in England.
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