Financial pressures growing on farmers, says UK200Group expert

The UK farming sector is coming under financial pressures on multiple fronts, an agricultural expert at the UK200Group of independent chartered accountants and lawyers has warned.

Farm gate milk prices have been cut significantly by major UK processors since August, as a result of factors including increased production by dairy farmers worldwide and pressures on global wholesale markets.

Meanwhile, although British farmers are enjoying what looks set to be a bumper cereals crop, prices have tumbled with the latest figures from farmer and grower-funded HGCA suggesting that wheat prices are at their lowest level since December 2012. And according to latest figures from the Royal Institution of Chartered Surveyors (RICS), published last month, arable land rents under the Agricultural Tenancies Act rose by 3.6 per cent and pasture land rents by 4.2 per cent in the first six months of 2014. Some commentators have pointed to a willingness to pay higher rents for cropping land for anaerobic digesters as a factor in the increases.

Richard Barnett, managing partner at Cheshire-based accountants Howard Worth and a member of the UK200Group’s agriculture special interest group, said: “These are unwelcome developments for the agricultural sector.Some farmers will tough it out, as they have traditionally done, but a combination of financial pressures could be enough to force others out of the industry.”

“At the same time, higher rents – and the increase on farm land prices, which RICS found had risen by three per cent in the first half of 2014 – are likely to prevent new entrants taking a first step on the career ladder. It might be an exaggeration to say a perfect storm is brewing for farmers but the outlook is uncertain at best, which underlines the importance of working with expert professional advisers to build resilience in farm businesses.”

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