Rural economy is on the mend, says survey, but we're not out of the woods yet
Confidence and optimism have returned to the rural sector in the South West, according to new data.
The latest results from the rural economy index compiled quarterly by the Country Land and Business Association and land agents Smiths Gore shows country-based businesses in the region are more confident and optimistic than they were three months previously.
But farmers say it was about time for improvement – and the situation is still far from satisfactory
The index’s figures relate to April, May and June of this year. The figures for the first quarter of 2013 showed that there was a threat of further recession of the rural economy and, while not out of the woods, the most recent results indicated that there are early signs of recovery.
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While farming businesses were still contending with the effects of the difficult weather conditions in 2012, they were more optimistic than they had been at the start of the year.
The statistics showed non-farming rural businesses were more positive than their agricultural counterparts. They were more confident about profitability over the next 12 months compared with farming businesses.
Simon Derby, of Smiths Gore’s Taunton office commented: “Confidence is critical for all businesses and is often an early indicator of profitability. Confidence influences investment and production intentions.
“Our analysis of projected business performance shows, however, that there is a marked difference in the expectations of agricultural and non-agricultural businesses. The greater optimism being expressed by non-farming businesses translates into expectations for higher sales.”
Confidence also translates into the prospects for investment and employment and there is again a marked difference between the agricultural and non-agricultural sector.
The investment expectations of non-agricultural businesses were now at their highest for over a year – and while they expected to employ more people, the sentiment was expressed with a degree of caution.
Mr Derby added: “There is evidence, albeit weak, that sentiment in the rural economy is on the cusp of change. There was tangible concern in the previous quarter that there was a silent crisis taking place in the rural economy.
“With the Government claiming that UK high streets sales have been rising and UK factories witnessing the biggest boom in 20 years, there was a real concern that the rural economy was being forgotten.
“While there is a long way to go before agricultural and non-agricultural businesses can claim that the economic revival has leaked out into the country, we can have some cautious optimism.”
National Farmers’ Union (NFU) chief economist Phil Bicknell said: “While this index reveals the difference between farming and other rural businesses, it does not pick up the varying fortunes that we tend to see within different farming sectors. Our annual Farmer Confidence Survey, which we shall be conducting in the next few weeks, will provide a detailed breakdown of what our members really think.
“When you look back at the last 18 months, the weather situation has had a large impact on industry confidence. The poor yields and planting conditions this time last year and the very cold, slow start to 2013, with turnout of stock delayed and high feed bills, were reflected in farmer attitudes.
“Given the scale of these challenges, it is hardly surprising there is more optimism about. This year’s harvest has been straightforward and there have been good-quality fodder crops, resulting in a degree of confidence returning. But while that has certainly been a step in the right direction, there are other factors to consider. For arable farmers certainly it will be another 12 months before we really see things get back on track. And for livestock farmers, costs of production remain close to record levels, impacting margins and long-term profitability.”