Farmers Urged to Act Now to Futureproof their Businesses

Farmers should act now to take steps to futureproof their businesses and reduce risk, according to the speakers at a Brexit roadshow meeting in Stirling, organised jointly by Quality Meat Scotland (QMS), AHDB and SRUC.

Douglas Bell, Director of Industry Development with QMS, said while there remain many more questions than answers on the full implications of Brexit, it is vital that farmers  take steps now to limit risks to their businesses and identify opportunities.

“Farmers can use the time they have just now – particularly if we have a transition period – to take a good look at their businesses. You need to know your costs of production and look at what improvements you can make,” said Mr Bell.

There could be opportunities to collaborate, he said, or make the most of new technology.

“Farmer-to-farmer learning is a key part of this - there is nothing like peer review to drive change on farms and farmers who work together will achieve better results than those who work alone,” added Mr Bell.

Steven Thomson, Senior Agricultural Economist with SRUC, said Brexit is inevitably going to set a lot of challenges for the industry not least because there are a lot unknowns at the moment.

“No matter what deal we get there will be changes to the budget, regulations and the mechanisms by which the UK government is going to deliver. So, the challenges going forward are likely to include how you overcome that change in budgetary position as a farm business.”

Mr Thomson said many farmers and crofters would have to ask themselves some really hard questions. However, he said there would also be opportunities.

“There will be opportunities going forward as some sectors under different trade scenarios are likely to benefit. For example, if we become a fortress Britain – the beef and dairy industries might see an uplift in prices as we offset imports,” he said.

“Equally, opportunities may exist if we move towards greater agri-environment support because Scotland is blessed with a lot of environmental attributes and areas where we have great biodiversity.”

There is unlikely, said Mr Thomson, to be the regulatory bonfire that people may be hoping for. “The simple fact is if we want to trade with the European Union we have to comply with all aspects of their regulations,” he added.

A hard Brexit where there would be no trade deal with the EU would mean products leaving this country would have a tariff – a fee – imposed in order to enter the European Union, he said.

“There would also have to be customs checks which inevitably lead to delays. That means there would be additional costs in order to do business in Europe,” he said.

Equally if the UK was to impose tariffs on products coming in, some farm inputs like fertilisers might be more expensive.

A soft Brexit would mean a continuation along similar lines as currently in place, with freedom of movement of goods. “There may be a customs’ union with some costs but no tariffs and that means that the lamb going into France can continue to do so on a no-cost basis,” he said.

A no deal would not be welcome , he said. “This would mean us walking away from our biggest trading partner in agricultural terms and we would be suddenly scrambling around for partners to deal with.”

Sarah Baker, AHDB’s Senior Insight Analyst, said those farmers who are performing in the top 25% would have the best chance of remaining profitable, regardless of the Brexit scenario which emerges.

“The most important thing is to establish whether you are in that top 25% and the logical step is to use some form of benchmarking – such as Farmbench – to find out where you stack up against your peers,” Ms Baker said.

Farmers can then consider what they could do to try to get into the top quartile, she said, urging producers to make full use of the tools available to them from AHDB, along with other organisations including SRUC and QMS.

“What can you change in your individual enterprise to make your performance move into what we call ‘the safe zone’ post-Brexit, meaning your performance is improved, your productivity is improved and your business resilience is improved?”

Julian Bell, Senior Consultant, SAC Consulting, urged farmers to look closely at their business’ key markets and customers to assess whether there might be threats or opportunities in a post-Brexit era.

“There might be an opportunity to introduce changes to spread the risk if, for example, a particular income stream is identified as at risk,” said Mr Bell. Changes might include the types of crops grown or livestock run and diversification could, perhaps, be an option.

The final AHDB/QMS/SRUC Brexit Roadshow will take place on March 8th at the Woodland Bay Hotel, Girvan. To register for this free event, starting at 7pm, contact Sarah Hunter-Argyll on 07391 408806 or email sarah.hunterargyle@ahdb.org.uk

For more information on the tools offered by QMS, SRUC and AHDB to assist farmers please visit www.qmscotland.co.uk; www.sruc.ac.uk or www.ahdb.org.uk