Farmers concerns for the future are rising.
Posted On August 10, 2015 By mhauk
The MHA Agriculture Insight Survey was conducted at Cereals 2015 in June and compares this year’s findings with those of 2014. The survey takes into account the views of more than 150 farmers nationwide.
Key findings include:
- Despite falling prices, optimism for growth is high with 59% of those who responded expecting growth, however, this is 10% less than last year.
- Expansion is an aspiration for many, with 66% planning to increase their acreage compared to 59% in 2014.
- 72% of respondents are concerned about succession planning, which is an increase of 7% over last year.
David Missen, head of the MHA Agriculture Group commented: “The survey has shown a remarkable degree of resilience or even optimism, given the lower level of arable prices. Normally falling cereal prices tend to help livestock producers but we are currently seeing revenues falling in every sector.”
Aside from the concern of available land, planning for the future of the business is a growing worry for many. Of the 72% who stated that succession planning was a concern, 16% explained that it was a ‘great concern’.
Missen added: “The reduction in the Annual Investment Allowance (AIA) from £500,000 to £200,000 from January 2016 announced in the summer budget, (which of course took place after this survey), will be welcomed by the industry as providing a much needed level of stability to plan capital expenditure – although given the current concern about cash flow this might be of limited use over the next 12 months.”
“The prospects are for a late harvest this year and coupled with uncertainties over the timing of support payments, we are expecting cash flows to come under pressure. Lenders are well aware of this, but farmers should be consulting their accountants at an early stage, with a view to keeping bankers advised over the autumn, and above all avoiding surprises. It is always better to ask for a facility a couple of months before it is needed rather than the day the overdraft limit is breached.”
Of those surveyed by MHA, a significant 75% would consult their accountant when making decisions about their business. Sound financial advice is essential – whether a farmer is planning to expand or looking to hand over the reins to the next generation. Agricultural accountants are well placed to comment on both the practical and taxation aspects of the business, as well as provide an independent assessment of the business.
Finally, the increases to Inheritance Tax allowance limits announced in the summer budget make it more important than ever that Wills and succession plans are looked at now with some urgency.
View the full report here.