More than 75% of farmers say they feel under pressure to adapt and innovate to keep up with the ever-changing environment.
This was one of the key findings from the 118 farm businesses that responded to Armstrong Watson's latest Family and Owner-managed Business Survey, in which 51% of participants in the agricultural sector said they ‘sometimes’ feel under pressure, while 27% said they ‘always’ feel this way.
This is an understandable concern, given the advances in technology, the ever-changing tax landscape, and the significant changes to government support payments. The industry is also faced with unpredictable weather and volatile prices that are key challenges for farmers.
The survey – which notably received the biggest response from the agricultural sector - looks at the impact of people challenges, how businesses are adapting to the evolving digital world, how they plan to innovate and grow, and their attitudes towards succession. Businesses were also asked about their concerns about the impact of external pressures and the issues that will affect business growth over the next three years.
It found that 76% of farming businesses are either somewhat concerned or very concerned about inflationary pressures on costs over the next 12 months, and 61% are also worried about having enough to pay outgoings.
Over the next three years, farmers say their biggest challenges to business growth are increased costs impacting viability (60%) cashflow (46%) and trade agreements with other countries (28%).
Looking at how they will finance plans for their business over the next three years 44% plan to use their own capital, 34% will look at bank loans and 42% plan to use working capital/profits generated from the business.
Whilst farming might not be the first sector to embrace the use of artificial intelligence (AI), some farmers are keen to see how it works within their business, with 4% of farming businesses currently use AI and 8% who say they are considering it. Those who do, use AI to monitor cattle health and calving and for crop spraying, field mapping and seed rate conversions. Perhaps these advancements contribute to the feeling among farmers who say they struggle to keep up.
Most businesses are second, third or fourth-generation (71%) and half plan to leave their business within the next 10 years. The majority of respondents (62%) say they plan to pass on the business to their children, with 57% whose successors are already in the business. Almost a fifth, however, have not discussed their intention to pass on the business.
Meanwhile, businesses who hire staff say they find it very difficult to recruit - a staggering 40% - or sometimes difficult (46%), citing the main reasons for this as a lack of skilled workers and struggling to find people to carry out the roles, despite this 62% have not made any changes to help with recruitment. On the upside, staff retention doesn’t seem to be a problem.
We’re really grateful to all those who took time to share their views and it is interesting to see the responses generated by the survey, especially when we take into account how hard the last six months have been due to the weather.
It’s also great to see so many businesses are continuing the work of their predecessors with the majority being 2nd generation or more and almost half of those who are 3rd or 4th generation farmers. Alarmingly though, a fifth of those who plan to pass on their business to the next generation have no succession plan in place.
Succession is vital in ensuring the future longevity of any farming business and if anyone is yet to implement such a plan it is important that they begin to consider this. We understand that this is not always an easy subject to approach but the earlier these conversations begin, the more successful the outcomes are.
The findings from our latest survey tell us a lot about the ways in which we can help our clients and provide more support. Please get in touch if you would like to discuss anything you are concerned about or would like to find out how we can help.
