Collaborative approach needed to face ‘perfect storm’

31.10.2020
Chris Solt
Agriculture, Brexit

A ‘perfect storm’ of events is about to test farming’s resilience to the limits, says Chris Solt of Lovewell Blake.

It never rains but it pours, and those in the agricultural sector will recognise that feeling only too well right now.  We face a perfect storm consisting of a prolonged pandemic, a host of imminent Brexit-related issues such as workforce, importing/exporting difficulties and lack of free access to markets, and the looming end of direct support for farmers.

Farming is a traditionally resilient industry, but all too often some within it have resorted to a ‘head in the sand’ approach.  But with such a combination of potential threats, simply battening down the hatches is unlikely to work this time.  The sector is going to have to work together to weather this particular storm, finding new ways to diversify, shoring up the supply chain, and educating the public that food may get more expensive.

Diversification has long been held up as a panacea to protect farmers from such difficulties.  Whilst it should certainly remain part of the solution, many diversification projects need more careful thought than ever. 

Investing to create furnished holiday lets in Norfolk and Suffolk isn’t going to work if half the country (including holidaymakers from London and Essex) aren’t allowed to travel.  Spending millions on a new poultry unit could be a bad investment if the UK is going to be inundated with cheap chicken in a post-Brexit free-for-all.

The changing landscape means that finding an easy-win diversification project is not so easy after all. A proper business plan which explores all the possible current and future threats has never been so important.

If diversification is usually undertaken by individual farm businesses, shoring up the supply chain is something which needs a more collaborative approach.  In two short months we may be in the position where we may have to replace overseas suppliers with UK alternatives (where possible), to ensure continuity of supply and avoid costly bureaucracy and delays.

Agriculture is not quite so dependent on a Just-In-Time culture as some other industries, but delays to essential supplies can be disastrous.  It may be necessary to stockpile things such as fertilisers, chemicals and soya-based foodstuffs, all of which are largely imported, to overcome any short-term supply problems.  National bodies such as the NFU and CLA need to continue their efforts to ensure a robust and resilient supply chain for the whole sector.

Whatever the outcome of the Brexit negotiations, food production is likely to get more expensive, and that cost has to be borne somewhere.  It’s unlikely to be by the supermarkets, and margins are already squeezed at the point of production – so, by default, it will probably be the consumer who needs to be prepared to accept higher prices at the tills. Government say that their agricultural policies are designed to drive improvements in productivity which should mitigate cost increases; however, even if they are successful, these improvements will not happen overnight.  Reverting to a more seasonal, homegrown approach to food consumption would also help, as long as consumers realise that there will be no more strawberries at Christmas.

Every farmer has a role to play in getting this message across, but it is a message which needs to be co-ordinated and consistent, so this again needs national leadership.

Farmers have a great track record of being self-sufficient when it comes to finding solutions to problems, but in this ‘perfect storm’, the whole sector has to work together if it is to become genuinely resilient.

Find out how we could help


Wide-ranging tax planning and compliance services for individuals seeking advice and guidance from our team of experienced and highly qualified professionals.

Friendly and coherent advice and guidance on accounting and tax matters for small business owners including those starting out for the first time.

Established businesses requiring accounting and tax compliance services, forward thinking tax planning advice and the support to help your business succeed.

Our full range of enhanced corporate services aimed at large companies and those requiring audit, assurance, corporate tax advisory and diverse tax planning services.

Glossary

Test

This is a test definition

more