Agriculture businesses are more confident than they were at the start of 2018, according to the latest Business in Britain report from Lloyds Bank.

Confidence amongst UK farmers – calculated as an average of respondents’ expected sales, orders and profits over the next six months – rose 25 points to 32 per cent in the past six months.

The net balance of farmers looking to grow investment in the next six months rose by 14 per cent, up 19 points compared with January, with 57 per cent of famers who do plan to invest saying that they would buy new machinery and equipment.

And the net balance of farming businesses looking to hire more staff increased to 27 per cent, up 42 points since the start of the year, when a net balance of 15 per cent of farmers expected their staff numbers to go down.

The share of farming businesses that reported difficulties hiring skilled labour was flat, with 45 per cent of farmers agreeing that this remained a challenge.

The Business in Britain report, now in its 26th year, tracks a range of performance and confidence measures, weighing up the percentage of firms that are positive in outlook against those that are negative.

Increased confidence in the agriculture sector

Agriculture was ranked in the top three sectors for business confidence, with the second highest points increase over the last six months.

Business confidence was highest in the Energy sector (41 per cent), followed by Transport (37 per cent).

Risks ahead

Uncertainty around Brexit is now the single greatest risk to farming businesses over the next six months, according to 36 per cent of farmers.

The proportion of farmers reporting Emerging Technology as their greatest risk increased to 14 per cent, while those citing weaker UK demand fell sharply from 30 per cent in January to nine per cent.

Uncertainty around Brexit negotiations continue

More than a quarter (27 per cent) of farming businesses expect a positive impact on their business if no trade agreement is reached with the EU.

Nearly a fifth (18 per cent) expect a negative impact, while almost a quarter (23 per cent) do not expect any impact at all and 32 per cent said they didn’t know.

Andrew Naylor, Head of Agriculture at Lloyds Banking Group and Managing Director at AMC said: “While it’s encouraging to see overall confidence has increased amongst agricultural businesses since the start of the year, the sector has a clear split in opinion over what will happen if no trade agreement is reached with the EU.

“For many farmers, stepping away from the EU’s Common Agriculture Policy presents an opportunity to start afresh and focus on British interests, while the impending publication of the new Agricultural Bill, detailing government plans for the farming sector post-Brexit, continues to create uncertainty.”