Farming News - Investment is key for Agriculture industry in 2019
Investment is key for Agriculture industry in 2019
The Head of Agriculture at Clydesdale and Yorkshire Bank believes investment will be key for the sector moving forward into 2019.
Looking to the year ahead, Brian Richardson is commenting on the importance of critical planning for businesses and with the UK due to leave the EU this year, the Agriculture community needs to give itself time to make appropriate preparations.
He said: “I doubt anyone would have predicted that we would reach the end of 2018 not knowing what will happen with our exit from the EU, but in the Agriculture sector we have a good idea of what the framework will be as we move into a post Brexit regime overseen by the UK Government. For many it is likely to mean less direct support, but with the reduction happening over several years, there is time to plan ahead.
“This period of time will be critical as it takes time to change direction. However, despite the continued uncertainty caused by Brexit, as well as the adverse weather we have experienced over the last year, we continue to see good level of investment propositions.”
The Agriculture and Horticulture Development Board (AHDB) published a paper in January 2018 identifying that there is a productivity gap in UK agriculture when compared with the rest of Europe, but Richardson thinks investment will help farmers work more efficiently.
He continued: “Given all the hard work that goes into farming, it was a fairly hard message from AHDB and it’s not just about how much we produce, but how effectively we do it. Investment in new systems, that will enable farmers to work more efficiently, will come to the fore in 2019 as we move towards a new agricultural support regime. And there was help towards this announced in the November budget, with the raising of the annual investment allowance to £1million for two years from the start of 2019. This will allow businesses to invest in plant, machinery, and fixtures and fittings, which can be set against the business in that year.”
The Agriculture industry had a reasonable year in 2018, according to Richardson, with weather playing a part. There was the ‘beast from the east’ in the early part of 2018, followed by a very dry spell in Summer, which hit the livestock sector particularly hard. Despite these severe weather events, almost all sectors have seen positive returns, helped by the ongoing currency weakness around Brexit. The dairy sector has continued its recovery and although returns remain tight, confidence is increasing, and longer-term investment decisions are being made. The pig price has been marginally better in 2018, although higher feed prices have proved challenging, and the dry weather has also pushed up cereal prices, although this eased towards the end of the year.
Richardson said: “It wasn’t a bad year for farming, and despite the continued uncertainty around Brexit, businesses have had the chance to look forward to the future with a little more confidence.
“That’s part of agriculture’s resilience - it continues, whatever the challenge, in producing quality food and an affordable price for the UK public. It’s ability to adapt and change is well proven - hopefully we will see clarity on the direction of future support mechanisms. We look to forward working with our customers as they start to address the issue of productivity, which investment will form part of. We are a significant lender to the farming community and the wider supply trade, and we will continue to work closely with producers and customers in supporting their businesses.
“I hope in 2019 we quickly see a clear path forward that the industry can plan around and the direction of travel becomes clearer post our exit from the EU.”