According to the latest Rural Economy Index (REI), published by the Country Land and Business Association and Simths Gore, The recovery of the rural economy seen earlier in the year has spread to the farming sector.

The report showed "continued improvement" over the third trimester of 2013, after the last index, published in September, found that, while many businesses in the rural economy were enjoying greater confidence and a return to growth, he same could not be said of farming, which was continuing to suffer as a result of the wet weather in 2012. Even so, Smiths Gore reported that the agricultural sector was "less negative" in Q2 of 2013, compared to the first three months of the year.

CLA President Henry Robinson commented on Thursday, "Rural areas were last to enter the recession so it is good news that recovery in the rural economy is now firmly rooted. For farming businesses, the pessimism of the last year has gone, and they are now looking forward to higher sales and profits in the next year."

The survey found that more farming businesses reported rising sales than falling sales for the first time in a year. Sales for non-farming businesses had a net balance of 44 percent compared to just two percent in the previous trimester.

According to the survey, profits for agricultural businesses are expected to rise in the next 12 months, which will be welcome news for many, as recently released Defra figures showed incomes went down for most farmers in 2012. The projected rise is set to be the first such increase since early 2012; profits are expected to increase by 11 percent for agricultural businesses and 48 percent for non-agricultural businesses- the highest levels since the start of the survey, according to CLA.

Rural businesses, such as property and tourism enterprises, reported a more positive outlook for employment and investment with farm businesses expecting to employ the same number of people as last year while nine percent more non-agricultural businesses now expect to employ more people.

The rural economy covers 28 percent of all British businesses and a quarter of the country's population.

NFU report reveals concerns

Although the REI gives a hopeful outlook for farm businesses, an NFU poll has uncovered areas of apprehension.

Reacting to the report, NFU chief economist Phil Bicknell highlighted concerns over regulations and CAP implementation. He said that, alongside rising input costs, these are key areas farmers perceive as having the potential to affect their business over the coming year.

Even so, the annual NFU farmer confidence survey revealed 'confidence' in the industry was higher than in 2012.

Mr Bicknell said, "Input costs have consistently featured second on the list over recent years as Defra figures show that farming's total cost base has gone up by 21 per cent since 2010. Fertilizers and feed are up by 22 per cent and 44 per cent respectively, with added volatility also creating challenges."