UK Farmers optimistic about business growth despite financial pressures

Monday 1 April 2019

According to a survey conducted by MHA MacIntyre Hudson at LAMMA 2019, where over 70 farmers were interviewed, optimism levels where generally high with two thirds of farmers expecting moderate to high growth in their businesses this year, higher than that at Cereals six months previously.

However, the same amount were also concerned about financial pressures with short term financial issues being high on the ‘worry list’.

Key findings included:
• 70% said that succession planning was of concern, similar to the year before
• 62% ranked greater efficiency as the main driver for machinery purchases
• 35% saw pricing as their biggest worry, marginally down from the 38% at Cereals
• 30% saw cashflow as their second biggest worry, up from 23% previously.

One of the biggest areas of immediate concern however was regarding Making Tax / VAT Digital which is about to come into force.

Whilst 74 per cent were aware of MTD / MVT, which was an increase from those surveyed at Cereals of 54 per cent, 38 per cent were still using manual accounting systems with no new plans for digital in place as yet, which will not be acceptable in a digital environment.

Sarah Dodds, Head of Agriculture at MHA MacIntyre Hudson, commented: “It is of concern to us that so many businesses are still relying upon manual records – which will not be acceptable to HMRC from 1 April 2019. Farmers should be reviewing their IT situation and deciding upon a revised digital process which, depending upon their IT knowledge and hardware and broadband capacity, the transition will be more straightforward for some than for others.”

The survey also asked about joint ventures, machinery sharing and contracting arrangements.

Results here were broadly consistent year on year, with:
• 7-10% of farmers sharing machinery regularly
• 20-30% involved in contracting arrangements
• 64% have no sharing arrangements in place at all with seemingly either no interest of or no knowledge of the cost saving opportunities of co-operation.

With AI on the horizon and an area of significant concern for the accountancy profession, it was of huge interest to hear that almost half of respondents use their accountants as the first port of call when needing to make business decisions, (compared to 10% talking to their solicitor, 17% talking to an agricultural consultant and the balance either speaking to their bank manager or to another adviser). Many also saying that they would turn to their accountant on tax efficiency decisions such as machinery purchases as an endorsement for the decision rather than the driver. It is clear that at a time when succession and profitability are such big concerns for UK agriculture, the role of the specialist accountant, who is also very much ‘part of the business’ has never been more key.

Forthcoming Events

June 21 2019 / 12.00pm onwards
Business Open Day
June 21 2019 / 12.30-2.30pm
Peterborough Construction Network
June 26 2019 / 5.00-7.00pm
Informal Networking Evening – Fenland
June 28 2019 7:00PM / 7.00pm onwards
Comedy Night and Black Tie Dinner - Peterborough
July 7 2019 9:30AM / 9.30am-1.00pm
Charity Cycle Ride - Peterborough
July 8 2019 / 5.00-7.00pm
Informal Networking Evening – Ely