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2021 is the year of forward planning

Controlling fixed costs will be key as agriculture moves away from direct payments

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2021 is the year of forward planning

Farmers should be proud of the resilience they have shown to meet the challenges of 2020 but should not be underestimating the amount of change ahead.

 

2021 will be a year of looking forward and planning, according to Brian Richardson, head of UK agriculture at Virgin Money’s Clydesdale and Yorkshire Bank.

 

“Ask where you can change and adapt the business. At the end of the day we cannot just keep relying on resilience,” he said.


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He added the banks were willing to support agricultural businesses over the long-term, ‘but it is a lot easier to support a business when they have the information and know what direction they are going’.

 

Jason Beedell, head of research at Strutt and Parker, said doing the basics ‘brilliantly’ was key with anyone outside the ‘top 25 per cent’ to be hit hardest by the loss of direct payments.

 

Top performers

 

Looking at the characteristics of those farms, Mr Beedell said they tended to have slightly higher outputs but the most important thing was control of fixed costs.

 

Mr Beedell added there were opportunities in collaborating to get costs down, particularly for smaller farms with like-minded neighbours or utilising contractors where appropriate, as this was an area the industry still was not doing enough in.

 

Mr Richardson also suggested looking at options such as buying groups which cut costs of inputs.

 

Mr Beedell said diversification was an opportunity but did not suit every farm or person.

 

Direct sales

 

He highlighted people selling direct to the public who had done particularly well this year with demand for high quality, local produce.

 

And while the environmental agenda had taken a backseat in 2020 due to Covid-19, Mr Richardson expected it to be the other big issue of 2021.

 

“We are working with customers getting carbon audits to see what wins there are in terms of being able to look at your business,” he said, adding many food manufacturers were looking at including audits in sourcing requirements.

 

“There are more opportunities for new environmental markets,” Mr Beedell added, but said markets such as woodland creation were likely to be most appealing to bigger farms.

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