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Fears growing for profitability of agricultural sector as revenue drops

Top 100 farming businesses see revenue fall by 3 per cent in the past year.


Abi   Kay

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Abi   Kay
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Agricultural sector's revenue drops

Fears are growing about the profitability of the agricultural sector after new figures revealed the top 100 farming businesses in the UK have suffered a drop in revenue for the second year running.

 

According to business finance specialists Funding Options, turnover from the biggest firms has fallen to £4.84 billion in 2015/16, down from £5 billion in 2014/15.


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The drop follows an earlier 4 per cent decline over the previous 12 months, from £5.2 billion to £5 billion. Information from Companies House shows the top 100 list included firms such as Monsanto UK, G’s Group fresh produce suppliers and Barber’s Cheesemakers.

 

Conrad Ford, chief executive of Funding Options, said the loss of EU subsidies, coupled with supermarket price wars and falling commodity values, could put additional pressure on farmers’ finances in future.

 

Subsidies

 

“EU subsidies have been crucial to many agricultural businesses, and as those are likely to end in 2019, the need for increasing turnover and productivity becomes even greater”, he added.

 

“Investment in new machinery and technology is clearly going to be even more crucial for the farming sector, so businesses need to think ahead and get the right financing in place.”

 

Supermarkets have engaged heavily in price wars and have tried to pass on the pain by forcing farmers to accept lower prices. The supermarkets’ dominance of the market has left farmers with little room for manoeuvre.

 

Poultry farmers have been particularly affected, with the wholesale price of eggs falling by 11 per cent in 2016 despite demand for eggs increasing by 3 per cent. Their overall turnover fell by 16 per cent.

 

Declining turnover and prices have led many farming businesses to seek increased financing, enabling them to make much needed investment in their businesses with farms in Scotland increasing their total borrowing by £113m to a record £2.3bn in the past year, according to the Scottish Government.

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