RISK-AVERSE Scottish farmers could be holding back from investing in their businesses due to Brexit uncertainty, a study has found.

Nearly 2500 farmers, crofters and smallholders took part in a survey which focused on how Brexit is affecting business planning.

It was found that nearly 40% of participants were 'risk-averse' and a further 44% 'risk-cautious' with only 17% describing themselves as 'risk-takers.'

Economists from Scotland's Rural College (SRUC) and The James Hutton Institute (JHI) carried out the study on behalf of the Scottish Government, and concluded that the agricultural economy requires some level of risk-taking for the industry to grow – suggesting that increased support is needed to help with this transition.

The study found that risk-taking farmers appear to be more likely to have increased their intensity of production or their level of on-farm diversification and are more likely to have invested in new technologies and new capital.

On more environmental-led approaches, the differences were less extreme, especially in aspects around woodland expansion, which may indicate different approaches to public good activities.

It was also found that older farmers were more likely to associate with risk-averse type behaviour, with a higher proportion of risk-takers under the age of 45.

The survey’s lead researcher, Professor Andrew Barnes from SRUC, said: “Risk-taking activity can lead to higher levels of investment and therefore increasing on-farm efficiencies.

“On more greener activities there is less evidence. However, while risk taking may lead to more sustainable growth, the high level of debt within Scottish farming may support more risk-cautious approaches to investment," he continued. " Nevertheless, supporting farmers to move away from being risk-averse, which comprises 39% of the sample, should be encouraged through support and advisory schemes.”

Rural economy secretary Fergus Ewing commented: “We know that the dual effects of Covid-19 and Brexit on businesses in our remote and rural areas will be considerable and we understand the need for stability during so much uncertainty. We want farmers and crofters to become more productive, profitable and sustainable, adapting to new practices and willing to innovate in order to secure business viability for future generations.

“The Knowledge Transfer and Innovation Fund will help us to grow a sustainable, vibrant and innovative rural economy and has awarded around £6 million to 36 projects to do this," he explained. "One such project is the Monitor Farm Programme which is helping to achieve this through practical demonstrations and sharing of best practice. The Scottish Government’s Farm Advisory Service provides farmers and crofters with the most up-to-date advice they need to run efficient, environmental and climate change friendly businesses.

“Investment in the agricultural sector is essential for farmers and crofters to respond to challenges that may lie ahead. This is why we aim to continue CAP and other support in line with the principles of stability and simplicity. We made the loan payments under the basic payment scheme from 1st September, three months ahead of England, with the second tranche of payments being made next year,” he concluded.