A survey of UK farmers shows growing concern in the UK Agri industry over input costs - but greater confidence in Scotland.

Responses to the third survey of agri customers of Virgin Money highlight the significant effects of a turbulent period of major change in the industry.

More than 300 responded to a wide range of questions covering key current issues including the impact of Brexit, new UK farming policy, input cost inflation, and how these factors might affect future plans for farming businesses.

Looking forward, 37% of respondents felt that UK agriculture would be worse off as a result of Brexit over the long term, and just 16% believed prospects for farming would be better.

A total of 20% of farmers cited increased costs, with 19% anticipating less industry support and 17% mentioning labour shortages.

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There were significant regional differences in the reported impact of Brexit, with 58% anticipating new agricultural policy to affect them negatively in Scotland whilst that figure rose to 86% in England.

With a growing focus on net zero and the natural capital agenda, the survey reports half of businesses have carried out a carbon audit, but there is a significant difference between Scotland and England with 61% in Scotland compared to just 38% in England, perhaps reflecting the importance placed on carbon audits by the Scottish Government. However, 39% of Scottish respondents failed to see how carbon audits can be used.

In addition, more than a quarter (26%) of those customers surveyed have been asked by suppliers to show evidence of their efforts to reduce emissions.

Despite much talk of the development of tree planting on farms, there was actually a drop in the year of those intending to plant trees, down from 43% to 39%. In Scotland, 35% of respondents indicated an intention to plant trees, 49% do not, and 15% are unsure.

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A massive 82% of farmers believed that higher input costs had not been reflected in higher farm gate prices. 24% of respondents said they were very likely to cut production if prices do not represent those higher input costs more fairly, and 47% said they would consider it.

In response to questions concerning technology and investment funding, the survey found that 51% of farmers have made investments in their businesses in the last 12 months, versus only 34% anticipated investing next year, perhaps indicating some uncertainty from farmers as to the economic landscape ahead. Over a third of that potential investment (38%) will be subject to securing some form of grant support.

Areas of investment remain focused on automation and equipment at 67%, followed closely by precision farming at 55%, and a third of those respondents planning to invest looking at renewables.

Diversification continues to be a fundamental strategy for farmers with 26% having created some diversification in the last 12 months, slightly down on the year before, with tourism being the main focus, taking advantage of the growth in staycation holidays.

Stephen Buchan, Head of Agriculture Scotland at Virgin Money said: “This annual survey provides us with great insight into our farming customers’ thinking, their concerns and plans, and it also demonstrates the profound resilience of the sector, particularly in Scotland.

“Despite the challenges of Covid and the slow emergence of policy post-Brexit, the majority of farmers are still focused on the future and looking to do as good a job as possible.

READ MORE: Input costs remain high and farmgate prices are falling

“What stands out from the responses this year is the challenge for farmers of not being able to pass on higher input costs, and the potential squeeze that will have on farm incomes in the coming year, but it is clear that Scottish farmers are taking a more positive view on issues such as new support schemes and Carbon Net Zero.”

“From the number and detail of the responses, we can see the importance of having clarity on the new support policy and how that will be funded going forward. Farming is a very long-term industry and it is critically important farmers can make long-term plans to future-proof their businesses.

“The survey gives us an invaluable window into the industry we serve, and we are very grateful to all our customers who took the time and trouble to complete the questionnaire.

“It is a huge help to us in planning how we can best support our customers going forward and where their investment focus will be.

“We remain very optimistic about the sector but the coming years will clearly be challenging and once again we encourage every farmer to look hard at their business, talk to their advisors, and create a plan to deal with the changes that are coming.”