2024: Optimism on the wane as new year approaches
© iStockphoto/Lemanie H Optimism about farming prospects for the near future is proving hard to come by, with farmers particularly concerned about the state of their output markets and the continued dismantling of old-style EU farm supports.
Our annual Sentiment Survey is designed to take the pulse of the farming industry and, as reported in our 15 December issue, many have come through the toughest of years.
See also: Farmers turn their backs on the political process
Almost double the number of respondents (31%) said 2023 had been a “bad” or “terrible” year, compared with just 17% who said it had been a “good” or “great” year.
Extreme weather and rising input costs were cited as the main challenges.
About the survey
- The survey was carried out over three weeks in October and November
- More than 650 farmers and farm managers took part
- Three-quarters of respondents were owner occupiers, with an average age of 56
- 65% of respondents grew cereals, 44% kept beef, 42% kept sheep, 14% were dairy farmers
- Average farm size represented was 284ha
This somewhat downbeat sentiment seems set to carry on into 2024.
When asked how they felt about prospects for their farming businesses over the next six months, just 24% said they were either “optimistic” or “very optimistic” about their short-term farming prospects, compared with 39% giving one of those answers last year.
On the flipside, it emerged that 37% are now “pessimistic” or “very pessimistic” about the months ahead, compared with 28% in last year’s survey.
Differences
As ever, there are some sectoral differences.
For example, livestock farmers tended to be more optimistic than average – probably reflecting the fact that both finished lambs and cattle have ended the year at a considerable premium to year-ago levels, thanks to tighter supplies.
Dairy farmers too had a slightly brighter outlook, with the first signs of a market recovery appearing at the time of the survey.
Global supplies are tighter, butter and cheese values are on the way up, and some processors have already announced price increases for December and the new year.
Within the survey, 45% of dairy farmers said they expected output prices to increase either “slightly” or “significantly” over the next 12 months, compared with 31% who generally held this view last year.
But the picture is very different in the arable sector, with those growing cereals, oilseeds and pulses all having a more pessimistic view than average of the next six months.
Just 16% of cereal growers said they were either “optimistic” or “very optimistic”, compared with 44% who were “pessimistic” or “very pessimistic”.
Again, this may be explained by the fact ex-farm feed wheat prices have been tracking below the £180/t mark for many months – at least £50/t below where they were a year ago.
Difficult planting conditions this autumn may well have exacerbated that downbeat feeling, although recent indications from the grain trade suggest some market improvement may be on the way.
Looking further ahead, our survey paints a more stable picture for the next two years, with the optimists more or less in balance with the pessimists.
Some 34%, said they were “optimistic” compared with 38% who were “pessimistic”, and 28% were “neutral”. Scottish farmers were the most optimistic.
Greatest challenges for 2024
The Sentiment Survey also asked Farmers Weekly readers what they thought would be the greatest challenges they would face in 2024.
The most notable change is that rising input costs, which last year was far and away the greatest worry, has now slipped to third, with 18% of farmers citing it as their number one concern.
Even though many inputs are still eye-wateringly expensive, agri-inflation figures from the likes of Andersons farm business consultants and the AF Group have for some time been indicating a reversal of last year’s cost spike.
In its place, the value of farm outputs has taken top spot as the greatest challenge ahead, together with government policy.
As the bar chart shows, most people (42%) actually think output prices will stay the same, though 27% anticipate a decrease.
Policy concerns
But it is future government policy that has really grabbed producers’ attention, with significant concerns about how changes in support arrangements are going to affect farm businesses.
Last year, just 9% identified this as their primary concern. This year, 23% are worried about it.
The evolving situation in England, with the steady phase-out of the Basic Payment Scheme (BPS) and the gradual introduction of Environmental Land Management and various productivity grants, has been well understood for some time, and there is a resigned acceptance of this change.
But in Wales in particular, a growing awareness of the shift to a new policy has really set alarm bells ringing, with 46% of respondents citing this as their top challenge for the year ahead.
In the autumn, news that Glastir was folding, to be replaced with a less attractive Habitat Wales Scheme for 2024, was an eye opener.
The latest consultation on the Sustainable Farming Scheme, which starts in 2025, has also confirmed the phase out of BPS, and the retention of the highly controversial 10% tree cover requirement on all farms entering the scheme – much to the chagrin of the farming unions.
Uncertainty about natural capital
With government budgets tight, and likely to remain so, it seems farmers are going to have to consider any opportunities to raise additional funding from private markets for natural capital – things such as trading carbon offsets, “biodiversity net gain” and “nutrient neutrality”.
At least, that is what the Treasury is hoping for.
We therefore asked readers about their approach to such matters – and discovered a fair degree of uncertainty and nervousness.
The starting point was to ask if farmers had done a carbon audit of their farm yet – something that some end-buyers are starting to demand of their suppliers.
Encouragingly, we found that 26% had already completed an audit, while 41% were considering it. But again there were significant sectoral and regional differences.
The dairy sector was top of the pile, with more than half (56%) having done an audit – reflecting the fact that some processors and supermarkets have been driving it in this sector.
Regionally, Scotland seemed to be ahead of the game, with East Anglia and Northern Ireland lagging well behind.
In terms of trading in natural capital, only 13% said they thought they were likely to do so, with about half undecided and the rest saying “no”.
Perhaps not surprisingly, those who have already done a carbon audit were more inclined to consider trading their carbon at some point.
And 20% of farmers in the South East said they were likely to trade biodiversity net gain – presumably to help the region’s prolific housebuilders offset any environmental damage that they might cause.
Sponsor’s comment
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