Agri-food sector 'needs local political support and clarity over post-Brexit risks'
THE north's agri sector is in rude health - but has no idea where it'll be in a year's time regarding market access, exchange rates and subsidies/support payments.
And that in turn is holding back many farm businesses from making key investments, a sectoral briefing has been told.
Danske Bank's Agri Economic Outlook breakfast heard that the agri sector is in generally good financial health, with a high percentage of farmers choosing to pay down debt and average incomes rising, particularly for dairy, pig and mixed-use farms.
But farmers and food producers need devolved government back in place and lobbying on their behalf to make sure the sector does not fall behind following the UK's exit from the EU next March.
Danske Bank's head of agribusiness Rodney Brown said farmers and food businesses are trying to evaluate their business and plan ahead in the face of increased market volatility, Brexit uncertainty and a lack of clarity about how a far-reaching new Agriculture Bill introduced last month by UK Environment Secretary Michael Gove will affect them.
He said: “The sector is generally in strong financial health, we have a lucrative domestic market and a growing demand for high quality food products which should provide further growth opportunities for Northern Ireland's farmers and food producers.
“But the political vacuum at Stormont could be devastating. We need local ministers in place to implement a tailored response to the new Agriculture Bill. Unless we have devolved government to deal with local agriculture issues, decisions affecting the future of farming in Northern Ireland will be dealt with from Westminster and our local farmers risk missing out.”
Mr Brown said a large number of farmers were now looking to de-risk their businesses through hedging or debt reduction, and others are using the current good conditions to innovate and drive further efficiencies.
But he said many still need to push ahead on issues such as land mobility and succession planning, particularly in light of likely changes in the support payments farmers currently receive from the EU.
“We are encouraging our customers to review the viability of their businesses with 30 per cent less support, to make decisions about where they want to be in five years and plan their route there. If your business is under-performing, you may need to look at other income streams and opportunities to diversify.”
Danske Bank's chief economist Conor Lambe believes the industry is likely to grow both this year and next year, albeit at a subdued rate.
He said: “Household spending power is gradually recovering, but with inflation still above the Bank of England's target, consumers remain under some pressure. There is no doubt Brexit is making it hard to plan and this uncertainty has led some businesses to postpone making long-term, strategic investment decisions.
He added: “We expect the local agriculture, forestry and fishing sector to grow, but at a relatively low rate. We are projecting real GVA growth in the sector of 0.7 per cent in 2018 and 0.3 per cent in 2019. We also expect employment in the sector to grow by around 1 per cent this year, but only by 0.2 per cent next year.
“Uncertainty has been the watchword around Brexit for some time now, but businesses and farmers must now be thinking through the potential impacts for them. It's also important they don't get Brexit fatigue, because the process doesn't end in March 2019, it just moves on to the next phase.”