B&Co Rural News November 2017
RURAL NEWS BROWN&CO | AUTUMN 2017
IS IT TIME FOR A REVIEW?
With the impending departure fromthe EuropeanUnion, uncertainty over future trade deals, volatile currency and a likely changing subsidy system, has there ever been amore important time to consider reviewing your farming business? The approaching changes and uncertaintieswill inevitably create as many opportunities as issues or concerns for those involved in the agricultural sector. However, with two years before significant change, this surely creates a great opportunity to ensure your business There is a full range of assessments that abusiness shouldmake, but near the topof the list are themanagement capabilities. Only themost capable, with a strategy for successionplanningto take care of the long gamewill thrive. Which enterprises and the number of sectors the business is involved inmay prove critical as ameans of spreading risk, aswill the availability ofmanagement data and financial information, key tohelpwithdecisionmaking. Also, the business structure, financial ratios and the cost structure for each enterprisewill be critical in maximisingoverall returns. to restructure and potentially reinvest in other sectors, insome cases. The challenges aheadmay seemdaunting to some, but exciting to others and thiswill depend on your attitude and approach. Whatiscertainisthattheprofitabilityofcertainfarmingsectorscannot, ontheirown,standthepotentialvolatilitygoingforwardandthose businesseswithoutavariedandstructuredapproachwillbemore vulnerable ifnoactionistaken. Recentresearchundertakenindicatesthat formostbusinessesthere isroomforimprovement.Allthatisrequiredis anopenmind,flexibleapproachandabusinessplanforthefuture. Making themost of each asset, whether that is land, buildings or
Diversification options are currently onmany farmers’ minds in a bid to strengthen their position in the build up to changes that Brexitmay present to the agricultural industry. Instigating a newenterprise can provide a vital alternative income stream, aswell as providing newand interesting challenges that can reduce the risk associatedwith volatile
bemade, in particular to direct farming subsidies.
farming and hasmore recently provided a stable and profitable income stream. On top of this the payback period (being in the region of 10 years), depending on production capabilities, has shown to be shorter thanmany other investments. Broiler and free-range egg unit investments have been favoured in recent years. This has resulted inUK egg production rising from10 billion in 2015, to 10.3 billion in 2016, of which 50%are free range. This is however set against UK consumptionof 12.6 billion eggs annually an increase of 2%on the previous year. With regards to broiler production in 2015, 930 millionbirdswere reared equating to 1.4million tonnes of meat. This represents an increase of 3%on the previous year. UK consumption of poultrymeat in the same year was 2.3million tonnes, with themajority being chicken meat. With a range of entry points into the poultry sector, fromself-managed, joint ventures or rental options, the poultry sector gives farmers and investors alike an opportunity to get involved.
If poultry is an enterprise of interest, or if you are looking to diversify
PROACTIVITY IS THEKEY Talk to our specialist advisors to helpmaximise your business potential
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