To take stock of the agricultural sector and farming customers’ evolving priorities, Virgin Money owned brands, Clydesdale and Yorkshire Bank, carried out a comprehensive survey in December 2020 with almost 300 farmers. All with substantial enterprises, the farmers were consulted to understand current and emerging industry trends on themes including Brexit and the impact of COVID, as well as future priorities and investment plans. The survey results have revealed both expected and unexpected elements. Virgin Money’s Head of Agriculture, Brian Richardson, said this research has provided an important snapshot of farming opinion and highlighted a larger than expected extent to which farmers are recognising the importance of climate emissions to their operations.
While it was perhaps predictable that, for 43% of farming customers, COVID has had mostly negative impacts, the survey showed that 8% have benefited – mostly due to rising produce prices for beef and cereals. A rise in supermarket demand has also reportedly helped some customers offset the collapse in hospitality demand, while others have continued to face cash-flow problems. Overall, the survey shows that COVID has had little impact on over half of agricultural customers, with the pain most felt by dairy and potato farmers.
With so much change going on, Virgin Money also wanted to look at the future for agriculture, specifically on sustainability and the Net Zero agenda. Brian Richardson, commented on the findings:
“We felt it important to understand fully what our customers are thinking around planning for the future. Perhaps surprisingly, almost a third of respondents had already undertaken a Carbon Audit, with that rising to over 50% for the dairy sector. From these survey results, it is clear that our farmers are very aware of the wider sustainability agenda and its growing importance to the future of farming.
“Reassuringly, the biggest priority for 86% of customers was the improvement of health and wellbeing for their workers on the farm, followed by tackling climate emissions. These results are very encouraging. Farmers have obviously, despite all the uncertainty, really focused on the challenges ahead and now have a clear direction of travel with sustainability not just been seen to be about the environment but also working conditions and employment.
“Another element really present among the responses was the very clear vision towards an AgriTech revolution, with an impressive 56% of customers having recently invested in technology. Their focus for investment was around automation tools and precision farming, followed by a strong emphasis on renewable energy. The results showed that 63% plan to bring these types of technologies onto the farm in the near to medium-term future.”
On thinking about how their businesses had been impacted by recent events and what was important going forward, Brexit was another hot topic for farming customers. The survey recorded that 44% were feeling that Brexit would have a negative impact on their business. Given that the survey took place shortly before the trade deal was agreed, this is perhaps not surprising. However, what was perhaps concerning in the findings was that in December 2020, 43% of agri customers stated that they did not know what the Brexit impact would be.
This proportion of those unsure of the pathway for their business again highlights how the agriculture sector will need to continue adapting around current uncertainties. On the negative impact of an uncertain Brexit, farm businesses identified concerns with:
- “Export being more complicated… supply chain issues.”
- “Import and export tariffs. Seasonal labour issues.”
- “Depending on the outcome, markets for lambs could be hit… getting fruit pickers might be very challenging.”
- “Not knowing the export tariffs… charges that come with different deals. Any sales to Europe are uncertain of their continuity and costs will differ greatly so it is hard to plan.”
More positively, an unexpected finding was that despite COVID-19, almost a quarter of customers had still diversified their enterprises within the last six months. An impressive number given the challenges around the pandemic and financing, but again demonstrating the agility and resilience of the sector.
Brian Richardson reflected on the role of banks with farming heritage in light of the survey responses: “Across the UK, we are always talking to our customers through experienced Agricultural Managers, but this survey gave us a good snapshot of present thinking. It points to the challenges ahead for the agricultural sector, and will help the bank to better plan our work with customers to support them.
“As we move forward, I am very pleased our customers have been happy with the Bank’s response to COVID-19 uncertainty. Understanding their needs means we can be there for them even more. The significant uptake of Carbon Audits also shows a focus on taking the climate challenge seriously. Over the coming year the Bank will work to facilitate these investments on customer priorities, including in agri-tech, productivity, and the net zero agenda.”
With an eye on the future, this Clydesdale and Yorkshire Bank survey has provided a good insight into the direction of travel for the sector, and highlights the support agricultural businesses will need as it navigates these changes.