Farmers must brace themselves for two years of turmoil, a leading economist has warned, cautioning that the UK could quickly be operating in a recessionary environment.
HSBC head of economics Mark Berrisford-Smith told delegates at the NFU Cymru conference last week that a combination of the ongoing war in Ukraine, the transition away from EU policy and dealing with the aftermath of the Covid-19 pandemic meant farm businesses were operating in a very dangerous world, with financial conditions never experienced in our lifetimes.
While he said markets had calmed quickly after the disastrous mini-Budget announced by former Prime Minister Liz Truss, the move had led immediately to the interest hikes on mortgages and loans and to the issuing of a further fiscal statement which would, he said, reveal just how much a price there is to be paid.
He highlighted the fact the UK stood on the brink of recession, with a 0.3 per cent contraction in UK GDP now expected for 2023 a downgrade from the 1 per cent growth forecast in summer.
NFU Cymru president Aled Jones said in order for farmers to survive the current turbulence, it was vital governments across the UK took action now.
Addressing delegates, Mr Jones said: Farm businesses, like the rest of society, have had to deal with severe inflation. The latest Defra statistics show the price index for agricultural inputs increased by 30.7 per cent in the 12 months to August 2022.
We are living through a period of unprecedented political instability, but I want to make it clear to politicians in Westminster and Cardiff that commitments made to maintain funding for Welsh farming must be honoured.
This means we expect, as a minimum, the 374 million that is currently provided through the Common Agricultural Policy legacy schemes to be available annually through the Sustainable Farming Scheme.
His words were echoed by chief executive of the Tenant Farmers Association George Dunn, who said: There will be no escape from the economic headwinds coming our way, but farmers and growers must not be left bearing the brunt of this by retailers and food service providers seeking to hold consumer prices, while protecting their own profit margins by forcing farmers and growers to accept prices below costs of production.
According to Mr Berrisford-Smith, the biggest challenge for the farming industry and the UK as a whole remained the stratospheric price of gas, with recent drops not likely to filter through to businesses until 2024.
He said it was critical for Government to get the situation under control and hoped it would be addressed by the forthcoming economic statement.
He said: The best news we can hope for is an end to the war in Ukraine, but without an end to the conflict, economic life for all of us will be tough.
