FARMERS tend to be heavily involved in the everyday practicalities of running their businesses, but many might be better to take a step back and consider the future options.
That was the message delivered yesterday in Edinburgh by David Douglas, head of rural business at Clydesdale Bank.
He said: "The past year has been an extraordinary period. It has been the classic case of 'up corn and down horn', but that is
not true of the dairy sector, where incomes have improved substantially.
"I believe that this is a time when farmers should take careful consideration of the their future prospects. I am certain that the prospects are sound, but planning is essential."
Douglas continued: "We should certainly consider that this is the start of a more fundamental change in global land use and respond accordingly.
"The impact of biofuel production, coupled with rising consumer buying power in Asia and the Far East may have affected the arable and livestock balance more than we have been used to."
Grain prices have virtually doubled in the past 12 months. However, the international markets remain perplexingly difficult to follow. Douglas, however, is cautiously optimistic for UK grain farmers, who endured almost a decade of returns which barely covered the cost of production.
He said: "While there are no guarantees in business, certainly not for a weather-dependent sector such as agriculture, you would have to say that the prospects for arable producers look good at present. Managing potential earnings to full effect will be the key challenge in 2008 and beyond."
Since early August, the livestock sector, with the notable exception of dairy farmers, has suffered a succession of near-disasters as a result of the foot-and-mouth outbreak in Surrey, which has hit the industry harder than the pandemic of 2001. Douglas said: "There is absolutely nothing fair or just about the hit which livestock units, sheep especially, have had to endure in recent months. There are, however, no rewards for allowing unfair developments to ruin an otherwise sound business.
"It is crucial that those with a business-rebuilding process to negotiate think it through, get started as soon as possible and stay positive."
Hill farmers, who have seen the price of sheep drop by 40 per cent, may find that advice difficult to swallow, but Douglas counsels:
"There will always be a marketplace for quality beef, lamb and pig meat; Quality Meat Scotland deserves to be congratulated for its huge efforts on this front.
"The laws of supply and demand, as we have seen this year with milk, inevitably restores market balance – eventually.
"The challenge for hard-hit livestock businesses is get through the present problems and be ready for future improvements when they arrive, as they surely will."
Land values have risen exponentially in recent years, securing the asset base of farming, and Douglas reckons this is a global phenomena.
"Land remains a precious commodity. This will help to ensure that even hard-hit income sectors will have a base from which to develop new business opportunities, skills and, eventually, fresh sources of income."
