Farmers look to alternative finance for post-Covid growth
Propel, a leading UK independent finance lender has released a landmark study revealing the financial outlook among farmers post-pandemic and indicates the key investments that they are planning for 2021/22 and how they intend to finance them.
Main findings:
- 75% of farmers are looking to acquire assets in the next 12 months.
- Nearly 60% of farmers feel positive about the financial outlook for the farming industry over the next 12 to 24 months.
- Only 22% of farmers expect the impact of Covid-19 to be a main constraint to growth in the next 12 to 24 months.
- Asset finance is the most popular form of alternative finance, with 86% of farmers seeing clear benefits to using it to acquire machinery and vehicles.
After a challenging year for farmers, caused by the Covid-19 pandemic and Brexit, the survey shows that they are increasingly looking at alternative finance options to help maintain or grow their businesses. The survey results showed that 75% of respondents are using one or more kinds of finance options. The most popular form of alternative finance is asset finance.
The survey also shows that UK farmers are increasingly looking at alternative finance options to help maintain or grow their businesses. The findings highlighted that asset finance is the most popular form of alternative finance, recognised for conserving working capital (41%), offering affordable payments (35%), and simple budgeting (30%).
Competitive pricing (57%), flexibility (42%) and sector knowledge of UK agriculture (39%) stand out as the three most important attributes that respondents look for most in a finance provider.
Despite the recent tough landscape for the industry, the Propel survey revealed a prevailing mood of optimism among farmers. 58% of respondents feel positive about the financial outlook over the next 12 to 24 months, with 56% feeling optimistic in terms of business confidence over the same period of time. This is a huge contrast to only 16% of farmers feeling negative.
However, the sector is not without its challenges, with rising costs identified as the main constraint to growth over the two years. However, farmers were also concerned about the cuts in the Basic Payment Scheme (BPS), despite the government’s sustainable farming approach announced in November 2020.
Jon Maycock, commercial director of Propel Finance says: “Despite all the challenges the agricultural sector has had to face over the past 18 months, UK farmers have remained resilient and have been working to move food from farm to fridge throughout the pandemic.
“While the outlook from the survey is positive, the sector’s optimism should not be taken for granted. As farms emerge from the pandemic, it is vital that they are able to access fast and flexible finance to invest in the critical machinery and technology they need to drive future productivity and growth.”
