Survey by Investec Wealth & Management (UK) explores how farmers are coping with high running costs

Farmers have increased their levels of debt, according to Investec

Farmers have increased their levels of debt, according to Investec

Farmers are taking on more debt, as well as taking advantage of more grants and subsidies in the face of rising costs.

That’s according to new research by wealth management firm Investec Wealth & Investment (UK), which polled 100 freehold farmers across the UK.

The research found two out of three (66 per cent) of farmers surveyed have experienced rising costs over the past two years, with 10 per cent of those saying costs have risen dramatically. A further one in five (21 per cent) say that their costs have stayed the same, with only just over one in 10 (13 per cent) saying their costs have fallen.

Of those who have experienced a rise in costs, these have increased by an average of 12.9 per cent in the past two years. However, over a quarter (27 per cent) say they’ve gone up by more than 15 per cent in that time frame.

Half (50 per cent) say they’ve gone up by between 10 and 15 per cent and almost one in five (18 per cent) say they’ve gone up by between 5 and 10 per cent. Just one in twenty (5 per cent) say their costs have increased by up to 5 per cent in the past two years, despite the vast majority of farmers (73 per cent) describing their farm as ‘frugal’ when it comes to keeping costs under control.

High levels of debt

The research also reveals that a third of farmers describe the current level of debt in their farm as high or very high. A further 40 per cent say they currently have moderate levels of debt, and only 24 per cent say it’s low. Just 3 per cent describe their debt level as very low.

Farmers are focused on securing government grants and subsidies, and more than a quarter (28 per cent) surveyed think that they’re excellent at making the most of incentive programmes designed to support farmers. Just under two thirds (59 per cent) think they are good at doing this and more than one in 10 (13 per cent) say they’re average.

This is certainly helping their outlook, with more than one in 10 (11 per cent) describing the financial health of their farm as excellent and seven in 10 (69 per cent) describing it as good. One in five (19 per cent) say it’s average and just 1 per cent say it’s very poor.

To make the most of the grants and subsidies available, almost all (97 per cent) of the farmers surveyed get some form of help when applying. The most popular option is to employ a consultant or adviser (71 per cent), but more than half (53 per cent) say they get help from a family member or employee. A quarter (25 per cent) opt to speak to a community or industry organisation.

Scott Jones, divisional director, southern offices at Investec Wealth & Investment (UK), said: “The pressure of rising costs on their balance sheets is just one of several challenging external factors facing farmers at the moment. While this is resulting in some having to increase their debt levels, our survey shows that a large majority are making the most of the government subsidies and grants that are available to them.

“It’s also very positive to see farmers getting the help they might need to access these, in order to benefit from the support they provide.”