The range of concerns held by farmers ahead of the EU referendum were clearly demonstrated by visitors to our stand at the annual Cereal Show in Cambridgeshire last month.
We asked visitors to our stand to tell us what were the main challenges they felt their businesses would face if the vote was to stay in the EU or if it was to leave. They could do this by placing a sticker on one of a number of potential areas of concern illustrated on a board.
By the close of play there was a clear consensus. If we stayed in the EU, the main concern was the level of regulation they would have to deal with. But if we left the EU, there were worries about access to export markets and subsidy and grant funding.
Now we know the result, these concerns are taking greater prominence, although there is a long way to go before we fully understand the implications.
But this is not a time for farmers to sit back and wait. There are things that can be done now that will help strengthen their position and put them in the strongest possible place to deal with whatever the future brings.
We are recommending that all of our clients undergo a thorough risk analysis, so that they can be sure they have identified the strengths and weaknesses of their business, and can react accordingly. This is something that every business should do on a regular basis, but at times of uncertainty it becomes even more important.
Businesses that are run effectively and efficiently will always out-perform those that are not. And there is no doubt that a business that sustains itself when times are tough will reap the rewards as and when the situation improves.
One immediate risk the industry is facing as a result of Brexit is the volatility around the exchange rate. This year’s subsidy will be based on the exchange rate between the pound and the euro through September of this year. Whilst we cannot be certain what the rate will be through September, a weaker pound will result in an increased subsidy cheque for those who elected to receive their subsidy in sterling
So, do you gamble that the pound will remain weak against the Euro or do you take steps to mitigate this? A prudent approach is for farmers to manage this risk by putting a contract in place that protects them against sterling strengthening. Locking into a rate now will provide complete visibility on this year’s revenues, allowing a business to budget accordingly. Failing to do so increases the risk of an extremely difficult year ahead.