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Fears mount for UK farming investment as energy, climate, and regulatory pressures bite

Fears are mounting among UK farmers over their ability to invest in projects that can bolster the climate resilience of their farms and tackle cost and supply chain challenges, according to the latest survey from the National Farmers Union (NFU).

The annual poll of more than 600 of the trade body's members shows confidence in the sector's short and medium term prospects is at its lowest level since the pandemic, in part due to spiralling costs of production and concerns that UK farmers are being undercut by imports that are produced to lower environmental and animal welfare standards.


Almost 90 per cent of farmers said they were being negatively impacted by rising input costs such as energy, fuel, and fertiliser, all of which have been driven upwards by skyrocketing fossil fuel costs in the wake of Russia's invasion of Ukraine.


At the same time the food and farming sector has been hit hard in recent years by climate impacts and the fallout from Brexit, which has contributed to produce shortages on supermarket shelves in the UK.


As a result, business confidence among farmers has dropped, according to the poll, with the horticulture, livestock, and poultry sectors particularly hard hit as they wrestle with shortages of produce eggs, tomatoes, and peppers.


"It is shocking but not surprising that our farmer confidence survey is reporting the lowest levels in three years," said NFU president Minette Batters. "During this time, we have experienced a global pandemic, a war in Europe, tumultuous political change and extreme weather. If this lack of confidence and uncertainty is allowed to continue during such challenging times, it has the potential to lead to further shortages on supermarket shelves."


The survey also found 72 per cent said they were being negatively impacted by regulation and legislation, while 82 per cent highlighted the negative effects of the phase out of previous farming subsidy schemes under the EU.


Quizzed over the biggest factors influencing their confidence to invest, 86 per cent of respondents said the strength of the government's strategy for ensuring domestic food is not undercut by imports produced to lower standards would be important, while 83 per cent highlighted increasing food prices, and 76 per cent cited the impact of inflationary pressures.


However, where farmers are opting to invest, renewables and energy efficiency measures are emerging as a priority.


The NFU said high energy costs and growing pressure from clients to drive down climate and environmental impacts was driving increased interest among farmers in investing in on-farm renewable energy generation and other clean tech measures.


The survey suggests 38 per cent of British farmers altready use or generate renewable energy, with higher uptake among poultry farmers and larger-scale farming operations, and lower uptake among sheep and beef farmers.


However, overall uptake of renewables and efficiency measures among farmers has levelled off over the past six years due to reduced policy incentives, and now declining business confidence risks further deterring investment in such projects, NFU warned.


"We know from experience that low confidence indicates that farmers don't have the means to invest in their food producing businesses, which could result in little to no growth in our domestic food security at a time when we need it most," said Batters. "It is also at odds with the government's own plans for growth, and the commitments made by Prime Minister Rishi Sunak last year to support British farming by setting a target for the nation's food security, with a statutory duty to report on domestic food levels."


The government has been gradually rolling out a new post-Brexit farming subsidy regime - the Environmental Land Management Scheme - that aims to incentivise farmers to improve environmental services, such as habitat protection, tree planting, and peatland restoration. But the scheme continues to face criticism from some farmers who have accused Ministers of failing to provide sufficient clarity over how the scheme will work and how they can access subsidy payments.


In addition, the NFU - alongside environmental groups and other trade organisations - has been hugely critical of several post-Brexit free trade deals inked by the UK with Australia, New Zealand, and others, which it claims lack sufficiently robust stipulations for ensuring all imports meet the same high environmental and animal welfare standards as food produced in the UK.


Batters said a lack of clarity over the government's agricultural policies was continuing to hamper business confidence in the sector.


"Farmers need to know that government is supporting them through policies that build profitability and resilience into farm businesses to allow us to unlock a thriving food and farming industry," she said. "For this we need to see clarity on future farming support policies, including the Environmental Land Management schemes, which will help farmers plan ahead and build financial resilience into their businesses."


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