Brexit is a hot topic at the Royal Welsh Show this week, as farmers across Wales seek assurances from Welsh and UK Governments over the uncertainty of the sector post-leaving the EU next year.
More than two-years has passed since the Brexit referendum and the only apparent certainty for farmers since then has been the prevailing sense of uncertainty.
We caught up with Roddy McLean, Director of Agriculture at NatWest, about the future of Welsh farming sector and Brexit and why he is optimistic for the future.
I am optimistic about the future of farming in Wales
This might seem like a bold statement to make, particularly when you consider the year experienced by Welsh farmers so far. 2018 has been a challenging one with the long winter, March’s heavy rain and the more recent prolonged dry conditions making it difficult to manage crops and grazing. This has impacted upon dairy farmers in particular, as too has the fall in the number of replacement heifers in the pipeline.
Lamb prices during the first quarter of the year reached record highs, largely because of the increased demand of countries like China and the United States pushing-up prices. Production is forecast to grow by 2% year on year in 2019 with 90% of Welsh lamb exports to the EU.
Similarly, the continent accounts for a significant share of Welsh farmers’ beef sales. Cattle prices have been encouraging tracking higher in the first half of the year than both last year and the five year average, yet the difficult weather conditions will have affected numbers born and consequently the stock of animals in 2019, and like Welsh lamb producers, the uncertainty of Brexit will be a concern.
The reduction in imports of chicken from Brazil and the EU due to issues surrounding disease has supported a positive increase in UK farm prices. This has been coupled with higher ration costs due to the weakness of the pound against the dollar, making it more costly to feed stock. Pig prices on the other hand remain stable with competition from imported produce likely to rise due to cheaper prices.
The sector as a whole then has fought itself into a quietly robust position, but is one evidently feeling the strains of Brexit uncertainty.
So why I am optimistic?
As a bank NatWest Cymru currently supports 25% of Wales’ farming businesses with over £175m of funding invested in the sector here. We understand what the pressures of Brexit uncertainty mean to Welsh farmers and this is why we are working with them, through our specialist relationship managers in the agriculture sector, to ensure they are in the strongest position possible.
No one can see into the future, but there is a consensus of opinion politically that a transition period of funding to farmers will be implemented post-Brexit. This will bring with it a certain level of intermediary stability however, it remains important that farmers work with our relationship managers so that there businesses are future-fit.
With change comes opportunity, but that means thinking strategically and looking at a farm as a business – what efficiencies can I make; where can I be more productive; are there opportunities to diversify; what new markets can I explore? Rural communities are resilient and can adapt, history shows us this, and encouragingly there is a growing awareness amongst farmers that they have to be business managers too. In doing so they will be able to capitalise upon the opportunities that are presented.
Wales’ greatest farming strength post-Brexit will be its standing as an internationally recognised brand, renowned for its quality of produce and product. It has a proud heritage and unique topography and this can be used to develop demand for its resources – both meat and diary – and in turn drive sales in new markets.
And through diversification there will be new opportunities for farmers to exploit their lands in different ways to generate new income channels. We are already supporting a significant number of farms moving in this direction and enjoying success as a result.
Fundamentally, farmers in Wales can have the confidence of knowing NatWest Cymru is ready to react whatever the future holds. If you look back at the milk price crash a few years ago, we quickly implemented a series of special measures to support farmers through this downturn. Crucially, we react immediately whatever the situation is so that farmers and rural businesses get the financial support they need.
There is no denying there will be challenges ahead for the Welsh farming community, but I am confident that with our continued support it has the people, infrastructure and ability to shine and prosper.