With farming currently experiencing challenging times, Scottish farmers have the potential to combine best in class efficiency and innovative marketing to compete on both price and quality – irrespective of whether they are producing feed wheat or high-value cheese.
Scotland has a winning combination of a good climate, varied enterprises, strong regional brands and farmers with “entrepreneurial vibrancy”. All this, and more, will soon be celebrated at this year’s Royal Highland Show, taking place from 23 to 26 June.
Having joined Bank of Scotland from a family farming business myself, I can say with confidence that many farmers across the country are innovative and tend to apply sound business principles. This is a recipe for success, irrespective of whether you graze livestock, grow large-scale arable crops or focus on intensive production enterprises.
This said, I am aware of the challenges facing today’s farmers. These include volatile global markets, increasing bureaucracy and what sometimes feels like illogical constraints on farming practices that can seem daunting, if not insurmountable. But this doesn’t have to be the reality.
Many farmers are adapting to cope with these new challenges and taking advantage of emerging opportunities. The sector continues to have a very strong balance sheet and, therefore, the capacity for restructure.
What’s vital is for farmers to look at how their borrowing reflects the cash needs of their business and mirrors farm production cycles. Well-designed and managed joint ventures can continue to play an important part in both reducing costs and managing risk. Whether it’s co-operative marketing, storage and grading, or simply sharing specialist machinery with a neighbour, there are opportunities to become more efficient.
While the effect of global surpluses on price is currently putting significant pressure on cash generation for many farmers, the medium- and long-term prospects remain sound. The UK’s proximity to a large and ever-more discerning consumer population also continues to present a competitive advantage.
Over the short term, in an increasingly challenging environment, those embracing and adopting new skills and practices will be best placed to maximise the opportunities that lie ahead.
• Sandy Hay is area director for agriculture at Bank of Scotland