Rural economy at risk of further recession, warning

A combination of bad weather, poor harvests and the rising price of livestock feed means the rural economy is in a depressed state at the end of the first quarter of 2013, according to data from the Rural Economy Index.

Published quarterly by the Country Land and Business Association (CLA) and rural property consultancy Smiths Gore, the index provides an insight into the business environment of the rural economy by taking a sample of agricultural and non-agricultural businesses. 
The latest data suggests agricultural businesses are faring worst. The index’s measure of optimism has fallen by 40 per cent compared with the same quarter last year while sales have taken a hit in the last six months, meaning orders, sales and profits are due to be lower in the next 12 months. Farming businesses also anticipate employing fewer people.
Non-agricultural businesses are less optimistic but expect higher profits in the next year despite actual sales shrinking in the last six months and a falling number of business enquiries. Hopes for higher employment have faded with fewer non-farming businesses expecting to employ more people in the next year.
Dr Jason Beedell, head of research at Smiths Gore, said: “The index clearly shows that the rural economy is continuing to suffer. For farming, bad weather, poor harvests and the rising costs of livestock feed have all played a part, which we largely expected.
“More shocking is the fall in expected profitability for non-agricultural businesses over the next 12 months. The rural economy has stalled and further recession is possible.”
Dorothy Fairburn, the CLA’s regional director for the North, believes cutting bureaucracy can make a big difference to the rural economy.
She said: “We call on the Government to reduce the negative impacts of over regulation by implementing the MacDonald recommendations as soon as possible, putting in place a broadband infrastructure that is effective, affordable and available to all and encouraging rural businesses to fully embrace the principles of growth.”
In February last year, the Government responded to a report compiled by Richard MacDonald, chairman of the independent Farming Regulation Task Force, which listed more than 200 recommendations for reducing form filling for farmers. The Department for Environment, Food and Rural Affairs committed to delivering almost 90 per cent of the recommendations. Speaking in January this year, Environment Secretary Owen Paterson said he would be working with Mr MacDonald throughout 2013 to ensure the agreed recommendations were implemented.