Beyond Brexit: The outlook for the rural economy
By James Attrill, Partner BCM, Rural Property Specialists
As we move closer towards Brexit in March 2019, the rural economy is peering over the horizon to see how it will need to adjust. After 40 years of significant subsidy from the EU, the impact on the UK’s farming and food sector will be massive. As larger specialist farming businesses look to streamline and expand, many other rural land owners will be looking to diversify further.
The Government has set out its vision for the rural economy – essentially a re-focussing of direct support, increasingly linked with environmental and public benefit, coupled with a recognition that the farming sector needs to become more efficient to survive on a competitive global market. The traditional barometer of market sentiment – agricultural land prices – are starting to show where people see the opportunities. Large scale commercial farms with globally competitive size and infrastructure are sought after; smaller rural units with a heavy influence towards diversified income are also attractive to the post-Brexit purchaser, as they are much less reliant on Government subsidy.
The rural sector has always been particularly sensitive to fluctuations in sterling exchange rates – small changes in food export/import dynamics have a large effect on farm gate prices. Weak sterling is a significant help to the agriculture and the food sector – the devaluation in June 2016 has pushed up agricultural profitability. As we move beyond Brexit, this advantage may continue. Rural tourism diversification may also benefit as holidays abroad become more expensive.
On the Island, tourism ventures make up a very significant part of the rural income. The advent of Airbnb, the changing ownership attitudes for second homes and the affordability of holidays abroad are all having an impact. Our development consultancy experience tells us that demographic change is an equally large driver. Short stays, food culture, fun activities and the ‘unique’ accommodation experience are all becoming essential ingredients. The digital generation are some of the most discerning consumers ever.
As the rural world adjusts to some seismic changes, and commercial farm units grow in size, it is inevitable that land and buildings will fall out of use. To boost the rural economy, the government has already relaxed planning legislation significantly and we see this as a continuing trend. The re-use of suitable farm buildings for housing through permitted development, positive policy towards renewable energy development, the re-definition of brown field sites and housing policy swinging towards supporting rural communities, are all critical to cushion the adjustments required over the next decade.
Most importantly, none of these changes will be possible without well-trained and motivated young people choosing careers and business start ups in the rural sector. We see many capable individuals below 35 years of age committing to a rural career path and reinventing rural businesses to be public facing, competitive and market led.
In summary – out, gently, with the old and in, positively, with the new!
This article was first published in the March issue of Island Business
