How bright is the future for Britain’s rural businesses?

The rural business sector is growing. The latest figures show that in 2015/16 there were 537,000 businesses registered in rural areas, accounting for 24 per cent of all registered companies in England. This sector now employs over 3.5m people in total.

So, what are the main challenges facing the rural business sector?

Funding perspective 

Brexit and the UK’s decision to vote to leave the European Union has been described as one such challenge – or opportunity – affecting rural businesses, particularly those operating in the agricultural sector.

Tim Maris, Head of Agriculture at UHY Hacker Young, comments: “Since Brexit, the secretary of state for environment, food and rural affairs, Michael Gove, has given comments on subsidies that were designed to stabilise the rural and agricultural sector, but has he done that?

“His statements, whilst continuing the pledge to maintain the current level of European funding up to 2022, suggest that the funding will be more targeted. British farmers currently receive about £3bn of subsidies per annum, and these are mostly (but not entirely) linked to the amount of land farmed. The suggestion is that, for this level of payment, farmers should be looking towards ‘woodland creation, habitat protection, caring for treasured landscapes and higher animal welfare.”

Neil Wilson, Head of Agriculture at HSBC, comments on Brexit: “In the aftermath of the Brexit vote we have seen the sterling fall against most major currencies and this has had a positive impact on many farming businesses, with output prices rising. However, the challenge around input cost management is something that businesses and managers need to remain focused on. The availability of labour continues to be a challenge too.”

Wider challenges 

Regarding the wider challenges facing rural businesses, Alan Johnson, Curriculum Manager at Bridgwater College adds: “The speed of broadband can be challenging, and this has a direct impact on the service level provided to customers.

“The availability and price of transport can also be a challenge – be it distributing products and services, or the use of public transport by staff who do not possess their own vehicles.”

Alan comments further: “There are also challenges around rural demographics, as there is very much an ageing population within the rural business sector, particularly in agriculture. New entrants find it increasingly difficult to start up rural businesses, due to the capital and cash flow required.

“However, the outlook is brighter than it has been in recent decades. There has been a resurgence in demand for locally produced food and drink, and technology has allowed businesses to operate effectively in remote locations through diversification. This is helping to create sustainable rural employment, attracting more dynamic professionals to the countryside.”

Fast-growing sectors

When people talk about the rural business sector, agricultural business will most likely be the first things that is discussed. But how is the sector evolving?

Neil Wilson comments: “We are seeing many farms exploring some form of diversification. In some areas, some of the diversified parts of the business now exceed the farming operation and these have developed into rural businesses rather than specifically farm businesses.

“These diversifications often include activities centred around tourism, such as farm parks, shops, or activity centres. Much of this growth has allowed rural business to flourish but for many it will be important to continue operating as efficiently as possible and to grasp opportunities.”

The Business Perspective

Somerlap

With Brexit, labour shortages and diversification affecting the sector, what do those running rural businesses have to say?

Somerlap is a Somerset-based, family-run firm which has been producing premium timber fencing, sheds, pallets and garden products for public and trade customers throughout South West England for over
35 years.

Managing Director Kevin Bond says that the main challenges facing rural businesses are related to infrastructure, transport and, of course, communications.

He says he recently visited rural China and had 4G connection, and would like to see larger investment in infrastructure to benefit rural businesses, particularly faster broadband.

The Barn Somerset

Leah Whitting is the marketing manager for The Barn – a rural cosmetics procedures and holistic therapies retreat at the foot of Crook Peak in Somerset.

Leah comments: “We sometimes experience issues with integral systems such as card payments, music, etc. The Wi-Fi can cut out unexpectedly and each treatment room’s music system is linked to it. This can affect the client’s experience and potentially have a negative effect on our reputation.

“We have also experienced a pressure to provide Wi-Fi for clients – it’s a crucial factor for them when visiting, whether to ‘check in’ and share their Barn experience using social media, or just to stay in touch with the world.”

The quality of internet connection is not the only issue facing The Barn, as the region is notorious for localised road closures and traffic incidences.

Leah concludes: “We are never contacted by local government about road closures or roadworks. We have had clients who have been unable to make their appointment as they cannot find an open route in.”

Farm491

Verity Payne is the centre co-ordinator at agritech research and testing facility, Farm491. Based in Cirencester, they offer start-up space at the Royal Agricultural University – offering access to a wealth of knowledge through innovators, investors and expert advisors.

The idea behind Farm491 is to create a create an incubation environment, like the Engine Shed in Bristol, to benefit the wider agritech and food production industries.

Verity summarises the current issues facing rural businesses: “Brexit is affecting the labour used by farming to harvest and this is leading to increased reliance on robotic and unmanned vehicle management of crops.

“With Brexit casting uncertainty with many, now is the time for the UK rural economy to refocus and redistribute its capital and energies towards the nation’s agricultural technologies.”

Verity does have a positive outlook for her industry though. She comments: “The good news is that the technological developments within the farming sector are attracting young people back into the industry and encouraging them to be part of the hi-tech revolution.

“Agritech is one of the fastest-growing sectors and includes a wide range of businesses; drones, robotics, aquaponics, precision agriculture, big data, crop data, bioscience, agronomy, apps, and GPS.

“Rural businesses are aware that by utilising technology, business service providers, innovators, entrepreneurs – farmers can cut costs as well as improve their productivity, efficiency and data transparency.”

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