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Agriculture trends 2017 – are your customers ready?

In 2015, the UK farming sector’s total income fell by 24 percent, driven by lower commodity prices and an unfavourable Euro/Sterling exchange rate. 2016 presents a more positive outlook: the exchange rate for Basic Payment Scheme (BPS) cheques has increased by 16.5%, helping to boost this year’s net farming income. It’s likely however, that gross income for the majority of farms will be flat this year due to global economic challenges in the food and production sector.

The general economic environment is uncertain and as such, the agricultural industry’s forecast for 2017 is cautiously optimistic. In times like this, it doesn’t pay to sit on the fence. There are challenges ahead that need to be prepared for and long-term business decisions that need to be made.

Your customers are facing some tough times. If you want to help them, make sure you’re aware of the key agriculture trends set to impact the farming sector in 2017.

Automation

Farmers are a tech-savvy bunch, and a growing number use GPS software products and tractors equipped with telematics. These technologies are helping farmers better manage the business of farming by improving yields and profitability.

With demand for food increasing as the global population grows, agricultural robotics like autonomous tractors, ground-based sensors and flying drones could help farmers produce more food, more sustainably and at a lower cost. It’s no surprise then that a report by US firm WinterGreen Research forecasts that this market will be worth $16.3bn in 2020. That’s a £13bn increase from 2013.

Automation improves efficiency and enables farmers to stay more in control of their costs – better cost management equals bigger profits.

Skills shortage

As exciting as automated farming technology is, it takes a specific set of skills to operate this equipment and trained technicians are in short supply. Not enough graduates are entering the agricultural workforce and the average age of a British farm holder has risen to 59 years old. More skilled migrant and foreign workers are required to meet the shortfall – in fact, 80 000 seasonal labourers are needed to pick and pack fruit, vegetables and plant crops across the country.

Technological advancements in farming automation and robotics are not completely autonomous. Rather than replacing the role of human labour, these tools can enhance the agricultural process, as long as there is a skilled operator at the helm. It’s critical that farms and businesses within the agricultural industry invest in their image and promote the sector as a positive career choice.

Rocketing global demand for food

The population of the world is growing rapidly. In the UN’s most recent report, it estimates that there are 7.3bn people on the planet. This number is expected to rise to 9.7bn by 2050. As a result, the demand for food will catapult and put increased pressure on farmers worldwide to produce more crops. This will require farms to become even more efficient; from use of land, to choice of machinery.

Fortunately, productivity in the UK’s agricultural sector is improving. High levels of production in 2015, including record yields for cereals, have increased the sector’s total factor productivity by 0.7 percent. Compared to 2010 results, productivity is currently up by a healthy 5.3 percent.

This positive outlook is challenged by the greater global imbalance in food supplies versus demand. To achieve a sustainable global food balance in 2017 and beyond, businesses and governments will have to work together to increase productivity, encourage innovation, and improve skills training.

Are you doing all you can to help your customers prepare for 2017? Partnering with BNP Paribas Leasing Solutions can help you grow your business, and theirs. Contact us today to discuss your objectives with our team of industry experts.

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Suhale Vorajee
Head of Marketing and Communications
BNP Paribas Leasing Solutions UK

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