Brexit to increase farmers’ demand for alternative funding
PEER-TO-PEER lenders could see more demand for funding from the farming industry after Brexit.
Folk2Folk, which specialises in providing finance to rural and farm businesses, said that reduced subsidies and a small pool of workers will put pressure on farmers’ income.
“We are having more and more conversations about how farming can be ‘fit for business’ during the Brexit transition and beyond and how we can help by providing finance to enable this,” said Ian Bell, head of farming and rural engagement at Folk2Folk.
UK farmers currently receive more than £2bn in subsidies from the EU. Although the Department for Environment, Food and Rural Affairs has suggested this will continue to be paid on a reducing taper for four to seven years, it is unprecedented for a government to commit to funding beyond a current parliament, which ends in 2022.
“Other issues may include the potential decline in migrant labour on which our horticultural sector is so reliant, and the potential for import/ export tariffs which would have such a detrimental impact on sectors such as the UK sheep industry and upland farms,” said Bell.
Bell suggested that inefficient farm businesses that rely on EU subsidies will be forced to diversify or cease trading, while a lack of skilled labour will require more investment in technology.
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“We will see more farmers looking to invest in their business, to grow and diversify in order to thrive,” he said.
Financing for agricultural businesses wishing to diversify tends to be in short supply, meaning farmers will be forced to look at alternative methods of funding such as P2P lending, he added.
This story featured in the October issue of Peer2Peer Finance News, now available to read online.