Farmers are increasingly looking towards alternative finance to grow after a challenging year caused by Covid and Brexit, research has found.
A survey from alternative lender Propel Finance has revealed that 75 per cent of farmers are looking to acquire assets in the next 12 months, and the same percentage is already using one or more kinds of finance options.
Asset finance was found to be the most popular form of alternative finance, with 86 per cent of farmers see clear benefits to using this type of facility to acquire machinery and vehicles.
Respondents noted the benefits of asset finance for conserving working capital (41 per cent), offering affordable payments (35 per cent) and simple budgeting (30 per cent).
Meanwhile, the three most important attributes farmers look for the most in a finance provider are competitive pricing (57 per cent), flexibility (42 per cent) and sector knowledge of UK agriculture (39 per cent).
Despite recent challenges, 58 per cent of farmers are now positive about the financial outlook for the industry over the next 12 to 24 months, with 56 per cent feeling optimistic in terms of business confidence over the same period of time.
This is a huge contrast to only 16 per cent of farmers feeling negative.
Only 22 per cent of farmers expect the impact of Covid-19 to be a main constraint to growth in the next 12 to 24 months.
However, the sector is not without its challenges, with rising costs identified as the main constraint to growth over the two years.
Farmers are also concerned about the cuts in the Basic Payment Scheme (BPS), despite the government’s sustainable farming approach announced in November 2020.
“Despite all the challenges the agricultural sector has had to face over the past 18 months, UK farmers have remained resilient and have been working to move food from farm to fridge throughout the pandemic,” said Jon Maycock, commercial director of Propel Finance.
“While the outlook from the survey is positive, the sector’s optimism should not be taken for granted.
“As farms emerge from the pandemic, it is vital that they are able to access fast and flexible finance to invest in the critical machinery and technology they need to drive future productivity and growth.”