Membership

AF’s Agribusiness Outlook 2019 – Working together to achieve more

28 November, 2019

In October 2019, AF CEO, Jon Duffy, embarked on a series of roadshows to engage with AF’s members. The events discussed important topics such as the future of agriculture in the current political climate and within that, the future of AF.

Jon was joined by Martyn Rogers, AF’s Business Manager for Crop Production, and the Regional Agricultural Manager for Barclays in each of the locations.

Across the 3 presentations, one topic was reiterated: Brexit. Despite reluctance to bring up the topic that so many of us are adverse to, it does put the outlook of the agricultural economy into question.

However, what was also reiterated, is that the mid-long term outlook is bright.

So, what should be done in the short term? Jon suggests that the industry could see a 3-12 month dip in prosperity.

“Be prepared for seismic change. But what always happens in times of seismic change? Opportunity.” Jon says.

One way in which opportunity can be found is through farmer owned businesses consolidating. This creates more leverage, more business and more value passed back down the chain. It’s something quite apparent in industries such as fuel, where 80% of the market is owned by two businesses.

Jon also highlighted how agriculture “stands up during times of recession”, reminding delegates that ultimately “people need to eat”.

Both Martyn and Barclays echoed the projection that by 2050, the global population (which currently stands at 7.7 billion) will reach 10 billion. With the growth in population comes the rise in demand for food produce, which, Barclays says, “is not a luxury”.

Despite not raising any major concerns, Barclays questioned whether the industry relied too heavily on cheap labour when investments could have been made into technology. Should businesses wish to invest, Barclays can offer the Rural Project Loan. It was explained to members how to be more viable for lending – character (history banking with Barclays, reliance etc) plays a big role in the decision process.

Outside of Europe, Martyn Rogers discussed how China has impacted the global market. Martyn explained that, for crop production products, a lot of the active ingredients are sourced from China. Due to a rise in pollution levels and the Chinese government trying to combat this, a lot of factories have been forced to close down. This has resulted in less supply, and subsequently, what is left is a product with a more expensive price tag.

Thankfully, AF have the market insight to understand the fluctuating markets. With a 9% share of the Crop Production buying space, AF have the leverage to ensure members see value returned. For this financial year, Crop Production has already returned £1 million back to its members.

When questioned on AF’s service to its membership, Jon highlighted the steps in place to ensure the business is giving its members value. “We constantly measure our service values using NPS,” Jon says, “This allows us to understand where we’re getting it right and where we can improve.”

When it comes to AF’s business areas, Jon highlighted that “whenever we look to focus on a particular business area, I ask the question: is it adding value to members?”

The closing thought? “Together, we can achieve more”.

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