Agricultural insolvency figures outperforms other sectors

Farm businesses are less at risk of insolvency than a number of businesses in tourism, retail and property sectors, according to new figures.


The data from insolvency trade body R3 suggests that one in five farm businesses are at a higher risk of insolvency, although that figure is marginally better in the South West.


Figures from Bureau van Dijk's 'Fame' database suggest that 19% of farm businesses in Wales and the South East of England are under threat, as are 17% of those in the West Midlands and the North West.


Meanwhile 26% of London farm businesses have a higher than normal risk of insolvency, above the overall UK average for all sectors of 24%.


The rate of actual liquidation was recorded at 0.7% per quarter though, suggesting that businesses are combating the corporate insolvency threats against them.


Additional figures from the Office for National Statistics show that only 33 liquidations occurred in the agriculture, fishing and forestry in 2013 compared to thousands in manufacturing, construction and hospitality.


Meanwhile, only six farming businesses entered receivership in 2013, less than half of the total seen in the previous three years.


However, the figures are not as widespread as in other sectors, although large parts of agriculture adapted to the needs of the population.


“It is particularly interesting to see that agriculture currently has the lowest risk of failure across the whole region, especially considering the recent floods,” said Ross Connock, chairman of R3 in the South West and Director at PricewaterhouseCoopers.


“It is possible that many in the sector have adapted to a changing economic environment or looked to diversifying.”


Farmers can also look to the selling of large assets such as land, buildings and machinery, which means many can stave off insolvency before it reaches that stage.


Despite the relatively high rates of insolvency in other sectors, many businesses are reportedly more optimistic for the coming year given the recovering economic conditions.


By Phil Smith


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