* Access to trade, subsidies knock sentiment
* Farmers plan to cut machinery, land investment
* Uncertainty over subsidies after 2020
* GRAPHIC: tmsnrt.rs/2liQv0I
By Mariana Ionova
LONDON, Feb 21 British farmers are holding back
on big investments as they brace for the UK's exit from the
European Union, their largest market and a vital source of
Agriculture enjoyed a brief boost after Britain voted to
leave the bloc last June, when a weaker pound lifted profits by
about 12 percent and subsidy payments by roughly 15 percent, the
National Farmers' Union (NFU) estimates.
UK food and drink exports rose nearly 10 percent to a record
20 billion pounds ($24.8 billion) in 2016, the Department for
Environment, Food and Rural Affairs said on Tuesday.
While more cash on hand usually spurs investment, farmers
have become cautious as the benefit of the weaker pound fades
and lifts the price of imported inputs such as fertilisers.
"There's big uncertainty ahead," said Stuart Roberts, a
cereals and cattle farmer with 1,400 acres of land in
Hertfordshire and Kent. "The benefits we were seeing - that was
always going to be a short-term gain."
"Certainly, at the moment, we are not looking to do any big
investments in the pure farming stuff like machinery, land, new
An NFU survey late last year showed British farmers on the
whole plan to reduce spending on machinery by 26 percent and
land investment by 31 percent over the next three years.
Some 37 percent of English farmland marketed in 2016
attracted no offers by the end of the year, up from 13 percent
in 2015, data from property group Strutt and Parker shows.
Farmland values fell 2.6 percent in the fourth-quarter of
2016 compared with the third quarter, property consultant Knight
"Medium-term confidence has been dented by increasing
uncertainty about the EU and the higher cost base," NFU
economist Anand Dossa said. "People will put investment plans on
back burners as a result of that uncertainty."
Appetite for bank finance from the agriculture, hunting and
forestry sectors is still growing at about 2 percent annually
but has slipped from levels seen between 2012 and 2015, when
demand rose by roughly 10 percent a year, Bank of England
The slowdown began before the June vote but has intensified
in recent months and is expected to deepen in 2017, a spokesman
for the British Bankers' Association said.
British farmers received 2.8 billion pounds in support last
year under the EU's Basic Payment Scheme. Farming and
environment minister Andrea Leadsom said on Tuesday that for
some UK farmers this payment accounted for 70 percent of their
The government has promised that these payments will
continue until 2020, but the future beyond then is unclear.
"There is no guarantee how much will be available after
Brexit," said Graham Redman, a research economist at the
Andersons Centre, a farm and rural business consultancy.
"But everyone is assuming it will be less. And if it is, we
might have some economically tougher times to get through."
Leadsom said Britain was looking to build new partnerships
and strike the best free trade deals for Britain while noting
that 60 percent of exports go direct to the EU.
"The EU is our most important trading partner, a fact that
won't change when we leave, and a relationship we are determined
to uphold," she said, adding Britain was seeking tariff-free
trade with Europe.
Roberts is taking no chances. He's shifted his own focus to
building closer relationships with consumers and moving down the
"What we're trying to do is structure our business in a way
that makes it at least as resilient as possible."
($1 = 0.8051 pounds)
(Reporting by Mariana Ionova; Editing by Veronica Brown and