Scottish Estate Benchmarking

Scottish Estate Benchmarking
 
Looking forward

27 February 2017, by Ian Bailey

What are the implications of Brexit?

 

Looking forward, there are key concerns in relation to Brexit, regarding both changes to support payments and the international trade negotiations. However, in the short term the weak pound may bring some benefits to rural businesses.

These include:

 a more positive environment for exports and commodity prices

 a substantial increase in subsidy payments in 2017

 an increase in domestic tourism as more people choose to holiday at home to avoid unfavourable currency exchange rates, this includes rural tourism

 a boost in the number of overseas visitors to the UK, which will have a positive impact on rural tourism

In the longer term the outlook is less clear. Our analysis of agricultural profitability post Brexit suggests that the impact of changes to trade agreements on arable units could be far more significant than changes to agricultural subsidy. On livestock units, the impact of the new subsidy regime has yet to take full effect and again future trade agreements will impact significantly.

We are regularly providing updates via our Brexit Briefings which can be accessed here. This report highlights the diverse income base potentially available to rural estates, where the shift in reliance on agricultural income has already diluted the impact of future legislation and changes to agricultural support.

The key to a profitable and sustainable business in the future will be maximising the opportunities offered by the range of assets, economies of scale, and working in partnership with communities and neighbours. To do this, a full analysis of the current position, including benchmarking to challenge current performance, will be needed to provide the foundation for future strategy.

Looking forward, the options, in addition to developing the core income streams, might include:

 diversifying into niche markets, for example alternative food products

 portfolio restructure

 liquidating capital through sales should not be ignored

 diversifying into assets outside the core business, including commercial property portfolios, hotels and commercial forestry.

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Key Contacts

Ian Bailey

Ian Bailey

Director
Rural Research

Savills Margaret Street

+44 (0) 207 299 3099

 

Julie Baxter

Julie Baxter

Data Administrator
Rural Research

Savills Margaret Street

+44 (0) 1483 203492

 

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