The first in a series from our Managing Risk in Farming report, we look at how the Coronavirus has affected UK farming. Ed Davey, and Account Executive from our Lincoln branch, gives his insurance perspective on defining future protection strategies.
The global Coronavirus pandemic was unprecedented and unexpected. The forced closures, social distancing and severe travel restrictions all had a major short-term impact across the wider economy and in farming communities up and down the UK. And those impacts continue today.
Farming was rightly recognised as a critical sector – with farmers, farmworkers and vets all named on the key worker list. But that was the only positive.
With UK farming so deeply integrated into global and EU supply chains (over 90 percent of our sheep meat exports goes to the EU(1) the disruptive impact of closed borders has had a financial impact for some. But while wide trade questions remain, it is possible that the virus – and indeed the UK’s impending EU exit – may push consumers’ behaviour towards home-grown purchasing. As it is, with the exception of barley, seed potatoes and rapeseed, the UK is predominantly a net importer of food products.
Along with import/export issue, the virus affected the supply of seasonal labour – bad news coming on the heels of the government’s more welcome decision to allow seasonal workers from the EU to come over as normal during 2020.
In domestic markets, we saw falling lamb and beef prices as local restaurants and national chains, including McDonald’s, locked down(2). Added to which, the scarcity of shearing gangs and questions over the safety of silage and harvest contractors as they move from farm to farm caused anxiety across the community. Milk prices were initially affected as school closures impacted demand, with Farmers Guardian reporting that some dairies withheld milk payments.(3)
With crops in the ground, growers were potentially less impacted – albeit, workforce illness and self-isolation remained issues. Looking beyond purely financial concerns, questions of equipment maintenance, and potential impacts on business tenancies, farm audits and inspections, and stock health issues (including TB testing and badger culling programs) all continue to be issues for consideration.
Stepping off the land, diversification incomes dropped – particularly those operating farm stores, holiday cottages and B&Bs. Taken as a whole, and while not everyone across the sector felt a major financial impact, there is little to be positive about in the short term. How things develop over time remains to be seen.
There was some support on offer. For sole trading, self-employed farmers and agri-business owners the government’s Self Employment Income Support Scheme (SEISS) provided grants to self-employed individuals or partnerships, worth 80% of their profits, up to a cap of £2,500 per month. Limited companies, however, with directors taking dividend income, were more exposed and the government was silent on this issue although companies were able to furlough employees under the Job Retention Scheme.
With the impact of the outbreak being felt by businesses all over the UK, Marsh Commercial developed a COVID-19 resource centre to house all important news and information to update the farming community on the potential implications for your business. This resource remains live.
The insurance perspective: Defining future protection strategies
With the crisis showing some signs of abating, it is now important that the government and the farming sector work together to define robust future strategies that can protect communities against both longer term impacts and from the reoccurrence of a similar event.
This is not just a business issue, but also a wider point about social change and impact. The insurance industry has a role to play, and Marsh Commercial is working with insurance providers to discuss and develop an effective way forward.
In our next edition, we look at the ongoing issues of climate change and the effects it is having on our agriculture sector. Can’t wait until the next series drops? You can download the full report here.
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