Small business growth forecasts in agricultural sector hit three-year high
Wednesday 31st January 2024
French farmers may be blockading Paris with protests, but UK small business growth outlook in the agricultural sector has hit a three-year high – with 39% of business owners predicting significant or organic growth for the next three months, a sharp rise on 26% last quarter.
The new research from Novuna Business Finance forms part of its Business Barometer study, which has tracked small business growth forecasts every quarter for the last decade. For the first time, the percentage of agricultural small businesses predicting growth is significantly higher than the national average for all UK small businesses, which remained largely unchanged on the previous three quarters at 32%. This contrasts to the years after Brexit and the pandemic, when small business growth predictions in the agricultural sector trailed far behind the national average.
Percentage of small business owners predicting growth each quarter:
The agricultural sector compared to the UK national average
Agricultural small businesses | UK national average for all small businesses | |
Q1 2024 | 39% | 33% |
Q4 2023 | 26% | 32% |
Q3 2023 | 31% | 32% |
Q2 2023 | 30% | 32% |
Q1 2023 | 34% | 33% |
Q4 2022 | 11% | 31% |
Q3 2022 | 22% | 34% |
Q2 2022 | 25% | 37% |
Q1 2022 | 23% | 36% |
Q4 2021 | 12% | 35% |
Q3 2021 | 15% | 36% |
Q2 2021 | 22% | 35% |
Q1 2021 | 23% | 26% |
Despite the national picture for small business growth forecasts remaining flat for nine months, the Novuna findings revealed some major highs and lows by industry sector.
Beyond agriculture, other sectors that saw a significant increase in the percentage of business owners predicting growth included; manufacturing (44%), media (45%) and legal services (40%) – all sectors where confidence has now hit a 12-month high.
Quarterly growth predictions over the last 12-months
Q1 2024 | Q4 2023 | Q3 2023 | Q2 2023 | |
Manufacturing | 44% | 24% | 32% | 34% |
Media | 45% | 28% | 36% | 38% |
Legal services | 40% | 31% | 30% | 35% |
Conversely, the first quarter of 2024 also saw sharp falls in growth outlook among business leaders in the leisure/hospitality sector (down from 35% to 24% compared to last quarter) and the transport/distribution sector (growth forecasts down from 38% to 27%). In the troubled construction sector, the percentage of business owners predicting growth remained stagnant for the third consecutive quarter at 23% - the lowest level since summer 2022.
Signs of resurgent confidence in the agriculture sector coincided with an increase in the percentage of small business owners that said they were working on new initiatives to secure growth for 2024 (70% for Q1 2024 - up from 64% this time last year and 60% two years ago).
The most common new initiatives that agricultural small business owners said they were working on to invest in growth opportunities for the year ahead comprised of:
- Keeping fixed costs down - 44% (up from 31% 12-months ago).
- Investing in new equipment - 30% (up from 26% 12-months ago).
- Improving cash flow - 25% (up from 20% 12-months ago).
With a General Election looming, 2024 may well be a year when UK farmers are targeted for greater support. In recent weeks, the Government has set out its biggest upgrade to the UK’s farming schemes since leaving the European Union – and Labour too has promised British farmers a better deal with the EU and vowed to make sure more British produce is used for schools and hospitals.
It is unlikely that the upturn of growth forecasts among agricultural small businesses is a reaction to policy announcements. Rather, it is more likely to be a statement of resilience among farmers despite the challenging economic context. The upturn in the percentage of farmers investing in new growth projects may well be the reason why they start 2024 will a more bullish outlook than previous years. At Novuna Business Finance, we are committed to supporting the funding needs of established agricultural enterprises and we back their plans to innovate new projects that will secure growth in 2024.
Jo Morris
Head of Insight
Novuna Business Finance
Notes
The research was conducted by YouGov among a representative sample of 1,124 small business decision makers, spanning all key industry sectors. The fieldwork was conducted between 5-19 January 2024.