Farmers should not hang their hats on the idea that food prices will increase post Brexit, Andersons consultants have warned. Releasing the 2018 outlook for agriculture in Carfraemill on Wednesday morning, they said that Scotland will become more dependent on the home market going forward, but price will be a big factor for consumers.

“It is difficult to think of a sector more impacted by Brexit than agriculture. We could see food price increases post Brexit, but how politically acceptable is that?” asked David Siddle. “The clock is ticking and we need to see conclusions in negotiations by August 2018. The leader’s summit in the middle of this month will be important.”

The Andersons’ Farm Business Outlook concurs with AHDB’s Brexit scenario modelling, in that a free trade deal with Europe is the best possible outcome for Scottish farmers.

In terms of farm profitability next year, Andersons says it should be broadly in line with the 2017 financial year.

“The world stock of grain supplies over the last five years is up by about a third, we’re well supplied going in to 2018,” Alex Caraffi said. “The exchange rate has given farms a short-term insulation bonus, grain prices grew to £140/t. If the exchange rates were at the same level as two years ago, UK feed wheat prices would be closer to £100/t.”

Andersons suggests that all farmers should use the boost in returns due to the weakening of sterling to make their businesses more adaptable to market changes in the future.

“The opportunity exists now to ensure balance sheets are stabilised, structure debt appropriately and put businesses into a stronger position to withstand the next downturn,” Caraffi said.

For 2018, he is confident that beef prices will remain steady. So what can beef farmers do at farm level to be Brexit ready?

“Recording and performance modelling. Actually finish an animal to factory spec. This needs to be done by everyone, not just the top 10% to 15%.”

Meanwhile, potato producers reacted to high prices by planting more land, but there was a 40% fall in price by harvest this year. Andersons added that the lack of investment in facilities is a concern for the sector.

The consultant firm warned dairy farmers that prices of 30ppl are not here to stay, with MÜller already dropping its January price (see p72).

There has been a 1m head increase in sheep numbers over the last seven years, but without the help of the exchange rate, Andersons is clear that the price would fall. While import figures are similar to exports for Scotland, the growing demand for sheepmeat in China presents an alternative destination for New Zealand lamb.