IT has been a traumatic year for all sectors of the agricultural industry: disease, weather and price have all taken their toll. Never have I known the spirit and enthusiasm for farming to be at such a low ebb.

Despite all the problems the industry will continue in a not too dissimilar form to be at the heart of the rural economy. The industry is changing, as a result of social economic and environmental pressures. To survive and prosper you may have to change with it or adapt your systems and attitudes to suit. Farming is a business and, like any other business, if it is to survive in the long-term it must make PROFITS - sufficient to cover personal expenses, reinvestment for the future and tax.

As we move into the new year, each business has options for the future. You can continue as you have always done, you can expand or modify the business, you can downsize, you can diversify or you can leave the industry.

If you are going to continue with the current system, it must be profitable and you must enjoy doing it if it is to be sustainable. With lower prices, higher standards and increasing levels of bureaucracy, all systems will be under pressure and require a high level of enthusiasm and commitment.

If you are going to expand, it must be viable. All too often in the past expansion has been based on spreading costs rather than adding profit to the core business. Farm business tenancies have been taken at high rents and, yes, the farm appears more efficient; but with little or no added profit was it worthwhile?

Downsizing may seem like a backward step but if, at the end of the year, the reduced enterprise has rid itself of debt and put itself into a profitable position, it will have been the right move.

Diversification is much-talked about as a salvation, but it is a route that must be taken with caution. It requires planning, enthusiasm and perhaps different skills to those you use in your core business. It is perhaps an option that all should consider but only those with financial resources and appropriate skills should take.

Leaving the industry is, wrongly, seen by many as a failure. However, in my mind it is only a recognition that the current system is not sustainable and that change is required. This is always a difficult decision. If, however, the business is failing and the asset base is being gradually eroded, an early decision may leave some capital for reinvestment.

Many of those in the agricultural industry underestimate themselves and the skills they possess. There is a skills shortage nationally and, who knows, you may well end up with well-paid employment that you enjoy and tht gives you the security of a weekly wage packet.

Alternative strategies are possible for every business and help is available from many different sources. DEFRA has, under the England Rural Development Plan, grants schemes to enable farming and other rural business to adapt to changing circumstances and develop ways to move ahead. The department also provides grants for the conservation and enhancement of the environment. The Regional Development Agencies also have grants for agriculture. Business Link provides, free of charge, a Farm Business Advisory Service which can help you think through these difficult decisions and point you in the right direction.

The first place to start is your accountant, who should have an in-depth knowledge of your business. Make him work for his fees, question him.

Take some time out this Christmas to reflect on where your business is and where it is going. There is a positive future for those involved in farming if they are willing to adapt themselves and their business practices to changing circumstances.

- ADAS would like to wish all its clients and friends, old and new, a very merry Christmas and a happy and prosperous New Year.

This column is supplied by Derek Knight (01430) 861988 and David Martindale (01609) 760362 ADAS consultants in East and North Yorkshire.

Updated: 10:00 Thursday, December 06, 2001