RURAL SMEs [Small and Medium Enterprises] NEED MORE SUPPORT
The Scotsman  26 July 2002, Business section, p. 4.
Fordyce Maxwell rural affairs editor

Non-farming, non-tourist businesses are still suffering post-FMD, says university study

BETTER support for the non-farming small businesses which comprise more than 90 per cent of the rural economy should be a vital "lesson learned" from the foot-and-mouth epidemic.

Making that claim in a report published today, researchers from Newcastle University's Centre for the Rural Economy say that many small firms are still struggling financially after last year's rural devastation.

Research associate Jeremy Phillipson said: "Business might be picking up during this year, but last year's lost income has gone for ever. It will take years for them to recover, if they do."

He went on: "The legacy of the epidemic for many businesses is additional debt, reduced reserves, disrupted trade cycles and shelved plans for growth and investment."

The report is based on a survey of the impact of foot-and-mouth and its restrictions on about 180 rural businesses in the north of England.

The micro-businesses covered by the report - each employing fewer than ten people and making up 92 per cent of firms in the north-east countryside - include, among many others, hairdressers, garages, haulage and transport, riding schools and accountants.

"The major reports into the foot-and-mouth crisis published in the past week or two, and the Curry report on sustainable farming early in the year, have been farm-centred," said Phillipson. "But during FMD, total revenue losses in the wider rural economy far outstripped those inflicted on farming.

"Tourism is mentioned quite a lot in the major reports, but we're talking about businesses which are not tourism. We say that these small businesses should get consistent, lasting support - financial and advisory - from the government and other agencies during this recovery period."

The report indicates how most small rural businesses were hit by the inter-dependence of a local economy and the knock-on effect of other businesses running into financial trouble, with the worst effects in more isolated areas such as Tynedale, Teesdale and the Wear Valley.

It says that many business owners could only cope by taking out loans or re-negotiating existing ones, spending personal savings; laying off staff; cutting back household spending and hoping that some household members could find other jobs.

Average loss for the firms surveyed was £16,000, about 17 per cent of revenue. By the end of last year, about 8 per cent had closed down, temporarily or permanently; 18 per cent were still trying to pay off additional debts incurred during the epidemic and about 40 per cent had seen no sign of recovery.

About 20 per cent estimated that it would take them up to two years to recover and a further 10 per cent said it would take longer than that.

Phillipson said that the department's survey work continued, including a similar survey in Cumbria, and that the most recent interviews suggested that there had been little change in estimates since those at the end of 2001.

He added: "Our report suggests that the need in future is to think more about the inter-dependence between different sectors of the rural economy. FMD showed not only the diversity of that economy, but also its vulnerability."

Confronting The Rural Shutdown is available from the Centre of Rural Economy, Newcastle University, NE 1 7RU. Tel: 0191 222 6623.

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