Sector trends

Sector outlook: What happens next for agriculture?

Our partner specialists at AHDB share their insights on ways to manage the continued state of flux in the agricultural sector.

To do this we create a set of assumptions based on our best information and publish an Agri-Market Outlook. Here’s a reminder of some of our key themes for this year:

The economy

At the start of 2023 it already felt like the position of the world had shifted. The rest of the year looks set to be one of economic unrest. The damaging effects of inflation, suppressed economic activity as a result of reduced spending power, and a tight labour market means a pre-Covid ‘normal’ feels like a long-forgotten dream.


Milk prices are a prime example of the motto ‘what goes up must come down’. After a winter of strong production, which increased as we moved towards the spring flush, there is a danger of creating an oversupplied market. AHDB expects marginal growth in production during 2023, although much will depend on the weather. UK and global demand are expected to be squeezed due to consumer cost of living challenges. We expect farmgate prices to decline in the first half of 2023, with some potential for this to abate in the second half if inflation subsides.


Wheat prices are drifting lower as energy markets drop and the global supply chain normalises after the shock of the Ukraine conflict emerging a year ago. In some places this is a welcome respite, as pork producers watch cost of production fall (albeit at still historically high levels). In 2023 AHDB expects wheat supplies on the global markets to remain constrained from the impact of extreme weather in the major exporting regions last season. Domestic wheat plantings are up, although high fertilizer prices may impact on applications in 2023 and subsequent yields.


Continued negative farm margins have resulted in a significant drop in the breeding herd. Pig meat production is forecast to decline by up to 15% year on year in 2023, driven by a reduction in clean pig kill in the first half of the year. Domestic demand continues to ease, driven by the cost-of-living crisis reducing retail sales and eating-out demand. A gradual recovery in the breeding herd is expected, with numbers predicted to increase by 7,000 head between June 2022 and June 2023.


Prices remain at record high levels supported by steady retail demand and some tightness in supply related to drought and feed cost pressures. AHDB expects production to grow slightly in 2023 due to higher cattle availability, by an estimated 0.6%. Consumption is also forecast to ease slightly by 2% as cost-of-living pressures consumers.


AHDB expects to see an increase in production for 2023, in the region of +8-9% year-on-year, driven by higher carry-over and a broadly stable lamb crop. Domestic consumption is expected to weaken, linked to recessionary pressures and tighter consumer budgets. The price outlook will be influenced by international trade, where we expect imports to weaken and exports to grow, potentially by over 15%.

What to do next?

Firstly, not panic. This is the perpetual state of agricultural commodity markets. We’ve just seen a hyper-extreme version in recent months.

There are ways to manage this constant state of flux, and we’ve highlighted them before, but they stand the test of time through all the volatility the world can offer:

  1. Minimise overhead costs
  2. Set goals and budgets
  3. Compare yourself with others and gather information
  4. Understand the market
  5. Focus on detail
  6. Have a mindset for change and innovation
  7. Continually improve people management
  8. Specialise

AHDB’s latest set of sector outlooks aim to help you understand the markets, and get a view on how they are likely to develop so you can anticipate how your business may need to adapt.

Agricultural businesses are preparing for the future by taking more control over spiralling costs and investing in efficiency-boosting technology. Read more here.

This material is published by NatWest Group plc (“NatWest Group”), for information purposes only and should not be regarded as providing any specific advice. Recipients should make their own independent evaluation of this information and no action should be taken, solely relying on it. This material should not be reproduced or disclosed without our consent. It is not intended for distribution in any jurisdiction in which this would be prohibited. Whilst this information is believed to be reliable, it has not been independently verified by NatWest Group and NatWest Group makes no representation or warranty (express or implied) of any kind, as regards the accuracy or completeness of this information, nor does it accept any responsibility or liability for any loss or damage arising in any way from any use made of or reliance placed on, this information. Unless otherwise stated, any views, forecasts, or estimates are solely those of NatWest Group, as of this date and are subject to change without notice. Copyright © NatWest Group. All rights reserved.

scroll to top