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'CATASTROPHIC' IMPACT OF FOOT & MOUTH ON YORKSHIRE'S RURAL ECONOMY - NEW REPORT

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An overview of the impact of foot & mouth disease was revealed to the elected members of foot & mouth member panel ...
An overview of the impact of foot & mouth disease was revealed to the elected members of foot & mouth member panel yesterday following a survey to 3,000 businesses at the end of June. A summary of the key findings revealed:

* the main sectors affected are agriculture, agriculture related, tourism and retail

* an estimate£19m was lost in revenue to the tourist industry between March-June

* 10% of respondents are losing over£10,000 per month

* 38% of respondents had made staff redundant

* 84% of respondents are going to have to borrow funds to keep in business as compared with only 68% prior to the outbreak of FMD

* over 100 community events have been cancelled depriving community services and

facilities of over£77,000

* the outbreak of FMD has led to a disruption of public services

The findings from the survey will be used by Craven DC to lobby for greater funds for Craven, and will be used to inform the Craven Foot & Mouth Recovery Plan. The district council will be working closely with Yorkshire Forward on the Regional Foot & Mouth Recovery Plan.

Craven DC leader Knowles Fitton said: 'Foot & mouth disease has been a catastrophe to all sectors within Craven, including agriculture, tourism, communities and public services. We must pull together to rebuild local confidence, and work with regional and local partners to plan and implement the recovery.'

From the recent Business Recovery Grants distributed by Yorkshire Forward, Craven attained the greatest number, 147 (or£294,000) out of 500 hardship grants were given to Craven businesses testimony of the effect of the hardship suffered in Craven.

Executive Summary of Craven Foot & Mouth Impact Study

The impact of FMD was felt immediately within the Craven economy from February 2001. The business survey highlighted trends that were already apparent within the rural economy.

Turnover

13% of respondents have a turnover of less than£10,000. This was particularly evident within the agriculture (11%) agricultural related (11%) and tourism (15%) sectors. There are a significant number of businesses operating with very low turnover, these will have been dramatically affected by FMD and may not survive.

Size of business

The economy is dominated by owner managers and micro businesses, 61% of respondents employed less than 3 employees, within the agricultural and tourism sectors this figure rises to 71% and 68% respectively. Similar trends are mirrored within part time employment. The number of businesses employing less than 10 employees rises to 90% of all respondents within agriculture this rises to 97%, retail 96%, tourism 90%.

Reduction in turnover

On average 60% of respondents are losing up to£2,000 per month, and over 10% are losing in excess of£10,000 per month. The value of tourism to the economy over the period February - June 1999 was£35m. In the tourism sector 27% of respondents experienced up to 40% reduction in turnover, a further 52% experienced downturns of between 41 - 70%, and a further 21% faced reductions of between 71 - 100%. Current estimates assume a downturn on average of 56% in tourism over the period February - June, which represents a loss of£19.6m based on the responses to the survey.

Reduction in employees

Businesses were asked if they had made employees redundant, 38% of respondents had laid off staff in the period March - May 2001. However these figures are not reflected in the official claimants of unemployment related benefit and claimant count rates June 2001. The number of registered claimants in Craven in June 2001 dropped to 1.5% or 414 persons. A small number of respondents did not feel confident that the economy would pick up in Craven and predicted the need to continue to lay off staff over the period June - October 2001.

Borrowings

Prior to the outbreak of FMD 32% of respondents had no borrowings at all, 20% have borrowings in the range between£10,000 -£20,000. However as a result of FMD the number of businesses with no borrowings had dropped by half to 16%, 25% of respondents have increased their borrowings from£10,000 -£30,000 as compared with 17%. Borrowing of between£100,000 to£500,000 within the agriculture and retail sectors will significantly increase in the future.

Continuation in business

Almost half of the respondents did not feel that this question was relevant probably because as long established businesses they feel that they can ride out the difficulties of this year. However 17 % of agricultural related businesses felt that they would only be able to continue for a further 1 - 3 months, and 25% could only see themselves as being in business for a period of 3 - 6 months. Almost a quarter of tourism businesses thought they could manage a further 3 - 6 months, and a further 26% felt able to continue for 6 - 12 months.

Planning for recovery

Businesses were asked to indicate which business support recovery measures would be appropriate to their business. The most popular measures were for marketing support 25%, revenue assistance 23%, and capital grant aid 27%. These proportions were mirrored across the agricultural, retail and tourism sectors.

Impact upon the community

The impact of FMD has had a catastrophic effect upon community events in Craven. An indicative list is attached at appendix one. Community events such as agricultural shows and galas serve as valuable opportunities to raise revenue for local services and facilities.

The value of known lost revenue earning opportunities is estimated of at least£77,000 for voluntary activity. A full survey of voluntary organisations has not been possible within the timescale. This figure does not take account of the value of lost business to local crafts people and traders that conduct business at such countryside events. This effect has been experienced throughout the district.

Impact upon Craven DC

The outbreak of FMD has created additional extra work for service units in communicating information to businesses and residents, administering the Council's hardship schemes, undertaking the business survey, and supporting the Foot & Mouth Task Force. There have been losses in revenue in terms of public entertainments licence£15,000, reduction in trade waste income - current estimate£5,000, Outdoor Event Licences - potential loss of income£5,000, at end of May income from Car Parking Fees was£4,500 below budget (Ingleton down by 39%, Settle down by 10% offset in part by Skipton 0.8% up.) Bookings for the 2002 Yorkshire Dales Official Holiday Guide are down by 38 % down, and revenue is down by 47% or£20,000. The impact of FMD upon Council budgets has resulted in a moritorium upon new expenditure, deferred investment in Information and Communications Technology within the Council, and a refocusing of corporate priorities to support plans for Foot & Mouth Recovery.

In their own words

Nothing can tell the story of the impact of FMD better than words for businesses directly affected.

Farmer

'20% stock taken in Lincolnshire 31st March, 10% taken Malham 20th May 70% taken 11June 2001. 1000 + animals slaughtered, left with 1 cat 4 kittens - no income!'

Tourism

'The problem now is not cancellations but people not booking for July, August and onwards. The media portrayal of this crisis has destroyed confidence in touring the Dales. The public reception is that roads are closed, pyres are burning in every field etc.'

Summary and recommendations for local recovery plan

The recent survey to businesses showed that the sectors most greatly affected in Craven were agriculture, agriculture related, tourism and retail.

The outbreak of FMD has cost Craven dearly in terms of culling of stock, falling prices brought on by animal movement restrictions, and the loss of the export market suppressing prices even further. The need for continued biosecurity measures prevents agricultural related businesses conducting their business too.

The combined effect of FMD and closure of footpaths has badly affected tourism and retail businesses, a loss of£19m to date in the tourism sector. The FMD has affected community events as well as traumatised businesses and residents within Craven.

The rural economy of Craven was reliant upon tourism and agriculture, the onset of FMD exposed the fragility of relying upon these sectors, though it has to be recognised that FMD has been an unforetold disaster.

The downturn in business, and continuing duration of FMD in Craven means that there is a lack of confidence in both the community and business sector as to when FMD will be over. This has meant deferred capital investment in both the private and public sector and will have a knock on effect in terms of purchasing power which will affect supply chains, and failing to keep up and forge ahead in terms of business competitiveness.

Recommendations for the recovery plan

The recovery plan for Craven must seek help the sectors most affected but also to redress in the long term the imbalance in the rural economy. The rural recovery plan must seek to prioritise the following:

* revitalisation of agriculture

* support for tourism in terms of broadening the product away from perceptions as just a walking destination, and capital investment in tourism infrastructure

* market town initiatives

* business association development

* diversifying the economic base through business space and ICT development

* short term support for community organisations to help them over the period summer 2001-2002

* healthy communities

* increase the economic benefits by using sustainably the natural environment

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