Challenges ahead need careful management
Several challenges face the farming sector and Vickers and Barrass, Chartered Surveyors, Land and Estate Agents are acutely aware that managing the risks, as well as managing livestock and crops can be tricky. It’s difficult to assess the impact of a proposed reduction in direct payments, a move to payments for providing “public goods”, coupled with potential new trade deals following Brexit. Vickers and Barrass advise there are things you could do to make your business more resilient.
In the recent AHDB survey, “Preparing for change: the characteristics of top performing farms”, the following contributing factors towards improved productivity are cited: Minimise overhead costs, set goals and budgets, compare yourself with others, understand the market, focus on the detail, have a mindset for change and innovation, improve people management and specialise where you can.
Alan Falshaw, Farm Business Consultant at Vickers and Barrass says “Some or all the above are achievable; even small improvements will help. Often, it is the combination of several small changes that will bring bigger benefits, rather than changing the whole direction or enterprises of a business”. The report also says that only 30% of farmers produce budgets or cash flows. Alan continues “More detailed gross margins will help to raise productivity”
The Agricultural Bill is set to enter the report stage through the House of Lords which is the last time that the Bill could be amended.
“It’s certain that the reduction in Basic Payments Scheme payments will start in 2021 through to 2027.
The new 3-tier Environmental Land Management scheme is predicted to be available in 2024. Alan believes the scheme will sound very familiar, but he highlights that potentially there may be some difference in payment structure. “Rather than payments being based solely on income foregone, an innovative approach of paying for the outcomes of environmental benefits is mentioned”
Alan Falshaw’s article “Managing Risks” was featured in the latest Business IQ North East Magazine to read Alan’s full article here.