We discuss the current frustrations and speculations in the farming press

Alan Falshaw talked to Business IQ magazine this month and voiced his opinion on the current situation most farmers are talking about. Read his article below.

The trade deal with Australia is filling the farming press. The government seems to be split, with Liz Truss pushing hard for a no-tariff agreement while more moderate members urging caution as to the impact this would have on particularly the red meat sector. Interestingly deadweight cattle prices in Australia are higher than in the UK at this moment in time, however home-produced lamb is approx. 40% and 25% dearer than Australian and New Zealand lamb respectively.” Alan Falshaw reflects at the time of going to press this month.

“The post Brexit collapse in the lamb trade did not happen and the majority of agricultural commodities have reached levels not seen for a considerable period and even record prices in some instances. This will have given many businesses welcome lift in profits and balance sheet values. However, farmers and land managers should not be complacent in these volatile times, and scrutiny of their businesses be it assets, enterprises and overheads should still be undertaken.” urges Alan.

In his view, Alan, who is Fram Business Consultant at Vickers & Barrass, Land & Estate Agents the writing is on the wall for the Basic Payment Scheme, “that is one of the few certainties we do know at this point. The recent announcement regarding the potential retirement scheme for farmers is still vague on details and will not suit every situation.”

“At Vickers and Barrass we have seen an uplift in interest in the Countryside Stewardship Scheme, this is one of the few routes available at present to access regular yearly payments to help fill the gap of the BPS reduction. With the added benefit of capital grants in some circumstances. There is a general frustration within agriculture and the advisory profession that the level of information available regarding the Sustainable Farming Incentive is very poor and this is a scheme which is meant to be available to all BPS claimants in 2022. The SFI was seen as a last-minute attempt by DEFRA to help with the reduction in BPS payments and the transition into Environmental Land Management, however there are serious concerns reading the timescales for this to happen effectively.”

“The slow pace of change from one system of support to another should not deter farmers from exploring what is available at present and assessing whether it can be incorporated into their business without affecting the overall productivity. Some farmers have recently and quite rightly questioned the economics of being paid to establish bird seed plots and wildflower margins when wheat is £200/tonne.” Alan feels this should be taken into account by DEFRA when developing payment rates for the future schemes. “The current offering of Countryside Stewardship was first available in 2015 and payment rates were calculated on an income foregone basis when wheat prices were at least 25% less than today. This volatility is nothing new in agriculture and businesses should not lose sight of historic data that clearly demonstrates that farmers as individuals have very little control over the value of their produce and are at the mercy of the market, which is continuing to be an ever-expanding global market whether we like it or not. Trade deals will be done with countries which supply competing goods, and we will have opportunities to supply to emerging markets too.” he continues.

“However, farm businesses should not be complacent due to the relative buoyant marketplace at present and they should still be appraising their business and reviewing performance of individual enterprises. Along with assessing the current offering of government schemes which might well provide additional income 2-3 years down the line when the balance of supply and demand has changed. It is also anticipated that a new round of productivity grants will be available later in the year. At Vickers and Barrass we are working with a number of farm businesses to explore the current opportunities and we are available for a no obligation consultation if required.”

To read the article online in Business IQ NE magazine please click here

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Posted by Vickers & Barrass on July 7th, 2021

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Vickers & Barrass

Rural Chartered Surveyors offering professional land agency services in the North East.