Clarity needed over future funding of agricultural support

“The publication of the Agriculture Bill marks another milestone in the farming industry’s journey towards a new domestic agricultural policy,” says James Farrell, head of rural at Strutt & Parker.

“However, while it puts more ‘meat on the bones’ of the policy framework UK farmers and landowners will be required to work to, there are still many unanswered questions – one of the biggest being exactly how much money will be available to fund it.

“The government has pledged that it will provide the same cash total in funds for farm support until the end of the current UK Parliament (currently around £3.2bn/yr), but it is less clear what could happen beyond that.

“We would not be surprised to see the Treasury looking to trim back spending and if the overall budget is reduced, this would, of course, have important consequences for the agricultural sector, with farmers being told they will see direct payments phased out by 2028. The wider rural economy will also feel the effects, as farm businesses and estates cut back their spending.

“The government wants to deliver a cleaner and healthier environment for future generations, but this can only happen if the new environmental land management system has sufficient budget to ensure that it can be accessed by all land managers. The payments on offer also need to adequately reward farmers for delivering the right environmental outcomes.

“It is also unclear whether the support budget for farming will be set over a specified period or annually. The current CAP budget is set for a period of seven years which gives land managers a level of certainty and confidence to invest.

“Our advice to farmers and landowners is to make sure they are taking steps to ensure they are well-placed to take advantage of opportunities as they arise, and resilient enough to face any challenges.”

In order to prepare, Strutt & Parker is advising:

People

People make the difference – so ensure that managers and staff have agreed a strategy for the business, based on critical reviews of how it is performing now and what the opportunities are for improvement.

There is a clear link between successful businesses and highly motivated, skilled people; not all businesses have the right people, skills, drive and vision, in which case they should explore options to bring in the right staff.

Efficiency gains

Farm as efficiently as possible, as top 25% businesses are less reliant on Basic Payment scheme payments and more resilient to volatility. Farmers should continue to look for ways to improve their farming systems, in terms of outputs and markets for their products, variable and fixed costs. Benchmarking can be a valuable starting point for businesses looking to identity where cost savings might be found and to assess technical performance.

Environmental management

Take your approach to environmental management as seriously as your approach to crop and livestock management. This will prepare you for the new Environmental Land Management Scheme (ELMS).

Natural capital

Understand what valuable public goods your land produces, by reviewing Biodiversity Action Plans, Landscape Character Areas, flood risk maps, water risk maps and air quality maps. If you don’t know what you have in terms of natural capital – both in terms of quantity and how significant it is – then you can’t manage it properly or put a value on it as the market develops for ecosystem services.

Diversification

Grow profits from diversification and environmental management to reduce the impact of the cut in direct payments and spread the businesses’ risk.

Collaboration

Greater collaboration – which can be formally or informally – has never been more important. This is not just about scale, but about using the best skills of the group, sharing labour and machinery, group buying and selling, sharing risk, cutting capital investment, and producing landscape-scale public goods, such as pollination and storage of excessive flood water for subsequent irrigation, environment or leisure use.

 

 

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About The Author

John Swire - Deputy editor of Agronomist and Arable Farmer as well as responsibility for the Agronomist and Arable Farmer and Farm Business websites. After 17 years milking cows on the family farm John started writing about agriculture in 1998 and has since written for a variety of publications and has developed a wide circle of contacts within the industry. When not working John is a season ticket holder at Stoke City and also of late has become a fitness freak, listing cycling, swimming and walking as his exercises of choice.