Taking business advice and contingency planning is more important than ever in the uncertain post-EU referendum climate, says accountant Andrew Vickery
Nobody knows exactly what the next few weeks, months and years will hold. For many, it will be business as usual, so it’s important not to make any snap decisions, but equally it’s vital to build that level of uncertainty into any future business plans.
Many farmers are fed up with the red tape, inequality and unaccountability of the EU, but we mustn’t forget that the Basic Payment Scheme (BPS) accounted for about 74% of total income from farming in 2015 – without it a lot of producers wouldn’t be in business. Politicians have vowed to continue with some sort of support, but it may be more closely linked to public and environmental services.
The value of BPS payments is set in euros and converted to pounds on 1st September each year: in 2015 the conversion rate was 1.37 to the pound – now it would be around 1.21. Across a 300-hectare farm that would be worth around an extra £4,500. In simple terms, if the pound is 12% weaker it should make our exports to the Eurozone 12% more competitive in the short term, which offers the potential for domestic prices to rise. But in the longer term, post-Brexit, demand and prices will depend upon the trade agreements that we have reached and any tariffs that are put in place.
It must also be remembered, however, that a weak pound makes all imported commodities, including energy, feed, and fertiliser more expensive – and with the overall UK trade deficit, the weak pound isn’t really of benefit to the nation as a whole.
Successful businesses are those which look ahead, adapt to changing times, and keep an eye on the day-to-day detail of costs and productivity.
Andrew Vickery is head of rural services at rural accountant Old Mill.