Fallout from Brexit, with uncertainty over subsidies, confusion on the status of migrant workers, the fall or stagnation in land prices and slowdown in land sales, is a wake–up call to farmers. Now is the time to review business plans and structures and make some hard decisions.
It would be as well to consider a world without subsidies. After 2020, when Government’s guarantee to match Basic Payment Scheme payments ends, supplementary income may need to be found elsewhere. Small to medium farms of up to 200 hectares (500 acres) will be hardest hit, reportedly only surviving because of subsidies, or making only modest profits. Farmers faced with unsustainable losses may be forced to sell up. A change of mindset is required.
As lenders are increasingly looking at how farmers can service their debt, as opposed to lending against equity in land, exploring other forms of income must be a priority. Consider whether you could lease land to a neighbour, or share costs of plant and machinery with other farmers.
Many have used permitted development rights to convert underused farm buildings to housing or holiday lets. We have seen a surge in option agreements where farmland near villages and towns can be considered for development. Many farms have diversified as far as they can, with renewable energy schemes, sporting and commercial lettings. However, rural development grants are still available for diversification projects.
The PR message is important. Subsidies may be replaced with enhanced environmental scheme payments, as the public like to see well-managed countryside. We need consumers onside and when imported food starts to get expensive, British farmers could benefit from less expensive, local produce, subject to the best welfare standards in the world.
Farmers will need to embrace technology and engineering to create innovative ways of farming. It may be time for the younger generation with fresh ideas to take over the more modern aspects of farming. Helped by their experienced relatives, they could preserve the investment and hard work ploughed into the farm through generations.
Many in the farming community voted to leave the EU, though some may be regretting their choice. Agribusiness is so diverse and each sector has its pressures. However, any business must be ready to respond to the changing economic, political and legislative climate and I have every faith farming will rise to the challenge, having demonstrated resilience and resourcefulness time and again.