Cost management and improved productivity will be key to arable farming success as the UK shifts to a public money for public goods support system, according to consultants Andersons.
Speaking at Cereals Live, Andersons’ Sebastian Graff-Baker said deductions in support will accelerate after the Environmental Land Management Scheme (ELMS) becomes fully operational in 2024 or 2025.
He calculated that support could drop from £230 per hectare now to about £180/ha in ELMS support by 2028, although payments to every farm will differ depending on what public goods they deliver.
Mr Graff-Baker said: “The opportunities to add value to combinable crops may be limited, so growers need to focus on costs and productivity.
"A rule of thumb suggests that labour and power should make up 34 per cent to turnover, seeds, fertiliser and sprays 30 per cent, rent and finance 15 per cent, and admin and property 6 per cent, leaving a profit margin of 15 per cent.”
He urged growers to assess which fields are loss-making and either take steps to improve their productivity or explore how they could deliver ELMS benefits.
He also expected rents will increasingly reflect their agricultural or environmental value, which could see payments for ‘normal’ land decline.