Farmers Are Too Reliant on Subsidies as Brexit Looms

13th August 2018

With just over six months to go until we officially leave the European Union (EU), Simon Britton, Partner at George F. White, highlighted just how reliant farmers across the North are on EU subsidy payments.

Farmers

Our decision to leave the EU has exposed the farming industry’s over dependence on subsidies. According to the Farm Business Income (FBI) Survey, the average profit for a farming business in Yorkshire & Humber over the last 5 years was £103 per acre, farmers received £73 per acre, over the same period, in subsidies. In the North East, farm profits over the last 5 years have averaged £57 per acre, with farmers receiving £80 per acre from subsidies. Many farming businesses are dependent on subsidy; however, it is not clear that these businesses understand to what extent their dependence relies on EU payments.

To highlight these issues, George F. White hosted a panel debate at the Great Yorkshire Show. The purpose of the debate, in which key speakers, including Geoff Hall, Regional Director at Lloyds Bank, John Lund, a livestock farmer, Tom Bayston, an arable farmer and owner of Park Lodge Shooting School, as well Miles Crossley and Simon Britton from George F. White, was to discuss how farmers can prepare for the long-lasting changes Brexit will create, focusing on changes to subsidy, increased commodity and currency volatility and shortages of labour.

Mr George Eustice, the Minister of State for Agriculture, Fisheries and Food recently described his vision for post Brexit Agricultural Policy within the UK as ‘a change in mind set for farmers.’ The Minister said that he saw new policy as ‘rewarding and incentivising farmers for what they do and not subsidising them for income lost’. He indicated that  the government will seek to support farmers, not based on the amount of land farmers own, but to reward them for helping the environment, water quality and to changes in husbandry, ultimately making more productive working practices.

DEFRA has set out its thoughts on a new Environmental Land Management Scheme (ELM) where farms and landowners will effectively quote a ‘price’ for the work based on a set ‘price list’. It is understood that those plans offering the best in value to the tax payer will be accepted.

Although we understand that farm subsidies are protected until 2022, my advice to farmers would be to utilise this time frame in order to fundamentally understand their business by preparing management accounts which will highlight farm income streams and to what degree their businesses are reliant on grants and subsidies. We can see from the previously mentioned statistics that the majority of farms in the North East and Yorkshire & Humber are hugely reliant on farm subsidy support. These farmers need to make changes to de-risk their businesses and ultimately future proof them, so they can operate with reduced funding support.

If you would like to start understanding and de-risking your business and its reliance on farm subsidies please contact Simon Britton simonbritton@georgefwhite.co.uk or 07866 721146.

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