Tag Archive: basic payment scheme

Brexit, Rural Grants and Business Resilience

It is clear now that there is a significant change in farm subsidies on the horizon in regards to Brexit and for many it could be substantially reduced. This is worrying for our industry as the Basic Payment Scheme and Environmental Grants account for a large percentage of turnover in many farming businesses.  Also, the industry will face further challenges from volatile markets to a shortage of farm labour, which has already, in many businesses, increased cost.

It is absolutely vital that farmers understand the financial performance of their businesses and ensure that they’re stable enough to weather the Brexit storm. The good news is that farmers have the next three or four years to do this and make certain they are flexible and resilient enough to manage these difficult times.

Over the past 12 months we have steered our advice, talks and seminars around the importance of business resilience in uncertain times and we are thrilled to present to you The Farm Road Show with George F. White. We will be hosting a series of seminars across the North in order to identify the pressures on farming businesses and give insight into what we are seeing across the sector.

Brexit



We will be highlighting:
  • Common themes
  • What farmers should be doing in preparation for Brexit
  • How to access Rural Grants

This is an excellent opportunity for you to understand the current state of the farming industry as well as meeting our team and receiving expert advice in regards to your next step.



We will be hosting at various venues and dates in February:
Booking a space

If you would like to join us please get in touch with Charlotte Bryden or call 0191 605 3489 by Monday 12th February.

Please specify which venue you would like to attend and the number of place required.

Farmers to See BPS Income Rise for the First Time in Five Years

Farmers are set to receive an increase in their 2016 Basic Payment Scheme (BPS) payment due to the exchange rate being set at €1 = £0.85228.

The 2016 exchange rate sees an increase of 16.5%, compared to last year’s exchange rate of  €1 = £0.73129, making it the most favourable rate since 2011. This year’s BPS payment window opens on 1st December and farmers will be hoping for a smoother and swifter payment than 2015.

David Hume, a farm business consultant at land, property and business consultancy George F. White said: “This news will be a welcome relief for farmers as farm incomes have been under severe pressure over the past 18 months. In simple terms, it means that lowland and upland farmers will see an increase in their area payment of around £12/acre extra than 2015, and those with moorland seeing an extra £3/acre.  An 800 acre lowland farm, for example, will see around an extra £9,600 which could be equivalent to an extra 80t of wheat. A hill farm with 500 acres of moorland will see an increase of around £1,500, equivalent to selling another 20-30 lambs.”

The news will also help ease the frustration of many farmers who have not yet received their full 2015 BPS payment due to incorrect penalties and miscalculations made by the Rural Payments Agency (RPA). The RPA started making ‘top up’ payments at the beginning of September to those farmers who had informed them of an incorrect 2015 payment.

David added: “Top up payments from the RPA will be paid into bank accounts without any prior notification and before a remittance advice or second claim statement is received. It is vital that these amounts are cross checked against what farmers expected to receive as even some of these top up payments have been incorrect. What has added to the confusion is that the RPA have also started making reimbursements for the Financial Discipline Mechanism (FDM) relating to the 2014 payment. It is also worth getting this payment cross checked too.”

FDM reimbursements have been calculated based on 1.3% of a farmers 2015 BPS payment, therefore those with incorrect payments may not have been reimbursed the full amount. For those farmers wishing to understand what they might be paid for 2016 or to cross check their 2015 payment, George F White has developed a ‘BPS calculator’. To find out more, please contact David Hume on davidhume@georgefwhite.co.uk or 01665 511986.

Land and Farm Sales Update

The purchase and sale of agricultural property is an exciting and fast moving enterprise offered by George F. White which I am pleased to be involved in. It has, however, been an area of work which in the lead up to, and post EU Referendum, we were unsure of the level which it would be impacted upon – commodity prices seem to be remaining at a low level despite a weak pound and Brexit is still causing uncertainty in the market place.

One of the big unknowns in purchasing agricultural property in the current climate is the future of the Basic Payment Scheme (BPS) income. But on a positive note, banks and financial institutions are still willing to lend on a business forecast which shows continued BPS support over the coming years. This is promising and is coupled with the continued low levels of interest payable on borrowing thanks to the long term low on the Bank of England base rate.

Thanks to these factors, we are pleased to report that it does seem like it’s business as usual with land transactions and general business growth across the region. This is very encouraging for the industry and shows good testament to people wanting to crack on despite the on-going saga the politicians seem to have us in!

Interestingly, privately marketed land transactions seem to remain popular across the region. The thought process is that the seller benefits from reduced marketing expenses and personal intrusion to their home whilst the purchaser is able to get their foot in the door from an early stage and complete on the deal without any turbulence from additional competition.

We expect to see continued movement within the land and property sector, whether it be as a result of retirement, dispute or cashflow pressure. I think that this is something that we are going to see increase within the industry with struggling businesses in need of a cash injection.

In terms of the larger scale land transactions, the market seems to be sustained as a result of the attractive tax benefits currently offered to investors, whereby the payment of capital gains tax can be offset against the purchase of a new qualifying investment.

Whether this is an area of tax likely to receive scrutiny going forward is yet to be seen – perhaps it would be prudent to assume a change for the worse.

Whilst making these business decisions, we feel it’s always important to understand what the exit strategy is going to be if something does go wrong. Stress testing the various ‘what if’ scenarios is something which is often overlooked in the run up to making a deal.

If you would like any advice regarding your property or agricultural business please speak to your regional contact:

Northumberland & Borders – Tim Michie 01665 511992
County Durham – Jonathan Wallis 01388 529577
Yorkshire – Matt Brown 01677 458203

Ongoing BPS saga

With the saga of 2015 Basic Payment Scheme (BPS) still ongoing the announcement that the 2016 BPS application window is open, as of Saturday 19th March, will not be particularly welcoming news, as it hardly feels like yesterday that the 2015 application window had just passed. With a number of 2015 payments still to be made and many farmers claiming they have been underpaid the 2016 application process doesn’t look as though it will be any easier. The application deadline, for 2016, is the 16th May, as the 15th is a Sunday.

Payments cannot be cross checked until a Claim statement has been received. David Hume, Farm Business Consultant at George F White advises that “where a farmer works out they have been underpaid they should email the RPA so that this can be formally logged and also reduce the pressure on the Helpline.”

There will be much scepticism as to how organised and successful this year’s application and payment process will be; with the announcement that BPS applications are to be made online. David believes that “online does not necessarily mean a quicker application process compared to the 2015 paper form. With claim and entitlement statements still to be issued to farmers this won’t leave much time for pre-submission checks of the pre-populated application to make sure the Rural Payment Agency (RPA) has uploaded data onto the online system correctly. Farmers will also have to re-do their Greening calculations as they cannot merely assume it will be the same as last year.”

There are many new features on the online system, including transfer land and entitlements between applicants.  The function of being able to transfer land and entitlements overnight will make for a much quicker and easier process compared to the old paper RLE1 form. However,  any field amendments which need to be made, for example splitting fields or marking a permanent ineligible feature, still has to be completed by submitting an RLE1 form to the RPA.

David goes on to stress that “it is key for farmers to be proactive and start thinking about and drafting their BPS application now, even though for some, springs crops wont have been sown yet. The 16th May may seem a while off yet but 9 weeks will soon fly by, especially with everyone busy concentrating on sowing, calving and/or lambing. For those who are aware of changes to land parcels it will be critical to get these changes submitted to the RPA as soon as possible, as any paper RLE1 forms submitted will have to be processed and then married up with the BPS application.”

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