Tag Archive: EU
The last few months and weeks have been particularly fractious in parliament as to whether or not a Brexit deal will be struck or indeed any deal at all. Theresa May has confirmed that Parliament will get to vote on a Brexit Deal in mid-January. Here, Simon Britton considers the effect that Brexit has had on the way we think about our businesses.
Whether or not we are cut adrift from our European friends, Brexit has made farmers stop and think about how exposed and reliant their businesses are to European subsidy and support. As an example, according to the Farm Business Survey, the average farming business in the North East makes £71/ac profit, including £97/ac support from BPS in agri-environmental schemes. This is a stark figure and illustrates that, if indeed we do leave the EU and the current UK Agricultural Bill that is tabled comes to fruition, then there are a significant number of farming businesses that would need to make radical changes within their businesses in order to replace the income lost by the removal of farm subsidy.
For nearly a year, our 10 strong team of dedicated Farm Business Consultants have been working with our clients and contacts in order to give them an understanding of their exposure to the loss of subsidy and to understand how resilient their businesses would be moving forward.
I think that the past 12 months and the introduction of the draft Agricultural Bill, has been a catalyst for a number of farmers to understand the impact of the loss of part, or whole of subsidised support. I do think that all farming businesses that receive subsidy do need to review and fundamentally understand their reliance to different income streams, whether it be subsidy or livestock sales.
We have recommended to many of our clients that they prepare a Present System Budget, which will breakdown the turnover by enterprise and give a better understanding of how their business are structured. We can then carry out sensitivity analyses on income received from each of the enterprises be it livestock/crop sales or occupancy rates for their B&B. This will identify the reliance on each enterprise or income stream and what a shift in policy or price would mean to their turnover.
The UK government are already steering farmers towards this by offering competitive grants to improve efficiency and competitiveness, diversify their income streams, improve animal health and welfare alongside water quality.
As a nation, we wait, with baited breath, for the outcome of the Parliamentary vote and whether or not we exit Europe with a Deal or No Deal, if at all. Whatever the outcome, I hope that this has given farmers food for thought and allowed them the opportunity to understand and examine their farming businesses in more detail and hopefully act upon it.
If you would like to understand your business in more detail please contact Simon Britton.
Great Yorkshire Show commences in just a few weeks (10th – 12th July). As always, we invite you to join us on our stand (201) to meet our team as well as enjoying some light refreshments.
Schedule of Events
Tuesday 10th July
10.30am – George F. White Tenancy Update with Matthew Brown and Robyn Peat (TFA stand – 715)
5pm – Evening drinks and canapé reception (George F. White stand – 201)
Wednesday 11th July
11am – Join the Debate: the direct effects of Brexit on farming businesses (George F. White stand – 201)
Thursday 12th July
8.30am – Succession Planning for Tenant Farming Families with Matthew Brown (NFU stand – 680)
We predict that post Brexit resilience will be a key focus at the Great Yorkshire Show this year; we will be hosting a panel debate to discuss the effects a reduced subsidy environment will have on farmers, landowners and rural businesses.
Join the Debate: the direct effects of Brexit on farming businesses
George F. White
Wednesday 11th July, 11am
The key debaters are 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 as George F. Whites, Simon Britton and Miles Crossley, who will explain why alternative income streams need to be a key priority for the sector.
Talking ahead of the Great Yorkshire Show, Simon Britton said: “It’s clear now that there is a significant change in farm subsidies on the horizon and for many it could be substantially reduced. Mr George Eustice, the Minister of State for Agriculture, Fisheries & Food, recently described his vision for post Brexit agricultural policy within the UK as a ‘change in mind set for farmers’. The Minister stated that he saw new policy as ‘rewarding and incentivising farmers for what they do, and not subsidising them for income lost’ and indicated that the government will still seek to support farmers, not based on the amount of land they own, but by rewarding them for helping the environment, water quality and to changes in husbandry; ultimately making more productive working practices. This is a fundamental change to our industry and will significantly impact farm businesses. The purpose of our debate, and the main aim of our farm consultancy team moving forwards, is to prepare our client’s businesses for the impact of the changes that will face us, as an industry, over the next few years.”
Attendees are encouraged to get involved in the debate, asking questions and providing opinions on what the future holds in a subsidy free farming environment and how they can or are planning to safeguard their main farm business and what financial support exists outside of government grant opportunities.
Simon added: “Geoff Hall from Lloyds will talk about how banks can support farmers following Brexit through secured lending and cash flow support. Tom Bayston, will be illustrating how he’s diversified from the core livestock business to safeguard the future of his farm. Ultimately, we’ll be discussing what reduced subsidy looks like, what it means it terms of profit and loss for farmers, and how, if you’re a farmer or a landowner, why you’re in a prime position to provide long term security and stability to yourself and your business. It’s going to be a somewhat lively and energetic debate, so please join us if you can.”
Click here to RSVP
We asked Partner and Head of Farm, Simon Britton about his thoughts surrounding Michael Gove’s vision for the future of farming at the Oxford Farming Conference 2018.
‘Michael Gove has intimated that, post 2022, farming subsidies are clearly going to move from the current BPS scheme to a rewarding farmers for environmental benefits and promoting public access. It is hoped that this move does not jeopardise our UK Food security or force UK farmers to cut costs. The UK has one of the highest crop and animal welfare standards in the EU, let’s keep it that way.’
Over the past 12 months we have steered our advice, talks and seminars around the importance of business resilience in uncertain times. We are currently preparing our farming clients for change by helping them gain a better understanding of the financial health of their business. For more information on how our team can help you, please contact your local consultant:
Northumberland and Borders: David Hume
Durham: Alan Falshaw
Yorkshire: Sally Horrocks
With formal discussions on how we exit the European Union now starting, now more than ever farm and land based businesses should prepare for the unexpected and plan ahead to mitigate risks.
Matthew Brown, a Rural Practice Surveyor at George F. White, said: “Tenancy succession planning is an important issue for farmers that hold Agricultural Holdings Act tenancies and their landlords. Most tenant farmers will be aware of succession and the role it plays in ensuring their tenancy has the maximum chance of being passed to the next generation however, the importance of getting it right is often underestimated with long-lasting consequences for future generations.”
Under many 1986 Agricultural Holdings Act tenancies, tenant farmers are within their rights to seek to secure succession of their tenancy, as long as the successor meets the relevant eligibility criteria.
Matthew continued: “This is what makes succession planning – in a timely manner – so vital. Succession is not automatic, or a given. Many farmers fail to plan effectively – rather they wait and deal with it when they’re ready to retire or the next of kin has to handle it in case of an unexpected death. Without preparation, the successor can fail to meet the criteria to succeed. If the process is started earlier and managed properly, this can be prevented.”
Succession planning is also important for landlords of tenanted properties as it means they can plan long-term, potentially benefit from significant tax reliefs and address any issues which may have been brushed under the carpet for years.
Tenancy succession planning involves many issues including assessment of income and livelihood, diversification, land outside the tenancy, financial position and experience. Therefore, it’s crucial that tenant farmers and landlords receive the right advice from the start.
Matthew added: “The law governing succession is complex. There is potential for disclosure and analysis of farm accounts and bank statements for seven years before succession, among other information. It really is better to act sooner rather than later to mitigate risk and allow both parties to plan for the future with certainty.”
For more information about succession planning and how to prepare, please contact Matthew Brown on email@example.com or 07854 903631.