Tag Archive: farm subsidies

Michael Gove – The Future of UK Agriculture

Earlier today is was announced that Michael Gove intended to change the way in which subsidies were distributed across the UK. Mr Gove described Brexit as “a once-in-a-lifetime opportunity to reform how we care for our land, our rivers and our seas, how we recast our ambition for our country’s environment, and the planet”, with this in mind he is looking for farmers to only get payouts if they agree to protect the environment and enhance rural life.
(Read full BBC article here)

an old stone cottage and farmhouse in the countryside

Commenting on Gove’s speech, George F. White Partner, Louis Fell said:

“We all know that change is going to happen and undoubtedly those claiming very large payments will be under scrutiny, especially those that in reality are not actively farming day to day. We have concerns though that there is conflict between storage of flood water and producing food and protecting asset value. We also are concerned that the environmentalists will see this as an opportunity to create such tight regulations that producing food in an economic manner will become impossible.

It’s pleasing that Gove is wanting to continue to support upland farmers. It’s such a fragile environment and, as we have seen in many parts of destocking, the land can easily revert to scrub which completely alters the current landscape that the public currently enjoy and wish to see protected. There is only so much diversification projects and non-farming income that some farmers can earn from their farm and the government must ensure that we don’t see a massive exodus of farmers or farm employees. The industry already struggles to attract really good people and those leading the country must be careful to ensure that they don’t portray a negative image during the next five years of changes.

The industry needs to be braced for change, and we hope that this occurs over a period of time to allow for businesses to adjust and change with the regime – what we don’t want to see is a decline in UK farmers, struggling financially and failing to sustain their farm business.”

Opportunities in Agriculture for North East Farmers

Farmers across the region looking to create jobs, diversify their business, and grow the rural economy could access grants and receive support through LEADER.

Providing grants to rural SMEs, farmers, foresters and communities, LEADER supports projects that create jobs and grows the rural economy. Supporting micro and small businesses, farm diversification, boosting rural tourism, increasing farm productivity, increasing forestry productivity, providing rural services and providing cultural and heritage activities are all LEADER priorities. This means that farmers across the North East have an opportunity of accessing funds for their diversification project.

LEADER delivers a bottom-up, community-led approach to rural and community development, promoting sustainable development in rural areas. An initial outline application will enable applicants to get a ‘yes, progress to a full application’ or ‘no’ answer at an early stage, reducing the risk of spending time and money developing an application for it to fail at an early stage.

The funding available will primarily be for capital expenditure, with funding of up to 40% of eligible costs, a minimum grant of £2,500 and no maximum limit. North East Farmers looking to submit an expression of interest can do so to Northumberland Uplands LEADER or Northumberland Coastal & Lowlands LEADER. There are no set deadline dates or application windows and the funding is open until 2020.

Another current diversification opportunity is Combined Heat and Power (CHP) units. For those businesses with a heat requirement CHP could provide a generous income stream through electricity generation and government incentives as well as heat cost savings. For farmers looking to become self-sufficient from the National Grid and produce their own energy, CHP is an opportunity worthy of serious consideration. CHP provides both heat and electricity through the gasification of burning woodchip or wood pellets. This gas is used to drive an engine which generates electricity and heat. The electricity can either be consumed on farm or exported to the grid. A constant demand for the heat produced through the burning process is needed and can be used for district heating, drying woodchip, heating warehouses, poultry sheds, or reversing the heat for cold storage etc. Through Renewable Heat Incentives (RHIs) from the heat generation, Renewable Obligation Certificates (ROCs) on the electricity and also the potential value from the heat, it can also provide significant income generation.

With a 20 year guaranteed income (with connection prior to April 2017) and a payback between 3 – 7 years CHP systems are fast becoming a very attractive option. We are guiding and encouraging a number of clients to look at these systems as a form of diversification and often an alternative enterprise for younger members of the family. There are however a number of salesmen currently pushing expensive CHP units without managing the process, as well as selling maintenance agreements that only apply 9 – 5, Monday – Friday.

For further information on both LEADER and CHP please contact Louis Fell or David Hume in the George F White Alnwick office on 01665 603231.

Is your cash flow prepared to weather the storm?

So, we have an economy growing and general business and development beginning to pick up, but from a farming perspective things on the whole aren’t a pretty picture as has been broadcast over the press in the past few weeks. I would say that yields on arable crops, so far, look good and indeed I’ve heard of some astonishing barley yields, but then talk turns to price and the gloom sets in.

The farming community has to contend with many wide ranging factors that impact on the business bottom line, be that weather across the globe, exchange rates or foreign policy. UK agriculture is feeling the pressure of the weak Euro, not only impacting on Basic Payment Scheme payments but as clearly seen in the lamb trade, it is affecting our exports. At £20/head less than last year, a 500 ewe flock results in £17-£20k less income, the cost of a living wage. We are still feeling the effects of the sanctions on Russia; it is clearly forcing produce that would go east to stay in our markets and the summer of discontent in agriculture is not just limited to the UK, but across Europe. The French are just better at protesting and causing chaos and properly getting their voice heard.

Yes there is always the supply and demand factor and at present, for example with milk, lamb and cereals, global supplies are on the high and demand low or not keeping up with increased output globally. That simply leads to price pressure. Of course it is not aided by supermarket price wars and clearly the influence of Aldi and Lidl in the marketplace looks like the farmer is paying the price; but I think we also have to realise that perhaps we are producing too much and need to work on increasing consumption and promoting UK farming better. We are too disjointed and need to work together much better as, for example, our Kiwi counterparts have learnt to their advantage since the mid 80’s. We need strong leadership and direction, and I’m sorry to say that I can’t see that either been driven by our government (because we don’t really have an agricultural ministry) or by the industry as its too busy competing internally for market share.

Across our firm, we have great concerns about cash flows for our farming clients; some will weather the storm due to diversified enterprises but for many we fear that the poor exchange rate, reduction in subsidies and stewardships, along with low commodity prices will mean many will run out of cash to operate. The banks are well aware of this situation and where businesses have a good grip on cash flow and approach the lenders in a positive way, the banks are being very supportive. So we would just stress how important getting your figures together now is going to be for the next 12 months. My advice is to be prepared; you’ll be surprised with the support that you’ll be given in these challenging times.

Countryside Stewardship Scheme: What Next and Will it Work for You?

Following the launch of the new Countryside Stewardship scheme, Natural England has called for Mid-Tier applications. Countryside Stewardship (CS) is an amalgamation of what was previously in place: Environmental Stewardship (ELS), English Woodland Grant Scheme (EWGS) and Catchment Sensitive Farming (CSF) and the window to apply this year closes on Wednesday 30th September.

Commenting on the scheme and its significance to the rural sector, Claire Bainbridge, Rural Chartered Surveyor at George F. White, said “It’s been a rather slow affair as, even at this late stage not all the information is available or known, which makes it very difficult to promote and advise but there are some fundamentals that landowners and farmers need to be aware of. For example, in order to apply you need to be registered with the Rural Payments, (if you applied for the Basic Payment Scheme you will already be registered). However, unlike ELS, CS Mid-Tier is competitive, therefore if your application doesn’t give enough environmental merit it may not be successful. ELS was a whole farm scheme and for each hectare, you received a flat payment. Mid-Tier is a parcel based scheme, and any options applied have a set payment rate. Applicants must make sure that any previous environmental stewardship agreement has finished before 2016, before submitting an application. Anyone wishing to apply for any element of the scheme needs to be aware that there is a one application per year rule, so if you’re applying for a capital grant and Mid-Tier, you would need to apply at the same time.”

The scheme has been designed to ensure that applications suit the environmental needs of the location – applications that do not match the priorities set for the area are unlikely to score high enough to be successful. For those wishing to see at a glance what they can do on their holding and how much they will get paid, it’s not so straightforward. It is impossible to say what options are a priority and available, and see how much a scheme will pay at a glance, as every application will be different and the money available is dependent on the options chosen and a successful application.

Claire continued: “A successful application will have chosen options that suit the farm and match the priority statement for the local area. The country has been split into different targeting areas, with detailed priority maps for each. The North East, for example, has 15 different priority maps. Applicants need to download the Priority Map for their area and then open and apply the various layers to see whether different priorities are High, Medium or Low for your farm.”

“If options are high priority for your area, they score higher, with further weighting given to your score by having options endorsed by a Catchment Sensitive Farming Officer, or by being in a “hotspot” or entering into the Wild Pollinator and Farm Wildlife Package. This score is then assessed on whether it gives value for money and the total cost of the agreement. If you are in the uplands, especially with Moorland, applicants need to be aware that there are no specific moorland options, so careful consideration is required when choosing options to ensure success and replace much needed ELS and UELS monies. The final score is then ranked against other applications. The greater the score, the better chance of success.”

If you are considering applying for Countryside Stewardship this year and would like to discuss any element of the scheme, please contact Claire Bainbridge at George F. White on clairebainbridge@georgefwhite.co.uk (07870 644946) or David Hume on davidhume@georgefwhite.co.uk (07739 321588).