Tag Archive: farmers

Communication Masts: Success of the Electronic Communications Code

Under the Communications Act 2003 and the Digital Economy Act 2017, the Electronic Communications Code was brought into effect on 28th December 2017 to prove the Government’s pledge towards the digital industry as more and more requirements are to be carried out electronically.

MastsUp until last year, Landowners were able to receive a reasonable rent for masts located upon their land which reflected the value to the Operator. Since the Electronic Communications Code came into effect, there have been many disagreements upon the interpretation of the new regulations. This has had major effects on the way the rent is calculated. It is also thought that the new code does not provide an adequate balance between the rights and interests of Landowners against that of the Operators.

One of the key issues with the new code is that the change in the way the rent is calculated. Previously the rent was ascertained by market value and now the operators are stating that the rent should relate to the value of the land lost.

Very few agreements have been approved since the new code came into effect because of the lack of rent being offered, although the new code rights do allow the Operator to apply to the Court to impose an agreement between the Landowner and the Operator.

A few cases have now been tested in Court and it appears that the Court has ruled in favour of the Operators.

In the case of EE Ltd and H3G UK Ltd v London Borough of Islington, there was a rooftop site, in which EE and H3G wished to relocate their apparatus to another building due to a re-development of the existing building. The Landowner originally requested £21,000 under the old regulations, but the Operator proposed £2,551.77 when the new code was introduced, and the Tribunal ruled in favour of the Operator.

The decision held that the owner of the land is to be compensated for what they have lost.

We argue that the rent, under the new code powers, should be assessed on what the owner is losing not only on the site itself but over the other land of the landlord.

Telecommunication mast rents, especially where located on farms near buildings and houses were let at the rents to reflect the impact that they had on the value and enjoyment of adjacent houses etc.

We therefore contend that each site should be assessed, not only the small area lost to the mast, but also how the mast devalues and effects the rest of the property; be it a farm, house or commercial premises. If you would like to discuss or find out more about the new Electronic Communication Code and your rights with regards to masts, please contact Robyn Peat, James Carruthers or Caroline Horn.

The increasing importance of CFA compliance

As we approach the end of harvest for another year thought turns to taking stock of the year past as well as planning for next year and beyond. This is a busy time of the year for us in the office as we are reviewing our Contract Farming Agreements (CFA’s), producing annual reconciliations and holding pre drilling meetings to instruct contractors for the season ahead. What is becoming more and more important is that CFAs are correctly drafted and implemented. It is clear that HMRC are now looking very closely at not only the formal agreement but also the practical implementation of the agreement. A number of cases now exist where a CFA has not been implemented properly and as a result the benefits of using such an agreement have not been fulfilled, often leaving the landowner/farmer or their family significantly exposed to taxation.

CFA

The simple exchange of cheques once a year will no longer be good enough to demonstrate proper use of a CFA. The farmer/landowner needs to show evidently that they are still taking financial risk from the enterprise, and not simply receiving a ‘rent’ through a false agreement. Essentially the theme of the agreement should clearly demonstrate that the Farmer is “farming with contractors”.

It is essential that meetings are held, ideally quarterly, and that they are recorded. A dedicated CFA, number two, bank account needs to be setup, funded and managed regularly by the farmer. Profit share arrangements need to be agreed in advance of crop planting and be detailed within the written agreement. If insufficient profit is made, then the farmer’s return will be at risk and reduced accordingly.

As part of demonstrating that the farmer is partaking in the risk of growing the crop, subsidy income should form part of the income. It is also key when planning the cropping with the Contractor that any ‘Greening’ requirements and Ecological Focus Areas (EFA’s) are met. With alterations to the Greening rules in the last few years we are taking the opportunity to review EFA plans with farmers to better utilise that land available for cropping.

As a business we have dedicated team of farm secretaries running CFA accounts for many farmers. This allows us to offer a complete package service, by working closely with your accountant and solicitor to ensure that you remain compliant with the latest legislation to remain actively farming the land. With the increasing scrutiny HMRC are subjecting these agreements to it is essential that not only do you have a proper and robust agreement in place, but it is actually run and implemented in full accordance with the agreement made. The loses from not complying are significant and will be costly.

Get in touch with Andrew Jamieson, Partner, and his team by calling 01361 883488, alternatively, email andrewjamieson@georgefwhite.co.uk 

Removing the guess work in an unstable landscape

It is fair to say that, so far, 2018 has been interesting and far from consistent in terms of the BREXIT uncertainty, the commodity markets, and of course, the weather. Combined, they have caused an uncertainty for farmers around their business stability. We sat down with Partner, Simon Britton, to discuss what can be done in order to remove the guess work that many business owners face in the current climate.

uncertainty

The Beast from the East hit us in late February and March and will be remembered for many years and for many reasons. The farming sector is still suffering with the consequences of record snow fall and a delayed spring. 250,000 lambs loses were reported over the months of March, April and May and a delayed spring caused havoc in regards to predicting the success of the harvest. We were then faced with (and are still going through) the longest spell of hot weather since 1976; with forage supplies drying up, some of our clients have had to rely on their winter stocks. NFU president, Minette Batters, stated that “This unprecedented spell of weather really should be a wake-up call for us all. It’s a timely reminder that we shouldn’t take food production for granted. Farming is one of the most affected industries when it comes to managing volatility.”

Late last month, the Bank of England announced a base rate increase from 0.5% to 0.75%; the highest level since March 2009. There are, of course, benefits here for those saving; however, with mixed harvest reports and unstable commodity prices, there is an overall atmosphere of uncertainty for those farmers with loans on a variable rate. It has been suggested that interest rates may rise again, not once, but twice, before 2021, taking rates to 1.5%. I have a theory that the Bank of England, with these base rate rises, could be creating a buffer to be utilised in case of a hard BREXIT.

Wheat prices are at nearly £200 per tonne, whilst good news for arable farmers, this will no doubt put further pressure on livestock farmers already short of forage looking to buffer feed. It is hoped that arable farmers do not use this increase in income to mask under performance of their businesses which fundamentally need addressing.

I am not all doom and gloom! There is advice out there and measures that can be put in to place to ensure your business is resilient enough to face the challenges we are up against in this period of uncertainty; and you don’t have to do it all yourself.

I cannot stress enough how important it is to understand your business and how it operates on a financial footing; you would be very surprised at how few people know their business as well as they think they do. This is for a number of reasons, but namely, how much the industry has evolved over the past 10 years. The weather, interest rates and commodity prices are currently in the limelight, however, the impending BREXIT deal, as well as global politics, is set to dictate a change in the way we run our businesses. We must be proactively planning ahead, essentially future proofing our businesses in order to survive.

Initially, I would suggest:

  • Assess your business in real time, regularly reviewing output, cost and performance;
  • Undertake accurate budgeting and cash flow analysis in order to understand annual cash surpluses/deficits;
  • Make informed decisions, utilising sound financial assessment and analysis criteria.

We have a diverse range of clients, all with different needs in regards to farm business management. In order to meet their demands, we have begun to offer bespoke business management packages. For example, we are able to quantify the impact of financial change, speak to banks about capital and identify what the future impact will be on their business so that we can be proactive whilst planning for the next 12-24 months.

For more information about our management packages, please get in touch.

Simon Britton
Partner
07866 721146
simonbritton@georgefwhite.co.uk

Farmers Are Too Reliant on Subsidies as Brexit Looms

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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