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No more excuses; it’s time to shape the future of your farming and business.

FOLK2FOLK

The uncertainty of Brexit has given rise to so much indecision over the last three years and there is a continuing sense of hesitation when it comes to making any investment decisions for farming businesses. Everything still feels ‘on hold’. But does it need to be? Really? Or has Brexit been an excuse to do nothing?

Since the General Election, a number of announcements and events suggest to me that it is time to make a decision about the future shape of your farming business and time to take action.

Where do we start.  The most recent Annual Farm Business Survey, released before Christmas covers 2018/2019, shows average incomes for dairy, grazing livestock pig and poultry are all down.  Grazing livestock lowland systems fell by 39% and upland systems by a whopping 42%.  On dairy farms, lower income was driven by higher prices of cereals which offset a 7% increase in milk price.  General cropping was better news with an 8% increase and cereals by 22%.  Looking forward, there is little sign of any significant improvement and we can’t forget the very wet weather which will have an impact too.

Against this backdrop, a recent announcement by the Treasury is of great significance.  In an announcement on 30 December 2019, Sajid Javid, Chancellor of the Exchequer, confirmed nearly £3bn to support farming in 2020 as the UK leaves the EU.  This will guarantee all direct payments will be paid at the same level as 2019 and that funding for development projects is protected until 2023.

The announcement went further, “we will guarantee the current annual budget to farmers in every year of the Parliament” Is the prospect of five years funding as good as we can ever hope for?

On 16 January 2020, the Agriculture Bill was introduced to the house of Commons and received its First Reading.  At this stage no debate has taken place and we await the Second Reading.  This Bill sets out the blueprint for future farm funding.  The Rt Hon Michael Gove as Secretary of State at DEFRA, speaking at the Oxford Farming Conference in January 2018, gave us a feel for what is to come with his concept of any future payments being related to the supply of public goods.  From The current Environment Secretary, Rt Hon Theresa Villiers sees one outcome of the Bill as ‘…to support farmers to adapt to our new pioneering approach to agriculture through a seven-year transition period in England, ensuring we unleash the potential of our farmers for the future’.  So perhaps we can even have seven years of certainty?

Prior to the General Election, DEFRA announced Round 3 of the Rural Development Programme (RDPE), the final throw of the dice for European Funding, making £35m-£50m available for rural business development, food processing and rural tourism.

Is there a logical thread running through all these recent announcements?  The Annual Farm Business Survey confirms what we already know.  Farm Incomes are under pressure and there is no reason to think that will change.  Most farmers are also realistic enough to know that the format of their business will have to change.

We have a greater degree of certainty around government funding than ever before.  Don’t forget that if we had not been exiting the EU we would have been starting to look at the next round of the Reform of the Common Agricultural Policy and I suggest many of the proposals will be akin to the final outcome of the Agricultural Bill.  Also, if you are contemplating changes to your business which are not sustainable within five years, should you be doing it anyway?

According to a recent article from Farmers Weekly, more than two thirds of UK farms have diversified with 97% finding it profitable.  Could the availability of RDPE funding be the catalyst to enable a tourism or food processing diversification?  Expressions of interest must be in by 16 February 2020.

FOLK2FOLK has much experience of financing diversification projects of all types.  Our lending window of 6 months to 5 years enables you access funding for your development plans using your existing land or property assets as security.

A final thought: our upland and lowland beef and sheep farms are under the most pressure to increase income, yet the nature of their locations tend to be in the more ‘scenic’ parts of the countryside. Why not consider using what certainty we have of future government funding, the opportunity of a RDPE grant and the support of a FOLK2FOLK loan to develop a tourism diversification? Your guests will always enjoy the view, but very soon it maybe of a field of saplings rather than a field of bullocks!

 

Click here to find out more about our secured business loans, or call us on 0333 455 1902 to talk about your diversification plans and find out whether we can provide funding.

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