The reality of no Basic Payment Scheme (BPS) income is sending shock waves through the farming community, despite the fact that this has been on the cards for years.
This seismic change may however seem minor when compared to likely tariff and currency moves and climate change. Understandably these influences are driving a re-think of agricultural enterprises.
From this re-think we can draw many positives and set up our industry for future prosperity. Although removing BPS is causing a massive shake up, for young farmers it could be seen as an opportunity. It has the potential to revitalise agriculture, open up opportunities for younger farmers to expand, enabling it to compete in a world market. It will take knowledge of husbandry, technology, markets and customers to make the difference. There is a lot of ticking-over farms. Even where the land is only suitable for livestock there is always something that can be done by a driven person to improve the productivity.
Farm reviews offer fresh eyes and expertise to take a look at what works and what does not work as well as future proof the business. These reviews work through different scenarios: scale up; scale down; change focus; rent land; let all or part of the land; diversify or sell up. If there is no need for the owner to be trading to maintain tax relief on the farmhouse then a tenancy, share farming agreement or contracting arrangement with another farmer might well provide the right solution. What is clear from our experience is that, contrary to popular opinion, there is strong interest in such opportunities from both established and younger farmers.
Brickhouse Estate, Etchingham
At Brickhouse Estate, Etchingham we carried out an extensive farm review which started in 2017. As we went through the process – looking at the revenue streams; drilling down on costs and returns; speaking to accountants; looking at practices – it was clear there was plenty of scope to make good returns for the estate.
The trust liked our ideas, including letting out a 500 acre block of grassland and buildings to a young farmer. After a tender process the new tenants took over in 2018. So in just over a year there was a new regime bringing life to a farm that had lost money for a number of years. The estate can now focus its resources on other income streams.
There are lots of young people out there with drive and ideas and who are technically very good. They are searching for opportunities and desperate to
be given a chance to show what they can do. A young tenant can revitalise a farm. These 25 to 35 year olds are very good at their job; technically minded; business savvy; knowledgeable and keen. Unless they are given the land to go out and farm a whole generation is going to be lost to the industry and agriculture will not move on as it needs to.
In a tender for a tenancy on a 500 acre farm in East Sussex we received 17 formal tenders from farmers, all around the age of 35. There is so much talent out there waiting for the chance to make
a go of farming.
Even for those who want to carry on farming themselves a farm review can introduce new angles and ideas to use the land better. Different buying and selling policies of stock can turn a negative
balance sheet into a positive one.
Farmers are not alone in being slow to discuss succession planning. It has to be worked at, but many have successfully integrated their children into growing enterprises to provide an income for all involved. However, there are others who refuse to think about the next generation or face up to the decisions to be taken. As a result the next generation can become despondent and find alternative careers. It is a serious loss of skills and knowledge for farming. Similarly those looking to develop their own careers in agriculture have found the way forward blocked through lack of opportunity.
50 years relying on support payments
In some ways subsidies have not helped agriculture. They have allowed businesses to tick over, as they have not had to focus on making a profit from the core business. Farmers have relied on
support payments for nearly 50 years, so a whole generation has always had them to fall back on. This has had the effect of stagnating the industry. You see a lot of land not being used to its best ability.
So often a retiring farmer scales back, getting by offering sheep keep or cattle grazing and perhaps relying on cottage or barn rents. This usually means there is less and less investment in fencing or buildings. Few farms have seen proper investment in infrastructure since the agricultural development grants of the 1970’s. The point is reached where a farm becomes so run down that the capital investment to get it functioning again becomes a real issue for the next person wanting to make a go of it.
One thing we can be certain of is change. BPS is planned to come to an end in 2028, with progressive reductions to payments starting in 2021, and Environmental Land Management Schemes (ELMS) phasing in as a replacement. Change can provide opportunities that will not only give us a better farming industry but will deliver a sound future for the family farm or estate.
Diversification propping up farming
Diversification is often covering up problems in the core business, or even enabling the core business to continue. Focusing on the agricultural enterprises makes sense. It needs to be as profitable as it can be. That is how other businesses operate, and farmers need to have that firm resolve when addressing their biggest land use. There is always a need to review, assess and plan to be better.
Boxtead Lodge Farm
At Boxtead Lodge Farm the Apps Family has farmed for a number of generations. Richard Apps moved back home in 2016 after university. Since then, the farm has adapted the business in a number of ways: not only to make use of the opportunities they have available but also expand and future proof the business as well as creating a role for Richard on the farm. The family installed an AD plant. This plant not only produces electricity to sell back to the grid but also contract dries grain and woodchip for third parties. This makes use of the excess heat source produced from the AD process.
In addition, Richard has driven the research into a straw based pelleting system produced from the combinable arable crops on the farm. The straw pellets cannot only be used in the AD plant but also as a valuable source of animal bedding.
Over recent years the farming business has grown and adapted to a changing market from primarily an in-hand arable and sheep unit to an arable farm, AD plant, farm contracting and now soon to be a straw pelleting enterprise.
Richard is 28 years old and although has benefited from having a family farm to return to his father has enabled him to grow within his role on the farm allowing him more responsibility as he gains experience.