For arable farmers, the year is rolling on and thoughts already turning to ordering seed for Harvest 2024.   With a reduction of Basic Payment next year to 50% of the original levels (and higher for those receiving over £30,000) it is time to assess the economics of production and the way forward.

There is no doubt that more farmers are looking at Stewardship Schemes as a method of supplementing income, but it will not replace Basic Payment.  For all its faults, Basic Payment has provided a fixed income each year, often at a time when bills are to pay without having had the benefit of selling the crop harvested during the summer months.  This safety net is fast eroding, which did not present a problem when corn was over £250 per tonne but becomes a very different scenario when corn is nearer £180 per tonne.  Pig farmers have lived in this world for decades and will tell you the answer is to have enough resources to survive any downturn.

At the current economics of arable farming, there is little margin for error, and more opportunity for larger operators with economies of scale from large machinery.  There is also an opportunity for those who are self-employed and prepared to take the good years with the bad years and who can make their machinery go that bit further by also being a relatively skilled mechanic with probably no HP and limited repair bills or depreciation of machinery in their profit and loss account.

For some it is time to consider whether to look at sharing machinery, entering a Contract Farming operation, or leasing their land.  The removal of BPS is forcing ever increasing pressure onto productivity.  On a recent trip to the Auctioneers Conference in Ireland, I was interested to note that if a farmer lets his land for 10 years, the rent on that land is income tax free.  This was encouraging an older generation to give keener members in the industry more land to farm and was deemed to be increasing their productivity.

It is also worth noting that the main political parties are testing the water prior to writing their manifestos for the next General Election.  The Conservatives with a suggestion that Inheritance Tax should be abolished, the Labour Party suggesting that development land should be acquired at agricultural value.  The Conservatives’ proposal would avoid the need for wealthy individuals to purchase agricultural land to avoid inheritance tax, and the Labour proposal would remove a source of funds which currently finances a significant amount of land purchases in Yorkshire.  I do not consider that either policy will make it to law and so I think it will remain very difficult for farmers to buy land to make a viable return on agricultural production.  In these circumstances we should do all we can to ensure that those who own land are encouraged to let it to those who can farm it the most productively.  I think the Irish model has many benefits.


Rodney Cordingley BSc FRICS FAAV

Tel: 01904 489 731




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