NEXT year will see farmers complete their final Basic Payment Scheme (BPS) application forms. And with base payments already down, it’s critical they use the transition to a subsidy-free era to their best advantage.
According to the Central Association of Agricultural Assessors (CAAV), farmers are currently facing enormous pressures, with extreme market volatility, environmental demands, soaring input costs and declining subsidies.
“We are witnessing a monumental period of agricultural change. It’s the transformation of a generation in a decade,” says Jeremy Moody, CAAV Secretary and Advisor.
The BPS will be both halved and decoupled in 2024 and the new environmental programs are not intended to replace this income for most farmers, forcing them to look to improve their businesses.
With the decline in BPS, fluctuating yields and commodity prices will have a greater impact on farm incomes. “In 2022, the average farm will derive 85% of its income from trade and 15% from subsidies,” says Moody. For an arable farmer selling 3.5t/acre of wheat at £250/t, a 10% change in yield or price is equivalent to 117% of his 2022 base payment. “So it’s very important to focus on the business.”
Given the huge performance gap between the top quartile and bottom quartile of producers across all sectors, there are clear gains to be made, he adds. “Good companies will be prepared and will continue to improve. Others will find themselves in 2028 wondering where their BPS check is. We fought to have the transition period and it’s time not to be lost.
Preparations will include investing in agricultural infrastructure, focusing on efficiency or diversification, reviewing business structure and planning for succession. “The right people on the right ground will seize the opportunities.”
In the future, land use will be much more diverse, with 60% of food production by value coming from 30% of the land, says Moody. As farm types become more diverse, they can be divided into five categories: producing food under cover; efficient production of goods; Added value; more extensive production with other revenue streams, including environmental services; and direct environmental land management.
Grant programs and environmental payments will help people adapt but, ultimately, the direction of travel will be decided by individual business owners, he added. “Given the pace and scale of change facing agriculture, it will be essential to seek expert advice. There will be a huge demand for rural land management advice; as trusted advisors, we have a fundamental and essential role in helping companies get through this ordeal. »
For more information visit www.caav.org.uk.