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Stags Senior Surveyor, Lydia Cox, offers her advice on how to Brexit-proof your farm.
There is no ‘one size fits all’ solution, but here are three key questions to ask that might go some way to help Brexit-proof your farm and allow it to prosper:
Many farms in the South West, especially smaller mixed farms, rely on agricultural subsidies as a core part of their income. The Basic Payment Scheme goes a long way to ensure the business is financially viable and a profit is made. Without this income, many farmers may be feeling vulnerable. However, there are steps you can take to go some way to make up this shortfall.
• Economies of scale: Consider whether you could expand your existing enterprises by taking on more land and/or stock to spread the fixed costs.
• Diversification: Are there any opportunities to add value to your existing enterprises or to create new income streams?
• Rationalising: Are there areas of your business that are underperforming and can be reduced or ceased in order to save costs?
There are several schemes that are still available and may be worth considering as a way of adding income. If you enter into a Countryside Stewardship Scheme prior to Britain leaving the European Union, the income has been guaranteed for the full five years of the scheme. It is not a straightforward option as farmers do have to provide a significant level of environmental benefit on the farm in order to meet the criteria. This is something that Stags can advise on as well as completing the application forms for you, if required.
A request for an application pack needs to be submitted by the end of May 2018 and full applications must be submitted by the end of July 2018. There will probably be another round of funding in 2019 but, as we go to print, this has not yet been guaranteed.
There are also two funds which are aimed at farm diversification and increasing business efficiencies, which Stags has been advising farmers on recently. The first is the RDPE Rural Growth Programme, which will fund 40% of projects that focus on rural tourism, business development or food processing and could provide an excellent opportunity to enable farm diversification. The minimum grant is £35,000, so this scheme is only suitable for projects with an overall cost of around £100,000 or more. The other capital grant scheme available is the Leader Funding. This scheme has no minimum grant amount, and as a result it is suitable for smaller farm projects, such as putting in a milk vending machine at the farm gate, which could bring in much-needed income.
Now could be the time to consider looking at farm buildings with a view to maximising their potential. While the obvious approach is to convert barns into residential units, you may find that, as an income stream, creating office or business accommodation makes better financial sense for you.
If you are letting out land as grass keep or renting a building to a local business, are your tenants all paying the full market rents? One farmer recently tripled his income from rents by asking Stags to advise on updating his agreements. It might also be time to sell off any unwanted or unused items of farm machinery, which can raise a surprising amount of money. Stags’ on-site farm sales team provide several options to sell unwanted deadstock by either entering items in a collective sale, hosting your own farm sale (should you have enough) or using Stags’ new dedicated auction facility, The West Country Sales Centre, at Willand, Mid Devon. You could even sell in one of our online timed auctions, which have proved a big success in finding bidders from all over the country.
Lydia Cox is a Senior Chartered Surveyor at Stags, Member of the Royal Institution of Chartered Surveyors and Fellow of the Central Association of Agricultural Valuers.