Suppliers have raised price since Brexit vote
Over the last few months we have started to see all sorts of articles discussing the implications of Brexit and what sort of agricultural industry we may have in the next five to 10 years.
The truth is nobody knows for certain and much will depend on the UK’s ability to trade internationally and the strength of the pound coupled with whatever payments may be available from our national government.
Over the last 28 months or so since the country voted to leave the EU the pound has dropped in value against other currencies improving the UK’s ability to export and the agricultural industry has benefited from improved commodity prices and better returns. Unfortunately, many of the industry's suppliers have increased prices, either forced by the implications of the vote or cynically using the implications as an excuse.
It appears that some form of Basic Payment will be maintained for the life of the current parliament. Will that be 2022 or earlier? Which party might win the next election and would BPS then be guaranteed or lost in the scramble for funding?
Unfortunately over the last 20 to 30 years we have allowed the agricultural industry to develop purely based on economics rather than trying to protect our rural economy, as a result many of the smaller farming businesses and consequently the number of people employed in the agricultural industry has declined massively to around two or three per cent of the voting public. Quite frankly it doesn’t matter to the politicians whether they appeal to the farming vote or not!
Let’s assume that the Government’s current ideas for Basic Payment come to pass. By 2028 there will be no Basic Payment. In 2021 all farmers will lose a percentage of their payment depending on the size of their BPS claim. The smaller claims (less than £30,000) are likely to lose five per cent in 2021, payments of £30,000 to £50,000 may have a 10 per cent reduction and payments above that up to 25 per cent.
Taking a farming business with £30,000 in BPS, which would by no means be unusual in the West Midlands, by 2023 that payment would only be two thirds of its 2020 level at £20,400 and three years later in 2026 that payment may be little more than £8,000.
For a great many businesses the BPS payment is the profit element or part of the profit element or simply reduces the losses. Can your business survive in its current form without BPS and Environmental Stewardship? If not, you need to recognise this immediately and get your costs reduced or do something different.
By James McIntyre who is a Rural Professional with Halls
