The “seismic shift” in farm support announced earlier this week will mean rewriting budgets and forecasts for thousands of family farms, a rural tax expert has warned.
Richard Cartwright, a partner at Saffery Champness and a member of the firm’s Landed Estates and Rural Business Group, said the policy shift will be of “great concern” for those farming under Westminster’s jurisdiction.
‘Little comfort’
Cartwright added: “This is a seismic shift in the basis of how subsidy will be paid and there will be little comfort for farmers to be drawn from 2019 payments being made on the same basis as now, direct payments for 2020 ‘in much the same way as now’ and then a ‘smooth and gradual transition’ post-Brexit between 2021 and 2027.
It should be noted that the Government has said all farmers will see some reduction to their payments from the start of the transition.
“Farming is generational; its very nature requires long-term planning. Business profitability is subject every year to uncertainty because of external factors.
“The future basic payment system will now be structured so that those providing the greatest public benefits will receive the greatest rewards.
“Whatever Brexit may yet bring in terms of trade and markets, imports – of chemicals and fertiliser for example – and the impact on exchange rates remains unknown.”
Now is the time to budget
Cartwright added that farmers should prepare where they can now; taking care to put together a budget for their business.
He said the thorough analysis should include essential capital expenditure, profitability, borrowing requirements and take due account of the worst case scenario of no subsidy.
“It would certainly appear harder in the future to farm just for food and farms with other profitable business streams will be at an advantage,” he said.
“Scale will be important so that, despite losing out initially, bigger landholdings will benefit from higher levels of support for their greater contribution toward the environmental footprint.”
