Government announcement not a surprise for farmers

This year there has already been a certain amount of news coming out of Westminster. Firstly on the 9th January we saw the Direct Payments Continuity Bill, which guaranteed that subsidy would continue at current levels in 2020, and then on the 16th January the new Agriculture Bill was published, with a fairly high degree of press exposure. Neither of these announcements caused much surprise.

What will it mean for the future?

The guarantee of subsidy payments in 2020 had long been promised, and the substance of the Agriculture Bill is virtually identical to the previous version which was introduced, debated, prorogued, revived and eventually timed out over 2018/19.

The new Bill is basically an enabling document giving the Secretary of State powers to continue flat rate payments and phase them out over a seven-year period between 2021-2027. Plus, it also introduces a new regime of support payments aimed at delivering environmental outcomes such as cleaner air and water, better soil, enhanced public access and better animal and plant health.

Additionally, it gives the Government power to intervene in markets, collect information on the food chain, recognise producer organisations and implement marketing standards, together with areas not covered in the previous Bill such as controlling food security and ensuring animal traceability.

Who will it apply to?

Interestingly the Agriculture Bill will only apply to England, with the devolved assemblies each being responsible for their own agricultural legislative framework post Brexit – potentially, and given the current level of friction, this could become a political hot potato in Scotland.

Amid all the excitement, however, another set of documents were released by the Rural Payments Agency (RPA) on 16th January in the form of the updated “Total Income from Farming” (TIFF) report. This shows that farm profits (before proprietor’s wages, notional rent or notional cost of capital) in England were £3.3bn, some 19% lower than the previous year and 10% below the 6-year average. This equates to about £145 per acre of which about £90 is represented by subsidy. This leaves a profit of £55 per acre to cover the proprietors return on capital, personal labour and notional rent.

Toughing it out

January is a month with its own affliction – the “January blues” or “Seasonal Affective Disorder” often triggered by long nights, cold wet weather and credit card bills from Christmas coming home to roost. Added to the prospect of agricultural subsidy reform, the TIFF figures underline the fact that the farming industry is starting on the process of reform from a pretty difficult place and will, therefore, make their own contribution to the seasonal gloom.

Commenting on the report, John Billings Head of Agriculture at MHA Carpenter Box, said:

“We have seen a lot about the Agriculture Bill and the process of reform, which many will welcome – but we must not overlook the fact that the farming sector is not, as some suppose, awash with money – and reform needs to encompass the needs of environment, food security, food quality and a living wage for food producers”

If you would like further advice, please get in touch with a member of our Agriculture team.

A version of this blog originally appeared on the website of one of our MHA association member firms, MHA Moore and Smalley.