Published: 08 June 2018
Area of Law: Agricultural & Landed Estates
Farming in England – on the brink of Brexit
Agriculture is one of the largest sectors in the UK and makes a major contribution to our economy. For nearly 50 years, the policy framework for UK farmers has been directed by the EU’s Common Agricultural Policy, but Brexit will bring time for change and for the UK to develop its own new policy landscape and legislation. But should our farmers prepare for a challenging environment created by Brexit or look to embrace new commercial opportunities?
At our recent agriculture seminar, Jeremy Moody, Secretary and Adviser to the Central Association of Agricultural Valuers, shared his views to an audience of over 60 farmers and professionals in the agricultural community.
We can talk about the uncertainty around tariffs, trade deals, the labour market and regulation until the cows come home, but there is no reason why our farmers shouldn’t take control of what they already know and work with our Government to shape up the future of farming in the UK.
Currently, both the EU and the UK enjoy the benefits of bilateral trade for food goods, however this may well change and time will tell. The UK will also have to negotiate new trade agreements with non-EU markets not only to survive, but to continue to grow and develop its export function and not rely so heavily on the EU as it has done so until now. Also, the middle classes in Asia are growing and shall account for around 66 percent of the world’s middle class by 2030. These countries highly rate the foods produced in Britain, which creates some optimism for exporting food to emerging markets in the future.
If farmers are to succeed, they need to make commodity production profitable (even in the face of fluctuating prices), or produce something niche where value is added and people are prepared to pay the premium for it.
Do you keep the business in the family?
Are generations of farmers still wearing the same old wellies and passing down what may be traditional experience and knowledge to family members, but which is outdated for modern-day farming? Unlike our EU neighbours - in particular Holland, France and Germany - who have invested in skills development, innovation, technology and have therefore seen significant growth, less than half of our UK farm managers have received any formal training. Bringing in expertise from outside the family could be considered as a viable option to increase skills, productivity and ultimately, profitability.
However, farms have historically been run as family businesses; this can be very positive and build a strong cohesive business. On the flip side, it can also bring disagreements, fall outs and the emotional stresses of any family business. Succession planning, making wills and inheritance tax are just some key considerations that need to be made by farm owners, but are often put on the back burner because of tensions in the family – or simple reluctance to address the issues.
Is it time for a change?
If a diversified farm requires a focus on developing and marketing a niche product, then the land which is not needed for the diversification activity could be let or contracted out to other ‘commodity’ farmers to generate additional income without a large commitment of labour or time.
What does the future look like?
Farmers should not see Brexit as a threat, but more as a prompt to look at their farms afresh so as to give the best chance of running a thriving and successful business – whatever the outcome of Brexit and world trade negotiations.
For more information, to discuss or just have a second opinion on a specific query, please contact Peter Snodgrass from our agriculture team – we’d be happy to help.
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