Opportunities and challenges ahead
Farmers are facing a period of transition and businesses will need to generate new income streams as opportunities present themselves.
However, with these new opportunities, come challenges as the agriculture sector faces increasing demand to reduce its carbon footprint, whilst inflationary pressures are making everyday business more challenging.
Here we look at some of the key issues and opportunities for 2022.
Reductions in BPS
The loss of BPS income will cause a dent in the finances of many businesses. A farmer who received a payment of £25,000 for the 2020 claim year will receive just over £20,000 for the 2022 claim, a drop of 20%. Change is needed now to address the impact on cash flow.
Introduction of new schemes
This year will see the introduction of DEFRA’s new schemes with the emphasis on the environment and improving productivity. We already have details of the first phase of the Sustainable Farming Incentive due to be launched in the Spring and there are a suite of grants available to improve farm productivity and add value to food products – refer to Thomas’ article in this issue for further details. The Countryside Stewardship Scheme (CSS) remains open and with the recent increase in rates, those farmers who have been sitting on the fence, should seriously consider a CSS scheme.
Lump-Sum Exit Scheme
Lump sum exit payments will see eligible farmers paid up to £100,000 to exit the industry. The scheme is designed to free up land for those wishing to pursue farming and existing farmers wanting to expand. Whilst the sums of money offered are unlikely to persuade farmers to leave the industry, it may bring forward discussions between farmers and landowners.
Carbon and Net Zero
Climate change is arguably the greatest environmental challenge and farmers will have a responsibility to protect carbon reserves already locked in soils and vegetation. This however, is an exciting opportunity for farmers, but there is still significant uncertainty about how carbon trading will work and there is still no standardised metric for measuring carbon. Schemes that allow landowners to generate new revenue streams through carbon farming are, starting to emerge. There is an expectation that private investment in environmental measures that help to mitigate climate change will become an increasingly significant market and offer further opportunities for farmers.
Buoyant Land Market
Renewed confidence in the farmland market has contributed to an unexpected increase in demand, resulting in land values increasing throughout 2021 and with demand predicted to remain firm values should continue to climb. Buyers looking to farm regeneratively, plant trees to harvest carbon, or even rewild have been particularly strong players. We already have instructions for a number of significant land sales in the region to be launched later in the year. In this issue, we discuss preparing to bring your property to the market.
Our team is well placed to advise business on adapting to the changes and the opportunities facing the industry.
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