Is your farming business fit for the future?
Published October 10th, 2017
It is now less than 18 months before the United Kingdom officially leaves the European Union (EU) and while the transition is likely to be gradual there is no doubt about the current economic uncertainty associated with such a significant change.
Mark Morison, a partner at the Shrewsbury office of Berrys, says farm and rural businesses are already seeing the impact as migrant labour supply weakens. Added to this there is a hesitant land market and doubts over the government’s previously stated commitment to the maintenance of farm support at current levels.
“Many farm businesses already enjoy a diversity of income streams while others are highly specialised but those businesses without the structure to survive on the tightest of margins or without the ability to rely on alternative income streams to support poorer performing enterprises will perhaps be most at risk,” Mark said.
“These are the businesses where it is more important than ever to ensure consideration is given to identify strategies to weather unpredictable economies.”
In the summer the NFU and law firm Wilkin Chapman hosted a Future Farms Poll with more than 200 farmers taking part at Cereals, Lincolnshire Show and Driffield Show. The conclusion was that businesses must implement planning for the future and grasp an appetite for change in order to protect and grow the farming industry.
The results showed that 41 percent of participants had agricultural policy as their main priority, 26 per cent succession, 20 per cent farm diversification and 13 per cent environment and disease.
“Now is the time to act,” Mark said. “Priorities must be identified and acted upon to ensure the business is fit for future.”
Points to consider:
Finance: Look at the flexibility and stability of your short and longer-term debt. Review the structure of finance arrangements if necessary to enable the business to adapt to new opportunities while locking down longer-term debt at attractive rates.
The window of opportunity is here to enable inward investment or restructuring while EU support is available to supplement income and favourable lending conditions prevail.
Land: Assess the potential of off-lying land in terms of non-agricultural investment or liquidity if there is a need to reduce borrowings. Assess planning and development opportunities.
Keep an eye on rental levels and review, particularly where rents were last assessed in better market conditions.
Assess whether property is capable of supporting a wider diversity of enterprises or alternatives
Look at the options available for sharing or other joint ventures to enhance efficiency and look at environmental opportunities.
Succession: Take advice over a programme for retirement planning and the early involvement of a successor in strategic and management decisions.
“Talking to us is a great starting point. Get in touch today,” Mark added.
Mark Morison can be contacted at the Shrewsbury office of Berrys on 01743 290647 or email firstname.lastname@example.org