Category Archives: Farming Rural News

Weak pound is a double edged sword for farmers, says Fish Partnership

A leading agricultural specialist from award-winning accountancy firm, The Fish Partnership, has said that official figures on farm profits are only one side of the story when it comes to Brexit.

The latest Government figures indicate that farm incomes in the UK have grown by up to 20 per cent during the last 12 months – mainly due to the fall in the value of Sterling and its impact on Common Agriculture Policy Basic Payments.

Released by the Department for the Environment, Farming and Rural Affairs (Defra), the figures also show an increased interest from overseas markets in ‘cheaper’ British produce as a result of weaker exchange rates, which also assisted farmers.

According to Defra, average profit for most farms in the UK during the last year was £38,000, an increase of 20 per cent on the £31,600 figure for the previous year.

The average basic payment, a subsidy paid by the Government to UK farmers from EU funding, was also up by 19 per cent – rising to £28,000.

Some sectors benefited more strongly from the weaker pound with specialist pig farmers seeing their average income increase by 167 per cent from £21,600 in 2015-16 to £57,800 in 2016-17.

However, other businesses in the farming sector did not gain as much, with horticultural enterprises seeing their income rise on average by just 29 per cent from £34,400 to £43,800.

Worse than that, around 20 per cent of cereal, dairy, lowland grazing livestock, mixed and poultry farms failed to make a profit at all in 2016-17.

Despite this surge in income amongst UK farmers, Paul Laird, a Director at The Fish Partnership has said that the weaker pound has also brought with it higher costs for fuel, livestock feed, transport and fertilisers, which have severely limited the scope of the current boom.

“The effects of Brexit are unpredictable and while many farms have enjoyed a boost in income as the result of a weakened pound – which has fallen in value by as much as 11 per cent against the dollar – they have also seen costs grow significantly,” said Paul.

“The next five years are likely to be even more uncertain, especially with potential trade tariffs and reductions in subsidies on the horizon, so it is essential that farmers make the most of the opportunities available to them now.”

He called on farmers to establish a number of different business plans that took into consideration the various changes that could arise in the next three to five years.

Paul said: “Future business planning needs to incorporate a higher degree of flexibility than ever before, so that rural businesses are properly prepared for any eventuality.

“It is also worth conducting more thorough checks of a farm’s finances by having regular management accounts prepared, so that owners can spot any weaknesses sooner and react.”

Fish Partnership encourages farmers to monitor financial performance closely

team-paul-lairdA specialist in the affairs of agricultural businesses at Buckinghamshire-based accountancy firm, Fish Partnership, is encouraging farmers to keep on top of their financial figures to avoid business distress.

In recent years the UK’s farming community has faced a number of pressures, from falling farmgate prices, to greater global competition and now the uncertainty of Brexit and a potential loss of EU subsidies.

With this in mind Paul Laird, Director at the Fish Partnership, is calling on the owners of agribusinesses to reassess how they monitor their financial performance and assets to ensure they don’t find themselves in trouble.

His message comes as new research from restructuring and insolvency trade body, R3, shows that more than one in five rural businesses in the South East (22 per cent) have been identified as being at a higher risk of insolvency in August.

“Farmers and agribusiness owners are in the whole very good at monitoring and managing their finances, but with so much uncertainty surrounding prices, land values and subsidies, it pays to gain a better understanding of their affairs,” said Paul.

“There are a number of options open to business owners depending on their size and complexity, from detailed monthly management accounts to incorporating online accountancy packages into their existing business, which can be checked in real-time by them and their advisers.”

Paul believes that with the minimal of outlay farmers can gain a far greater understanding of where their business is heading and identify signs of business stress sooner.

He said: “Like any business, information is power. Knowing where your strengths and weaknesses lie well in advance gives you that extra time to prepare yourself or seek the extra help you require.”

If you would like to know more about Fish Partnership’s range of services for farms and rural businesses, please 01628 527956 or visit www.fishpartnership.co.uk

Accountants urge small dairy farmers to apply for one-off cash sum

team-paul-lairdPaul Laird, Director at Buckinghamshire-based accountancy firm The Fish Partnership, is urging small dairy farmers to apply for one-off cash sums from the Small Dairy Farmers Scheme, with the deadline for applications fast approaching.

Under the scheme, farms in England that produce less than a million litres of milk a year are able to receive a one-off payment from the EU.

A total of £8.5 million has been made available by DEFRA for the scheme from funds made available by the EU, although the actual amounts paid to individual farmers will depend on the number of applications received and payments will be capped at half a million litres of cow’s milk.

In order to apply for a payment from the scheme, farmers must submit proof of total cows’ milk deliveries covering the period from 1 April 2015 to 31 March 2016. This could be either annual or monthly production statements.

Paul Laird, a specialist accountant in rural affairs, said: “I would encourage any dairy farmers who may meet the criteria to apply to the scheme as soon as possible.

“This potentially valuable one-off payment is an important boost and eligible farmers should not miss out.”

The deadline for applications to the scheme is 31 May 2017.

Accountants welcome increased investment in the rural economy

team-paul-lairdPaul Laird, director at Buckinghamshire based accountancy firm The Fish Partnership, says that the government’s investment of £120 million is a welcome boost to the rural economy.

The government has announced that this investment, offered through the Rural Development Programme for England (RDPE), is intended to support rural businesses and encourage the creation of new employment opportunities.

The RDPE is encouraging businesses that are carrying out projects to make use of the funding to boost employment or bring more money into the rural economy.

This support will be made available through three national calls for projects that have been developed with Local Enterprise Partnerships (LEPS).

The projects can vary from supporting food processing, business development and tourism infrastructure projects.

However, all businesses that are carrying out projects to that bring more money into the rural economy in their LEP area of England are eligible to apply.

Paul Laird, a specialist accountant in rural affairs, said: “The high volume of businesses and enterprises in rural areas makes this sector of the economy a profitable area for investments and growth.

“Whilst much of the farming industry remains uncertain post-Brexit, this investment clearly demonstrates the Government’s confidence in the potential for growth in rural areas.

“This is a valuable opportunity for rural start-ups, businesses and farmers, which can support new businesses whilst also helping existing communities to diversify and grow.

“However, rural business owners must be proactive when applying for these projects and it may be best for them to seek professional assistance when taking advantage of the new funding.”

He advises that farmers ensure their business plans make the best use of this money, adding that the application process for projects tends to be very competitive.

Rural businesses should make the most of new rates relief, says The Fish Partnership

team-paul-lairdLeading agricultural accountancy firm The Fish Partnership is calling on farmers and businesses to make the most out of the new Rural Rate Relief announced in the Autumn Statement.

During his speech the Chancellor Philip Hammond announced that the Rural Rate Relief will increase to 100 per cent from 1 April 2017, a move that he said will give “small businesses in rural areas a tax break worth up to £2,900 per year.”

Currently businesses can only obtain a mandatory relief of 50 per cent on their business rates if they are based in in a rural area with a population below 3,000, although this set mandatory rate will double under the new measure.

The rules also stipulate that the relief is only available to post offices and village shops, with a rateable value of up to £8,500, if they are the only one in the area, while public house or petrol stations in village, with a rateable value of up to £12,500 can also receive relief.

Local councils can also grant relief of up to 100 per cent to other rural businesses whose properties have a rateable value under £16,500.

Paul Laird, a specialist in the financial affairs of farmers and a Director at Buckinghamshire-based Fish Partnership, said: “The Chancellor didn’t announce a lot of help for rural businesses or farmers and in fact some measures, such as increasing the National Living Wage to £7.50 from next April, will have a negative impact on rural businesses finances.

“However, the one saving grace was the Rural Rate Relief. Whilst this won’t help every business based in rural areas it should still be welcomed.

“Businesses that are eligible for the relief and who are already receiving it should see an automatic decrease in what they pay next year if they are only receiving the mandatory rate.

However, there are likely to be many other small businesses out there that might not be aware of what is on offer. They should seek help immediately to make sure they make the most of this change.”

If you would like to know how The Fish Partnership can help you minimise your liabilities, please call 01628 527956 or contact us.

Arable farmers need to make the most of lower input costs, says the Fish Partnership

team-paul-lairdNew figures have revealed that the costs faced by arable farmers have fallen, a decline which accountancy firm The Fish Partnership say could help the industry.

The latest data from Anglia Farmers AgInflation Index – a well-regarded tool for estimating farm costs – has shown that during the last 12 months there has been a 1.14 per cent decrease in input costs across the sector.

The figures reveal that whilst the Retail Price Index has decreased by -2.6 per cent during the last year, farmers growing crops have seen their production costs fall in line or below this amount, while the livestock industry has experience a general increase in costs.

This improvement in arable farming is understandable with the decline in costs for fertilisers, which have fallen by around 18 per cent and agrochemical prices, which have dropped by around 3.2 per cent.

In comparison, the cost of animal feed and medicine for livestock has increase by 2 per cent during the same period between September 2015 and September 2016.

This situation has been made worse for livestock farmers as they continue to experience unstable and lower prices for their produce, with many farmers reporting an overall decline in their income.

Paul Laird, a director at the Fish Partnership and specialist in the finances of the farming community, said: “Prices and costs within the farming sector are constantly changing and so when opportunities appear, farmers need to make the most of them.

“Those producing cereals and other arable products should be using this period of lower costs to focus on investing in the future, so that they are ready for future changes in costs or pricing.

“Unfortunately, those in the livestock sector are being hit by a double whammy of low farmgate prices and higher costs. Many may find that they need to reassess their position and consider diversifying to make their business more robust.”

If you would like to know more about The Fish Partnerships range of services for the agricultural sector, please click here.

Low milk prices need to be addressed by farmers at an individual level

A specialist agricultural accountant from Buckinghamshire-based Fish Partnership says farmers may need to look at alternative strategies instead of waiting for milk prices to improve.

Chartered accountant Paul Laird has said that farmers need to reassess their business strategy now to find alternative forms of income, rather than hope and wait for milk prices to rise on their own.

It comes after the UK’s largest milk buyers, such as Arla, First Milk and Dairy Crest, have recently announced further milk price cuts during May, June and July.

Meanwhile, the average milk price for March was at the lowest level since 2009, with some farmers across the country receiving milk prices well below 16 pence per litre.

Paul, who is also a Director at The Fish Partnership, said: “Milk prices have been very unstable over the last couple of years and despite the best efforts of co-operatives and the government to redress this issue, the simple fact remains that there is too much supply and not enough demand.

“Dairy farmers cannot afford to wait for things to get better and need to act now to mitigate the loses they are experiencing from lower milk prices. This could include reducing the overall size of their herd to reduce costs, diversifying into new areas or even renting out land that is underused.”

He added that whilst these measures did not solve the problem, it may help some farms stay afloat until the markets improve.

If you would like to know more about The Fish Partnership’s range of accountancy services for the agricultural sector, please call 01628 527956 or email PaulL@fishpartnership.com

National Living Wage will have significant impact on farmers

Buckinghamshire- based accountants the Fish Partnership are warning farmers that the introduction of the National Living Wage could have a significant impact on their businesses.

The new National Living Wage’ (NLW) came into force on 1 April 2016 and has seen pay for workers aged 25 and older increase to a rate of £7.20 an hour; an amount that will increase incrementally to £9.00 an hour by 2020.

Seasonal farm businesses that require pickers during harvest time are extremely labour intensive and wages can represent more than 40 percent of a farm’s operating costs.

These businesses will see a significant increase in wage costs at a time when profitability is already in decline.

Farming unions have warned that if growers can’t recover the extra cost they face through the products they sell then many farms may fail and be forced to close.

Paul Laird, a specialist agricultural accountant and Director at The Fish Partnership, said: “Although the majority of people are aware that the National Living Wage has come into force this month; many may not have considered the true impact it will have on their business over the next few years.

“The incremental rises in wages for those over the age of 25 will really eat in to the slim profit margins of farms, especially those that rely heavily on low paid workers.

“If farmers are unsure of the effect the National Living Wage will have on their business then they should speak to a professional who can help them manage the additional cost.”

To find out more about the Fish Partnerships range of services for the agricultural community, please call 01628 527956 or contact us.

Lack of clarity over potential Brexit is causing confusion amongst farmers, says The Fish Partnership

An agricultural specialist from Buckinghamshire-based accountants The Fish Partnership has said that the lack of clarity over Brexit is affecting farmer’s abilities to plan.

Paul Laird, a Director at the firm and a specialist in the finances of farms and the farming community, believes that the government has created confusion over the EU, which is preventing farmers from planning for the long-term.

He points to the recent discussions held by government ministers at the National Farmers’ Union (NFU) annual conference this month, which he says shows there is confusion at even the highest levels that is damaging farmer’s confidence and denting growth.

During the conference held in Birmingham, George Eustice, Secretary of State for Farming, Food and the Marine Environment told delegates that leaving the European Union would pay an £18 billion a year “Brexit dividend”  that will allow the UK to spend £2 billion on farming and the environment.

He also sought to reassure farmers that they would continue to receive similar subsidies under new measures that would be brought in following a departure from the EU.

However, during the same conference Liz Truss, Environment Secretary, took to the stage to tell the audience that leaving the EU would be “a leap into the dark” that would put the UK’s £11 billion food and farming export trade at risk.

Ms Truss has previously said that the Department for Environment, Food and Rural Affairs (DEFRA) didn’t have a team working on a ‘Plan B’ if Brexit occurred, raising fears of the fallout following Brexit amongst those in rural businesses.

Paul Laird said: “Contradicting messages like these from government ministers creates confusion in the agricultural market and sows the seeds of fear over what might happen to the sector if the UK leaves the EU.

“While it is unclear exactly what the outcome would be if the country did leave, what is obvious is that the lack of certainty over the future state of UK farming is having an effect on British farmers.

“This uncertainty is killing off any prospect of long-term planning and is forcing many to reconsider investments they had planned to make, hampering any chance of growth within the next year.”

He said that businesses that were unsure of what direction their businesses should be taking should seek professional assistance to plan for the future.

If you would like to know more about The Fish Partnerships range of services for the farming community, please call 01628 527956 or contact us.

Famers need to look at diversification for alternative forms of income, says Fish Partnership

Buckinghamshire-based accountants The Fish Partnership have said that farmers need to look at alternative ways of making money from their land in the years to come.

Their message comes after new official figures show that farm diversification is on the increase across England.

The latest results from the Farm Business Survey (FBS) for England has revealed that 61 per cent of all farm businesses had some form of diversified enterprise in 2014/15, up three per cent from 2013/14 and up to ten per cent higher than a decade ago.

For the majority of farms that took part in the survey their main source of diversified income came from letting buildings for non-farming use. This could include renting out barns as storage or converting them into stables.

This form of diversification accounted for 41 per cent of farms who had diversified. The second most common form of diversification was renewable energy (18 per cent), followed by sport and recreation (12 per cent).

Total income from the alternative enterprises on the farms covered by the survey was £530 million and the average diversified farm income was £15,200.

Paul Laird, a specialist agricultural accountant and Director at The Fish Partnership, said: “With potentially thousands of pounds on offer to farms who diversify it is clear to see why so many have chosen to offer different services to the public and other businesses outside of agriculture.

“Letting buildings for non-farm use seems a popular and profitable option, with an average diversified enterprise income of £16,100 for a farm with let buildings.

“However, choosing the right solution that meets each farms needs is not easy and diversification is not always successful and it can be costly when it goes wrong.”

Paul added that farmers needed to put more consideration in to diversification and select a strategy that suits them and their farm.

If you would like to know more about how The Fish Partnership can help your farm maximise income through diversification, please call 01628 527956 or or contact us.