Category Archives: Farming Rural News

Accountants call on farmers not to delay after extension of subsidies timetable

team-paul-lairdThe environment secretary, Michael Gove, kicked off 2018 by confirming that farmers would continue receiving similar levels of farm subsidies until 2022, but a specialist accountant at Buckinghamshire-based firm The Fish Partnership has said farmers still need to be ready for future cuts.

Farmers currently receive around £3 billion a year from the EU in subsidies which are based on the land they manage or own.

This latest announcement will give them an additional two years, on top of the original 2020 deadline promised after Brexit, to prepare for the new farm payments system.

The Government has said this new system will reward farmers for looking after the environment and making land more accessible to the public.

Mr Gove described the EU’s Common Agricultural Policy as “unjust” and as a system that didn’t “really reward efficiency”.

He said that during the transition to the new system the Government would aim to reduce the largest subsidies, with a maximum cap or a sliding scale of reductions and insisted there would be a “smooth path” towards a new way of paying farmers when EU subsidies ended.

Commenting on the new plan for farm payments after Brexit, Paul Laird, a Director at The Fish Partnership and an expert in rural affairs said: “Many farmers will welcome the two additional years of funding, but they must remember that this means they only have four years to prepare for a completely new system – the details of which are still to be fully fleshed out.

“Mr Gove has suggested that farmers will be rewarded for undertaking actions that benefit the environment and public, so farm businesses need to consider how they can adapt their current business model and land management in preparation for this new system.

Paul added that research showed that a cut in subsidies would see the average UK farm income fall from a current level of around £38,000 per year to nearer £15,000*.

“Whether you agree or don’t agree with the Environment Secretary it is vitally important that farms begin preparations now, as very few businesses could survive their income being effectively halved as some studies have suggested,” added Paul.

Leading accountants warn of rising farm costs

team-paul-lairdA leading accountant at Buckinghamshire-based firm The Fish Partnership is warning farmers about a rise in input costs over the next 12 months.

The warning comes after a report was produced by AF Group which showed that input costs for farmers had risen by five per cent in the last year.

Its latest AgInflation Index, which was released at the end of 2017, showed that one of the most significant rises was the cost of fuel, which rose by 11.5 per cent in the year to September 2017.

The cost of seeds also rose by 7.3 per cent, as did fertiliser which saw an 8.7 per cent increase.

Meanwhile, contract and hire costs rose by 8.5 per cent, but these are expected to increase further with the recent change to the UK base interest rate in November.

Responding to the latest research, Paul Laird, a Director at The Fish Partnership and an expert in rural affairs said: “We have seen first-hand the rising cost to the farmer in the UK, which in many cases is the result of more expensive imports.

“With the pound still performing well below other currencies following the Brexit referendum the cost of buying overseas imports has risen and many domestic suppliers have followed suit as well.

“While this has also served to drive demand from the continent as well, due to the lower cost of UK produce, it would seem that the rise in input costs certainly isn’t matched by the additional income.”

He said businesses struggling with the new costs need to seek help to ensure their ability to trade wasn’t affected.

“So far we have seen some improvements in the strength of the pound early in 2018, costs are still likely to remain high for some time and those farmers experiencing cashflow issues as a result of higher prices need to seek advice sooner rather than later,” Paul added.

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.