Farmers must use the time before Brexit to take a strategic look at their business and future-proof it against a potential fall in subsidy support and a more difficult trading environment after the UK leaves the EU, consultants for estate agents Strutt and Parker told a meeting in Scotland on Thursday.
 
Strutt & Parker farm business consultant Stephen Whiteford urged farmers to take advantage of the relative certainty offered by the pledge of continued support until 2020.
 
Mr Whiteford, who is based in the Perth office and works with clients throughout Scotland, was speaking at a Farm Business Breakfast in Haddington in East Lothian.
 
He said, “Unfortunately there are more questions than answers at the moment both in terms of future subsidy policy and future trading policy post-Brexit. Brexit will undoubtedly offer opportunities to the industry and arguably there is now an opportunity to have a more direct influence on how future agri-policy is formed.  However, it would be prudent to prepare for some challenging trading conditions in the immediate post-Brexit period.”
 
Mr Whiteford said questions remain as to whether or not there is an appetite at UK level to allocate funding to the industry at or near existing levels provided by the EU.  Furthermore, trade negotiations which can take many years to come in to effect, have not yet begun, leaving the likelihood that the industry could potentially be somewhat exposed for a year or two once we leave the EU.
 
However, he stressed that there are some positives in the shorter term. He pointed out that the main impact since the EU referendum in June was the fall in value of Sterling, which - for farmers - has had mainly positive impacts including a lift in some commodity prices and a 16% year-on-year increase on BPS value.  He added, “We have been given some clarification on the outlook for the current support systems. The current BPS system will remain until the end of 2020. This is positive and that amount of relative certainty allows for a degree of planning for the next three years in preparation for what comes after Brexit.
 
He told farmers to scrutinise every business enterprise and assess its chances of survival without subsidy support.  From there an options appraisal should take place to identify opportunities for alternative or additional income streams.  Where applicable any opportunities to invest in infrastructure either to gain efficiency or to bring in new income streams, should be considered. With record low interest rates, arguably there has never been a better time to borrow, provided that there is a solid business case to justify the applicable level of borrowing.
 
Chairing the briefing, Strutt & Parker partner Mary Munro said, “If there is one thing this year has taught us then it is to expect the unexpected.
 
“There is uncertainty ahead but it doesn’t do anyone any favours to sit around and dwell too much on what they can’t control. Clearly the trade deals negotiated post-Brexit will be key; they will have a huge impact on business. The question of support is high on the agenda. However, farmers in New Zealand lost their subsidies almost overnight and they have coped. It is about being prepared and taking advantage of any opportunity that can be identified.
 
“Every business has a different set of challenges and there is no simple answer that applies to all, hence the value of taking experienced advice.”