The new year will bring changes to the way in which British farmers qualify for grants and payments, leading to calls for many to check that they are still financially viable during this turbulent period of transition.
Before the outcome of Brexit, the EU system of payments meant that farmers were paid based on the amount of land that they farmed, with this scheme finishing when the post-Brexit transition period ends on 1st January 2021. The new Environmental Land Management (ELM) system will pay farmers for helping the environment, using initiatives like flood prevention, planting woods and helping wildlife.
England and Scotland
In England, the Department for Environment, Food and Rural Affairs (DEFRA) have set out a roadmap of how the transition will take place. Changes have meant that the payments based on the amount of land a farmer owns will be phased out, to be replaced with the new ELM system.
The Department for Environment, Food and Rural Affairs (DEFRA), the body responsible for announcing the government’s plan for the transition, have significantly stated that direct payments will be reduced over the next four years for English farmers, starting from 1st January 2021. These reductions will continue until they are eventually removed completely in 2027.
In Scotland, new regulations will also come into force from the New Year’s Day. However, the degree of such change is unclear. The change in the Common Agricultural Policy (CAP) from the UK Conservative Government in Westminster has led to opposition from the SNP Scottish Government in Westminster, who claim that such changes will bring losses of £170 million per year to Scotland’s rural budget.
In what seem very uncertain times for Scottish farmers, with differing views from opposing directions, what appears certain is the fact that the next couple of years, at least, are likely to bring significant financial change for farmers across Scotland and the rest of the UK.
Farmers should action now
The reality for current farmers is that they need to make sure that they not only understand that change is necessary, but make sure that they are financially sustainable for the following years of transition.
Key questions farmers need to ask themselves are, in light of these changes: Do you know your own profit margins? Are you sustainable enough to continue during the years of transition with a reduced, or even without, the old Common Agricultural Policy available to you pre-Brexit? And perhaps looking toward the future – Are there other environmental grant schemes that you could benefit from in the years to come?
If you are uncertain about any of the above questions, it is wise to invest time understanding how you may need to adapt your farming operation to ensure it is safeguarded for the future. Douglas Home & Co Chartered Accountants, who have offices across Scotland and Northern England, has a dedicated agricultural team led by company Director, Victoria Ivinson, that can assist with financial and tax planning as well as all accounting compliance services.
If you are a farmer with any form of doubt in your mind, you can visit the Douglas Home & Co website www.dhco.co.uk, call the team on 01573 225082 or email email@example.com to book a consultation today.