Agents’ cheery outlook post-BPS

[Fat hen]

Recently attended a zoom meeting with a respected independent land agent. He described the next 5 yrs as the biggest change in Farming in a lifetime. He painted a fairly bleak picture of agric under the Tory government’s funding plans, none of which encourage food production:

> £40K BPS will be £19k in 2024!!
> New schemes (ELMS , Carbon trading, etc) collectively will not nearly replace BPS monetarily
> 75% farms are NOT profitable w/o BPS. (obv depend on weather/prices)
> Post Brexit exporting bureaucracy will incur costs which will be borne at the farmgate. Prices will be more volatile too

He foresees 3 types of farm streams going forward:

1 Out and out large commercial hi-tech farms

2 ‘Environmental farmers’ taking advantage of schemes carbon trading, natural capital.

3 Farmers exit sector altogether taking a one off Govt payment of 250/ac to do so

Put like this it and the short timescale involved- there’s nothing gradual about it- we are in for a tumultuous period. In particular for small family farms which may be sink or swim.

Any thoughts?

 

[Fake it ‘til you make it]

I think the retirement payment is a crazy idea, and I don’t think it would go down well with the public if more widely reported.

 

[The Ruminant]

I can’t see carbon trading being workable. The only way you can justify being paid for removing carbon out of the air is if you can guarantee it will never be put back into the air. Locking carbon into soils is doable, and we should all be striving to do so for the health of our land, but it isn’t permanent and could easily be reversed through changes in land management. What happens in ten, twenty, thirty years time when the carbon has escaped? Do you repay the money? Are you fined? How does it work?

Put it another way. I know mob grazing sequesters (locks in) a lot of carbon into the soil. I could take payments for doing so for, say, a ten year period. If I was a dodgy character, at the end of the agreement I could then plough the land hard to reduce the soil carbon levels and, after a year or two, start again and take new payments.

To avoid this the agreements are going to have to last for decades after the money has been received.

Tread carefully.....

 

[Spud]

Recently attended a zoom meeting with a respected independent land agent. He described the next 5 yrs as the biggest change in Farming in a lifetime. He painted a fairly bleak picture of agric under the Tory government’s funding plans, none of which encourage food production:

> £40K BPS will be £19k in 2024!!
> New schemes (ELMS , Carbon trading, etc) collectively will not nearly replace BPS monetarily
> 75% farms are NOT profitable w/o BPS. (obv depend on weather/prices)
> Post Brexit exporting bureaucracy will incur costs which will be borne at the farmgate. Prices will be more volatile too

He foresees 3 types of farm streams going forward:

1 Out and out large commercial hi-tech farms

2 ‘Environmental farmers’ taking advantage of schemes carbon trading, natural capital.

3 Farmers exit sector altogether taking a one off Govt payment of 250/ac to do so

Put like this it and the short timescale involved- there’s nothing gradual about it- we are in for a tumultuous period. In particular for small family farms which may be sink or swim.

Any thoughts?

Think I'd be getting a new agent if that's as much positivity as he can muster!

My take on it?

High priced short term FBT's are out.
For those looking to retire, the exit incentive might well be attractive, and in doing so, present opportunity for others.
ELMs in all its forms will assist in providing increased productivity, opportunity and profitability, but imo won't pay (in cash income terms) much more than the likes of ELS now.
Stand still, go backwards has been true for decades, and remains so. We have a few years to set up new enterprises, adapt and plan to replace bps income, and must use the time wisely.
Anyone not profitable without bps should be asking hard questions of themselves anyway.
It's oft talked about threatening the family farm - in practice, a lot are the most resilient of all, particularly the owned & paid for ones.
A diverse spread of enterprises spreads risk

 

[GeorgeK]

I can see why he's respected, I'd say it's worth mulling over.
> £40K BPS will be £19k in 2024!! - Correct
> New schemes (ELMS , Carbon trading, etc) collectively will not nearly replace BPS monetarily - Correct
> 75% farms are NOT profitable w/o BPS. (obv depend on weather/prices) - I've seen various figures around 60-70%
> Post Brexit exporting bureaucracy will incur costs which will be borne at the farmgate. Prices will be more volatile too - Hard to predict prices, but we can safely assume they won't increase to offset BPS loss

As for his 3 types of farms I have thought similar, here are my 3 types:
1. Won't be taking government money. Investing to increase efficiency and productivity. Reducing costs.
2. Aiming to continue food production but hoping ELMS can be used to eliminate loss making or break even aspects of the business to ensure viability.
3. "I've been doing things the same way for 50 years, I won't be changing now." These farmers may have the wealth to subsidise a loss making operation, they may wind down slowly and the bits that get sold off will be enough to keep them solvent, or they may go bust.

 

[2wheels]

if things are going down the road described the aforesaid agents will be the first to get the boot. glad i'm retired.

 

[DRC]

It’s hard to be specific about how farms will be affected . There’s a big difference between a bought and paid for farm and a tenanted farm.

 

[livestock 1]

If BPS is in a way just allowing farm gate prices to be lower than what they should be then surly there’s a possibility that the slack in the shortfall will be taken up. Combine the amount of farmers getting out of the job then maybe the prospects aren’t too bad at all. The proposed 10% reduction has already been more than covered by livestock prices already

 

[midlandslad]

if things are going down the road described the aforesaid agents will be the first to get the boot. glad i'm retired.

Change brings work for agents. Filling BPS forms out doesn’t generate good fees just keeps your foot in the door for the bigger deals.

 

[midlandslad]

It’s hard to be specific about how farms will be affected . There’s a big difference between a bought and paid for farm and a tenanted farm.

There is also a big difference between those on tenanted farms and those with big mortages. If returns fall theoretically so will rents, but the banks won’t reduce their repayments because you get less support.

 

[glasshouse]

It’s hard to be specific about how farms will be affected . There’s a big difference between a bought and paid for farm and a tenanted farm.

Yes
A mortgage only lasts 25 yrs and doesnt rise
Rent keeps rising forever

 

[holwellcourtfarm]

I can’t see carbon trading being workable. The only way you can justify being paid for removing carbon out of the air is if you can guarantee it will never be put back into the air. Locking carbon into soils is doable, and we should all be striving to do so for the health of our land, but it isn’t permanent and could easily be reversed through changes in land management. What happens in ten, twenty, thirty years time when the carbon has escaped? Do you repay the money? Are you fined? How does it work?

Put it another way. I know mob grazing sequesters (locks in) a lot of carbon into the soil. I could take payments for doing so for, say, a ten year period. If I was a dodgy character, at the end of the agreement I could then plough the land hard to reduce the soil carbon levels and, after a year or two, start again and take new payments.

To avoid this the agreements are going to have to last for decades after the money has been received.

Tread carefully.....

Does the "Woodland carbon guarantee scheme" require permanent storage of the carbon in return for the payment?

I'm fundamentally against carbon trading (allowing commodity traders to suck profits from the actions of others whilst delivering no benefit themselves and often using those profits to maintain a high climate footprint) and carbon offsetting (allowing polluting businesses to avoid addressing their underlying pollution)

 

[holwellcourtfarm]

Yes
A mortgage only lasts 25 yrs and doesnt rise
Rent keeps rising forever

So long as tenants keep offering more...

In the great depression of the 1930's millions of acres was idle as no tenants were willing to bid. It could happen again.

 

[glasshouse]

There is also a big difference between those on tenanted farms and those with big mortages. If returns fall theoretically so will rents, but the banks won’t reduce their repayments because you get less support.

It will be 1980 all over again
Remember that tory inspired disaster?
By 1986 land values had quartered
3 million on the dole

 

[Johnnyboxer]

Thought provoking post #1

 

[Mixedupfarmer]

So long as tenants keep offering more...

Especially those owner occupiers bidding for FBT land to "spread fixed costs", at an unsustainable rent which is used as a comparable for all FBT's in the area at review / renewal.

 

[No wot]

After 50yrs experience of "end of uk ag" scenarios from joining EU , McCsharry reforms , IACS introduction , BPS Introduction, leaving the EU and a host from diseases FM , Blue tongue, Scellemburg , I've learnt to sit back look at what you can do within your means to brace for any rough waves that may come you way , AND REMEMBER 2 things ---- 1) things probably won't be as bad as predicted and 2) if a Agent tells you anything , DO THE EXACT OPPOSITE!!!!!

 

[glasshouse]

So long as tenants keep offering more...

In the great depression of the 1930's millions of acres was idle as no tenants were willing to bid. It could happen again.

Tensnts dont offer silly rents , its owners that do.Landlords in the 1890,s wouldnt accept low offers, they didnt care if people starved.
tenants couldnt get finance, that was biggest prob , just like today

 

[Hindsight]

Commodity prices, Commodity prices, Commodity prices.

 

[GeorgeK]

It’s hard to be specific about how farms will be affected . There’s a big difference between a bought and paid for farm and a tenanted farm.

Another way of looking at owned vs tenanted is that the tenant farmer may already have to be more efficient and profitable than the owned land farmer. Rents can come down, reducing the effect of losing BPS. To maintain profitability on an owned farm major changes will have to take place, some in this group might not even realise they're dependent on subsidy, in fact they may never have turned a profit from their farming activities