ELMS plans unveiled.

[Steevo]

ELMS looks like the new way forward, and, alongside Brexit, we are moving into a brand new regime, it's going to happen, there is nowt we can do about that. But, surely this is the right time, to sit down, and do a full assessment of our businesses ? SFP, has had an effect on how we farm, it has influenced our farm policies, for decades, right from the start of SFP we were 'advised' to put it elsewhere, which most ignored, our produce buyers, have factored it into the price they pay, landlords have set rents, on it, machinery makers have as well.
There is nothing wrong with commodity prices, they, in many cases, are set by supply/demand worldwide. What is wrong, is the cost of production, there are to many people 'living' of our backs, and they are having the profit, taking it away from us, as we are the bottom of the chain.
So, let us all look at how we farm, I repeat, subsidies have influenced our systems. We are now faced with a completely new set of 'rules', would help if we new them, but, however much we disagree with them, they will happen, and we should seriously look at how we HAVE farmed to max subs, and see how we COULD farm in the future, most of us are in the habit, of running faster, each year, to simply stay in the same place, and giving it to all the people, that live off us.
I accept, it isn't going to be the magic button, and the industry will shrink, but, if we stopped buying machinery, as an example, what would happen to that trade ? It would have change, and get a lot leaner, and keener, or stop buying soya, palm oil, all on the 'bad' list, and so on.
The only way left, for us, to increase profit, is either a niche market, or cut production costs, milk, wheat, meat, barley prices, are set by world mkt's, they will only alter, on supply/demand, it is simply a question of, how much of that price, can we keep. And, it is that, which is of the greatest importance.
So, lets look at the new system, it could well give us oppurtunities, set aside, we all took our worst ground out, might get paid for planting trees, etc. The simpler our systems become, the cheaper the COP, accept, yields may drop, the less intensive investment, = more potential profit, I hope !!!

I agree with much of this.

Cutting costs is easier said than done due to UK regulation.

Stop buying machinery works....unless your tractor breaks down or it’s worn out and you need a replacement. Crops in the field need looking after so you can’t just survive without part of the system.

The regulation is causing the vast chasm between our costs (all subject to regs. i.e emissions on tractors etc) versus our selling price (no regs on competition).

Unless the govt level the playing field somewhere it will never function at all.

The market is distorted.

 

[Greythundercloudys]

Every farm l know up here in Scotland will be in a loss make situation once bps goes, or 8 out of 10. That's the truth, suckle cow sub, lfass, and a headage payment on ewes will need to come in to keep farms going in Scotland, getn 1000 pound for elms for growing buttercups doesn't go far.

 

[Steevo]

ELMS won’t be a panacea.

Take govt grant schemes previously. Plenty who applied for them for new diversifications etc have found that whilst they get a 40% grant, the extra cost and hassle of jumping through the hoops, higher spec, forced deadlines etc and other bureaucracy makes the whole job cost even more than had they done the job without the grant in the first place.

 

[B'o'B]

But locking in to a five year scheme with payment rates worked out 6 years ago and loss of bps does not look that attractive. Maybe some commodity prices will improve and some inputs fall with the loss of bps, and you will be left in a loss making scheme. Don’t get me wrong I have been in mid tier from the start but it is looking less attractive with loss of bps not more

The right Mid-tier option is far better than failed rape or average linseed with or without BPS.

 

[Feldspar]

Research can show whatever the person researching wants it to.

Theory and practice are two entirely different things.

Not all farms can trim machinery efficiently. Should I sell my 180ho tractor and trade down to 150hp because I’m cropping less? The cost to change makes it more costly not less.

Fixed costs is the issue here. Just because you don’t crop that 10% it doesn’t mean you lose the fixed costs associated. Underperforming areas may only break even, but if they contribute towards the fixed costs of the man/machine etc then they are still helpful.

This is a good point and an important issue which I think does penalise the smaller farmer with maybe one of a number of things (one tractor, one man etc.) and a fixed land area. We have been able to get some quite attractive margins out of the Mid Tier options at the current payment rates, but that has only been achieved by being in the fortunate position of being able to take back in hand land that was on a contract farming agreement and also cut production at a time when we were buying more land (which I know will seem perverse to many). Also, already being at the scale of a number of tractors, it's easier to sell 2 out of 6 tractors than a third of one tractor. This has enabled us to reduced fixed costs by dilution as well as absolute reduction.

I also agree with @silverfox that it could be damaging to tenant farmers. If bigger estates think they can simplify their lives by putting a lot of land into much lower input environmental options, they may well take the opportunity when tenancies end not to renew them.

 

[Northern territory]

The right Mid-tier option is far better than failed rape or average linseed with or without BPS.

Yes can see it as a big attraction for blackgrass land. More reliable and safer bet than many break crops.

 

[farmerm]

Research I saw showed that between 5%-10% of land on most arable farms could be dropped out of production with no negative effect on profitability as those areas consistently underperform and at best breakeven in a good year so are effectively a constant drain on profit.
Those are the parts of a farm to enter into mid-tier and trim machinery accordingly and you end up with a leaner more profitably farm business.

That's what I have been trying to do.. trouble I find is these areas that are awkward and grow poor commercial crops are still awkward and still poor when it comes to establishing and growing nectar pollen and other mid tier options

 

[Mixedupfarmer]

The right Mid-tier option is far better than failed rape or average linseed with or without BPS.

I don't disagree, but it is not in any way going to replace any BPS as the potential future payments are the same as we have had for the last five years, but without the BPS (or at least much reduced levels). It may well be that some farms should have looked at mid tier or higher tier for parts of their farm five years ago, but for those of us who did, and embraced it, stagnant payment rates and rapidly reducing BPS means a new five year agreement is locking into a much reduced profit guaranteed. This may or may not be the case with crops and stock.

 

[Feldspar]

ELMS won’t be a panacea.

Take govt grant schemes previously. Plenty who applied for them for new diversifications etc have found that whilst they get a 40% grant, the extra cost and hassle of jumping through the hoops, higher spec, forced deadlines etc and other bureaucracy makes the whole job cost even more than had they done the job without the grant in the first place.

And whilst you're making good points, this is another one! The cost to administer a big scheme is much lower than it is for a smaller one. It is worth my while reading hundreds of pages of documentation and spending weeks understanding how best to structure an application because spread over a larger number of acres the cost is not that great. It is worth me spending a day a week administering and checking compliance for the amount our scheme is worth. If you are on a smaller scale and your payments are maybe a few thousand a year, all that paperwork might not be worth it.

 

[farmerm]

Exactly. I would have thought they would have put the BPS money clawed back through reductions into increasing payment rates for mid tier and higher tier through the 5 years, so encouraging higher uptake and all the benefits to the environment, public good, etc, etc. If farmers, me included could see scheme option payment rates increasing by say £200/ha over the five years, it would be a safe bet on some of our land replacing most of the BPS on it. There is going to be no NLMS for years, so where’s the money going in the mean time?

I think some of the money will go into the pool to payout those few smaller claimants who will choose to take a lump sum and run around 2024-25.... Some will probably go into funding an expensive new white elephant of an IT system, some may go into creating a pool of advisors and ecological surveyors…. A bit will go into ELMS pilot schemes... If there is anything left the treasury will be eyeing it up for a clawback….

 

[Mixedupfarmer]

I think some of the money will go into the pool to payout those few smaller claimants who will choose to take a lump sum and run around 2024-25.... Some will probably go into funding an expensive new white elephant of an IT system, some may go into creating a pool of advisors and ecological surveyors…. A bit will go into ELMS pilot schemes... If there is anything left the treasury will be eyeing it up for a clawback….

This is what I fear.

 

[Northern territory]

And whilst you're making good points, this is another one! The cost to administer a big scheme is much lower than it is for a smaller one. It is worth my while reading hundreds of pages of documentation and spending weeks understanding how best to structure an application because spread over a larger number of acres the cost is not that great. It is worth me spending a day a week administering and checking compliance for the amount our scheme is worth. If you are on a smaller scale and your payments are maybe a few thousand a year, all that paperwork might not be worth it.

Bang on

 

[B'o'B]

I don't disagree, but it is not in any way going to replace any BPS as the potential future payments are the same as we have had for the last five years, but without the BPS (or at least much reduced levels). It may well be that some farms should have looked at mid tier or higher tier for parts of their farm five years ago, but for those of us who did, and embraced it, stagnant payment rates and rapidly reducing BPS means a new five year agreement is locking into a much reduced profit guaranteed. This may or may not be the case with crops and stock.

As far as this government is concerned production needs to be profitable in its self or they don’t want it. That’s the hard reality we all now face, our businesses need to change and change fast. There is a lot of money in agriculture, but farmers are pretty poor at holding onto it. We are advised to not pay tax by giving our profit to a machinery dealer in a good year and wonder why we don’t have any reserves in a bad year. We pay agronomists to tell us how to grow our own crops (and we blame them if they don’t do well or pat ourselves in the back if they do). We are lead by the nose by chemical companies by advertorial articles in the farming press and yield is king. We have developed into an industry that just wants to produce more and more almost regardless as to wether it actually profits our businesses any more.
These changes we are now facing are a major disruption to everything we have considered “normal” for decades.
It’s not just the subsidy changes, we as an industry and individuals are very vulnerable to the shift towards “the polluter pay” principal which is coming in with the Environment Bill. Fancy a bill from a water company for cleaning pesticides out of drinking water? Or a bill because a bore hole can’t be used as nitrate levels are too high?
The Ag Bill give powers to restrict any fertiliser use as “public bodies” see fit. If you don’t like it tough, they will also have rights of access and inspection and powers to fine. NVZs will seem like a walk in the park compared to what’s on the table now. Phosphate will be high up the danger list as well.
Tinkering around the edges of your business isn’t going to cut it, this is fundamental rethink time. Yield is king for most farms won’t be the case anymore.

 

[Northern territory]

As far as this government is concerned production needs to be profitable in its self or they don’t want it. That’s the hard reality we all now face, our businesses need to change and change fast. There is a lot of money in agriculture, but farmers are pretty poor at holding onto it. We are advised to not pay tax by giving our profit to a machinery dealer in a good year and wonder why we don’t have any reserves in a bad year. We pay agronomists to tell us how to grow our own crops (and we blame them if they don’t do well or pat ourselves in the back if they do). We are lead by the nose by chemical companies by advertorial articles in the farming press and yield is king. We have developed into an industry that just wants to produce more and more almost regardless as to wether it actually profits our businesses any more.
These changes we are now facing are a major disruption to everything we have considered “normal” for decades.
It’s not just the subsidy changes, we as an industry and individuals are very vulnerable to the shift towards “the polluter pay” principal which is coming in with the Environment Bill. Fancy a bill from a water company for cleaning pesticides out of drinking water? Or a bill because a bore hole can’t be used as nitrate levels are too high?
The Ag Bill give powers to restrict any fertiliser use as “public bodies” see fit. If you don’t like it tough, they will also have rights of access and inspection and powers to fine. NVZs will seem like a walk in the park compared to what’s on the table now. Phosphate will be high up the danger list as well.
Tinkering around the edges of your business isn’t going to cut it, this is fundamental rethink time. Yield is king for most farms won’t be the case anymore.

Regulation will be what kills this economy before they are finished though.

 

[GeorgeK]

Can't rely on ELMs as funding will only go down over time as it will be competing directly with the NHS, police, schools etc. 'The Public' may appear to care an awful lot about the environment in a 2 minute survey, but when the question becomes "Where do your taxes need to go... the hospital where you are on a 2 year waiting list for a new hip or habitat for some newts?" It's easy to guess which will keep the voters happy.
Up to now it has been possible to justify farming based on job satisfaction and increasing land values, but whether this continues to be the case is becoming questionable

 

[Steevo]

The right Mid-tier option is far better than failed rape or average linseed with or without BPS.

I'd agree on this on the one hand.

That said though, with Mid Tier you're tied in for 5 years or so which can be good or can be bad. Flexibility is often key in farming - previous years I've done spring barley so have had stubbles over winter but not in a scheme so don't claim anything on them. This time around, I could see the glut of spring barley coming down the tracks so in November I planted a few extra fields of winter wheat instead. If I was contracted to a Mid Tier application and relied on over wintered stubbles or such to make up my points then I'd have my hands tied rather more and couldn't capitalise on the opportunity.

 

[Steevo]

And whilst you're making good points, this is another one! The cost to administer a big scheme is much lower than it is for a smaller one. It is worth my while reading hundreds of pages of documentation and spending weeks understanding how best to structure an application because spread over a larger number of acres the cost is not that great. It is worth me spending a day a week administering and checking compliance for the amount our scheme is worth. If you are on a smaller scale and your payments are maybe a few thousand a year, all that paperwork might not be worth it.

Spot on. It's refreshing that as a larger farmer you can see both sides of the coin.

If there were ELMS contractors who a bit like @unlacedgecko does with sheep could read up on the schemes, understand the forms, know the ins and outs (which a small farmer hasn't the time to specialise in and thus runs higher risks of non-compliance/penalties), cheapest and best way to establish different things etc. and could create an environmental business in and around several production focussed farmers. The farmers do what they know best, and the contractor comes in and sorts the rest out for a fee which is lower than the ELMS payment. Ideal opportunity for a new entrant there for example - they don't need land to farm in their own right, just the ability to provide a service on others land for bits that they don't want to do.

Potentially a win-win situation. Value added all round.

 

[Steevo]

As far as this government is concerned production needs to be profitable in its self or they don’t want it.

....and yet at the same time our government are the ones who are making the sector less profitable/unprofitable.

 

[B'o'B]

....and yet at the same time our government are the ones who are making the sector less profitable/unprofitable.

Yep! Draw your own conclusions from that, but my take is they don’t really want production agriculture in the UK at all.

 

[4course]

Research I saw showed that between 5%-10% of land on most arable farms could be dropped out of production with no negative effect on profitability as those areas consistently underperform and at best breakeven in a good year so are effectively a constant drain on profit.
Those are the parts of a farm to enter into mid-tier and trim machinery accordingly and you end up with a leaner more profitably farm business.

but you still have to manage said areas if you have them and that costs ,not to mention rent and a share of other costs reckon that just about takes care of any payment at the rates suggested for any elms scheme , though some folks are maybe able to make it work I would struggle