Why should farmers be optimistic about their future following the phasing out of the Basic Payment Scheme?

From the end of March, after decades of subsidies via the Common Agricultural Policy (CAP), the countdown began to the phasing out of the Basic Payment Scheme (BPS).

The EU subsidy system has provided a comfort blanket for UK agriculture for decades. According to The Times, in 2015 the average farm made £2,100 from agriculture and £28,300 from subsidies. In the same year, on average, English farms made a £39,000 profit from their farming business. Now, the top 10 per cent of UK farm subsidy recipients collect almost 50% of all EU agricultural payments to the UK.

One of the downsides of the subsidy system has been that it has discouraged some farmers from investing in business efficiencies to improve the financial returns from farming, and diversification to generate alternative revenue streams.

From 2027 the Government’s new scheme will revolutionise farm support as part of the government’s new domestic agricultural policy. It plans to reward farmers for the provision of public goods, seeing landowners paid for measures that help the environment, including flood defences, improvements to air quality and the protection of wildlife.

For some rural businesses, the change to subsidies will mean that they will need to adapt. Farmers will need to be more creative in the way that they use their assets.

While farms vary considerably there is reason to be optimistic:

• The planning system is generally favourable to farm diversification and reusing redundant farm buildings.
• Rural tourism is becoming increasingly popular- total spend on ‘staycations’ in 2017 was £23.7 billion – up 3% on 2016 (Sykes Staycation Index 2018).
• There is increasing evidence of the “significant and wide-ranging health benefits” of spending time outdoors and living closer to nature. These themes are beginning to find their way into the education system.

Farmers are encouraged to begin to plan for the future as soon as possible to ease the transition into the new subsidy arrangements. To find out how we can help you with your plans, please get in touch with the Forge team. 

Charles Lawson, Director