Free business advice helps with financial planning

With a new cropping season underway, farmers and rural businesses are being urged to apply for free advice to help with budgeting and cashflow forecasting.

Support is available through the Future Farming Resilience Fund – and on offer to any farmer registered with the Rural Payments Agency.

Tim Frost, associate director in the food and farming team at Savills in Cambridge, says it has seldom been more important for farming businesses to keep an eye on cashflow.

“While many arable farms may have received good returns from last year’s harvest, this has been partly offset by rising input costs – namely fertiliser – and the continued phasing out of the Basic Payment Scheme,” he says.

“Selling forward earlier in the year may well be a saving grace for those who capitalised on wheat prices in the region of £200- 250 per tonne. But this typically only accounts for 20-50% of crop sales – highlighting the need for continued financial planning throughout the year.

Keeping a clinical eye on cashflow and regularly updating costs within existing budgets enables farmers and rural business managers to make sound strategic decision.

“The use of breakeven spreadsheets has allowed a number of farms to not only understand the cost of production per ton but also ensure sale prices are considered carefully alongside required profit/returns.”

The Future Farming Resilience Fund runs until March 2025 and includes everything from new funding streams and new farming techniques through to successional changes within the business.

Previous advice has resulted in businesses changing the enterprise mix, adopting Countryside Stewardship, altering the management structure, identifying diversification opportunities and developing business plans for new investment.

Defra support

Defra has committed £32 million to provide support to farmers as they move through the agricultural transition away from the Basic Payment. Savills is offering free advice via the Future Farming Resilience Fund in partnership with NIAB and AKC.

“Sound financial planning will ensure clear management decisions that give rural businesses the best chance of navigating whatever lies ahead,” says Mr Frost. “We’ve already helped a number of farmers through the FFRF but there is still plenty of time if anyone would like further support.

“Lower fertiliser costs and reasonable wheat prices mean that income is forecast to be more stable for 2024’s harvest. However if the last few years have taught us anything it’s that a lot can happen in the space of just a few months.”

The advice allows businesses to have one-to-one advice via a Farm Business Review and access to online tools, resources and industry expertise to help guide the business into the next phase of agricultural policy.

Organic farmers better off with new schemes

Organic farmers can combine Sustainable Farming Incentive and Countryside Stewardship payments to deliver a 50% increase in revenue above the old basic payment scheme.

Roger Kerr, chief executive of Organic Farmers & Growers (OF&G), says it is vital to promote the ‘easy win’ financial benefits highlighted in a new technical leaflet, which has been prepared by William Waterfield of the Farm Consultancy Group.

“The outcomes of this independent research reflect the high environmental status of organic and demonstrate how existing organic licensees can capitalise on the opportunities available to them by stacking SFI payments on top of existing CS agreements,” says Mr Kerr.

The leaflet shows the income comparison between old BPS and the combined CS and SFI payments. It reveals an increase from £48,510 to £68,671 for the livestock farm. Arable farm rates would rise even more, from £48,510 to £73,061, which equates to a 50.6% increase.

Mr Kerr says: “There’ll be many farmers both organic and non-organic who’ll wholeheartedly embrace the new schemes and their approach, while others will reject the environmental principles and go all out for increased yield by foregoing the schemes.”