Help on hand to navigate financial uncertainty

Impact of budget changes felt on farms

Advice from experts on ways to navigate financial uncertainty will be on hand at this year’s Cereals event.

As the turbulent outlook continues, more farm businesses are finding themselves presented with a complex scenario. The arable sector in particular faces a cash flow challenge in the run-up to harvest.

But what unites all sectors is the increased financial pressure, including fluctuating exchange rates and substantial tax bills – creating a perfect storm of economic uncertainty.

Critical factors shaping the future of British farming will be discussed by Jeremy Moody at the Central Association of Agricultural Valuers (CAAV). He will be speaking at the Seed to Shelf mainstage, sponsored by KWS.

Mr Moody will deliver a special seminar, titled Land Use, Tax and Business, at 10am on both days of Ceereals – aiming to help growers better understand the situation and navigate the headwinds they face.

Faster transition

“The transition away from traditional agricultural subsidies is accelerating, with both Defra and the Treasury signalling that farmers must increasingly rely on their own resources,” explains Mr Moody.

“The Sustainable Farming Incentive (SFI) has emerged as a critical factor in farmers’ financial planning, however, the recent closure of SFI applications caught many farmers by surprise, with uncertainty surrounding future schemes.”

Ministers are suggesting a potential shift towards focusing the SFI on less productive land and environmental initiatives, particularly in protected landscapes like national parks.

Working on the basis of a 10-15-year outlook, Mr Moody says farmers should consider several factors:

• Generational succession:
Plan for the next generation, considering the viability of the current business model.

• Business objectives:
Identify opportunities to improve overall business performance, enterprise efficiency and profitability.

• Climate resilience:
Develop strategies to adapt to changing environmental conditions and potential agricultural challenges.

Long-term planning is crucial for farmers looking to secure their financial future – especially after the tax changes in the autumn Budget, now coming into effect, Mr Moody adds.

Measures may include diversifying income streams and investing in sustainable practices.

Farmers should also be exploring innovative farming technologies and seeking expert advice on tax and inheritance planning.

Generational planning can often be challenging for farming families and rural business owners. Michelmores solicitors are aiming to get the conversation started in a young farmers-focused panel session at the event.

Charles Frost of Michelmores, headline sponsor of the Young Farmers Programme, says farming families must consider the impact of the proposed changes to inheritance tax on their succession plans and broader financial strategies.

Until October 2024, the legislation encouraged landowners to hold on to their farms. But Mr Frost says the new rules –which are due to come into effect in April 2026 – will require a change of approach in many cases.

“The landscape looks set to change completely. There’s now a much greater case for handing assets on during your lifetime and at an earlier stage.”

Conversation starter

The proposed changes have forced farming families to think carefully about their succession plans and to have those conversations now, adds Mr Frost.

“We are helping many families to navigate complex discussions about tax and the transfer of assets to the next generation while ensuring that older generations retain sufficient resources to provide for their own needs.

“Facilitating open family discussions hopefully results in a clear framework, with future expectations aligned, which benefits the farming business and all those involved in it.”

Young farmers can play a crucial role in this by initiating ideas about succession and bringing their fresh ideas for the future to the table – an area which he’ll be focusing on at the event.

“By bringing all family members to the table, the exercise ensures everyone understands the plan and feels confident about their role.

‘Great opportunities’

“While there is uncertainty, there remain great opportunities, and the next generation of farmers will want to feel confident about their place on the family farm to commit their future to it and navigate the many changes the sector currently faces.

“We hope that the panel session can be interactive and would encourage the next generation of farmers to come to the Young Farmer tent armed with questions and ready to share their own thoughts.”