From farm filing fiasco to financial fruits

Jonathan Gifford BEng ACA CTA, Partner at Haines Watts North Devon LLP, Chartered Accountants.

June 10, 2015

2015 so far has seen a mixed bag of challenges and opportunity for farmers. We have been helping farmers with anything from dealing with the online filing fiasco through to applying for the New and Young Farmer incentives on offer. Subsidies, of course being an incredibly valuable income stream for many farms in the region.

In over 10 years of working with agricultural clients I have seen many cycles in various sectors. However, in that time I have not witnessed a period where all of the main sectors in this region have seen tough trading conditions at once, until now. Sectors including beef, sheep, dairy and arable have seen low prices and much-reduced profitability in recent months. Therefore, good financial management is more important than ever with important jobs now including:

  • Monitoring cash flows closely and comparing to budget
  • Liaising closely with the bank manager – communication is key; alert the bank of likely cash flow requirements in advance
  • Review tax payments due carefully – many farms will be facing 31 July HMRC payments could be in a position to reduce these down
  • Consider your machinery capital expenditure requirement – could employing contractors be more beneficial overall? Or perhaps sharing capital purchases with neighbours?

I do expect a tough summer for farms in the region, but overall I remain optimistic about the prospects of farming in the West Country. I feel that efficiency improvements made now will both serve to help ride the current “storm” and reap rewards when the current cycle ends and the markets become more buoyant. The strength of the Pound is likely to continue to play a part in farming incomes, and cycle timing as it has done since the Euro currency infancy.

We have seen a number of Young Farmers take the chance to apply for the Young Farmer Payment with the BPS. This will benefit farmers that have either started in business by themselves in the last 5 years, or be a positive by-product of recent succession planning on the family farm.

Whilst I reserve judgement on the success of Young Farmer incentives until nationwide application and payment statistics are available, I do applaud recognition by the authorities that young farmers need attracting to the industry, long term.

I would remind BPS applicants that there are a number of drop-in centres (for example in Launceston) across the region at which paper application forms may be delivered up until midnight on Monday 15 June. Those posting their forms are advised to use signed-for next-day post. RPA can confirm over the telephone whether an application has been received.

By Jonathan Gifford BEng ACA CTA, partner at Haines Watts North Devon LLP, Chartered Accountants.

Published Western Morning News Farming