Making the Agricultural Bill Work for You and Your Business
In recent weeks, the Agricultural Bill has been in the press due to the potential changes on imported food standards, with local Conservative MP, Neil Parish, seeking to protect UK farmers. Although this is incredibly important, I wanted to take the chance to remind us of what else is included in the land mark bill, due to be passed this summer.
The Bill has the power to implement new approaches and provides many short-term challenges to businesses. These challenges include understanding how to secure new contracts within the supply chain or future payments after BPS is phased out, reminding us how key business plans will be in building a resilient business. Hopefully planning is already underway for the phasing out of the current direct payments with the largest claimants losing 25% next year. Consideration should be given to how businesses can adapt to prosper without this funding. Such plans may include entering into Countryside Stewardship Schemes (CSS) in preparation for the Environment Land Management Schemes (ELMS).
As well as short term challenges there are also long-term opportunities. To utilise these opportunities, businesses need to understand the risks, exposure and impacts that will be felt. It maybe that businesses are looking at continuing to strengthen their core enterprise to protect financial performance, or reflecting upon the diversification and synergies available.
The increased transparency requirements should give farmers more clout within the supply chains with an increase in contracts available. Greater use of contracts should allow farmers to forward plan and a competitive trade advantages may be achieved with the new livestock traceability service. The new services offer multiple benefits for the livestock industry providing more information to the consumer, together with a practical and efficient method to record movements, births and deaths.
In order to consider the overall impact and how the available grants may unlock opportunities, it would be worth businesses reviewing:
- Current farming practices - Many good farming practices can improve the long-term profitability of the business, thus increasing its sustainability.
- Sustainability strategy
- Budgets and forecasts for future viability
- Resilience analysis, including supply chain risks
The common phrase “public money for public goods” is essential to remember as it is at the core of the Bill and will mean farming efficiently whilst also improving the environment.
The tax environment should also be considered when reviewing your farming practices and potential investments. Although it should never be the driving factor, advice should always be sought when considering material changes to any business whether it be to maximise the tax relief (capital allowances) available on the cost (net of grants) of slurry stores, plant and machinery and aspects of intensive housing, or the VAT status of the business, or impact on capital taxes.
To summarise, food production and the countryside will look very different in 5 or 10 year’s time and with this comes a number of risks and opportunities across the agricultural sector. Although some businesses may be at risk of failure with the withdrawal of BPS, others should be well placed to benefit from the changes and will thrive.
Kate Bell (née Bailey) BA(Hons) ACA ACCA
Kate joined Evolution ABS in March 2016 having moved from another South West based firm where she was Senior Manager of their Agricultural team. Kate was appointed director in May 2018 and specialises in more than accountancy and tax, offering proactive business planning and advice to a range of rural entities.
Kate holds a number of other voluntary positions including Treasurer of Somerset YFC, Secretary of the Somerset branch of the Centre of Management in Agriculture and committee member of the Somerset and Dorset Branch of the Agricultural Law Association, just to name a few!
Kate loves nothing more than to spend her weekends helping on her husband's farm but since joining the team has been converted to cycling as well!