Arguably the most commonly posed question to the Rostons team at the moment is: “What’s going to happen with Brexit and what should I do?”
While the tongue-in-cheek answer is to not worry because farmers are resilient in these modern times, it is essential to treat farming as a business and be ready to tackle the issues likely to arise.
Our ‘best guess’ list of the way Brexit is likely to affect you is listed below but be aware that even though much of the impact is outside of your control, you should still try to Brexit-proof your business.
Areas to consider
Are land values likely to increase or plummet? In the opinion of Tony Rimmer, Director of Rostons, it is likely that they will remain steady but the growth we have seen in recent years will slow.
Trade is an important part of our relationship with Europe, indeed for many beef and sheep farmers, it is the export trade to Europe that maintains current prices. So what can you do?
We recommend you look at what you are producing. Is there a niche market you can exploit? Is there a home market or alternative system that can be adopted that will guarantee better returns?
The requirements to each individual farm business are different so there is no right or wrong answer, but you need to consider what you can do within your business.
The word subsidy probably does not reflect the payments you receive. In simple terms, farmers are receiving payments to manage the countryside and to provide cheap food – an assessment that might be unpalatable to many.
The fact of the matter is that we are not conveying this message as an industry to the general public. The recent Conservative manifesto did state that subsidies would remain for the next five years i.e. the life of parliament. Whether this remains a promise once Theresa May has her Government in order or whether this will be subject to EU changes only time will tell but wise businesses are already considering how they can replace that income.
For owner-occupiers with limited borrowing, the ability to fix money at less than 4% and use the farming asset to leverage funding to buy perhaps a non-farming investment that can yield between 8-12% return is worth considering. There is a good margin to be made that could contribute to your bottom line.
You should also consider a review of your assets and farming system. Are you making the best of what is available to you and are you farming with a view to making the maximum profit?
The team at Rostons come across these questions on a regular basis and would be delighted to assist with this as well as any other rural property and business matters.