Everyone in farming will have learned something from 2018. For me it has shown that it is really important to understand the risks affecting farming businesses (and their families) and what might be done to mitigate them.
The last 12 months weather has thrown up all manner of challenges. The ‘beast from the east’ delayed turnout and first cut silage on livestock farms and spring activities on arable units. The major drought then reduced crop yields on all farms.
There was political turmoil caused by the lack of progress and clarity on the Brexit negotiations, leaving significant question marks about how the UK will trade in future, which is a major concern for all in farming, given the global nature of our markets and input supplies.
Many outside factors will continue to affect farm incomes, so how can we ensure the future of our businesses?
1) Focus on the factors you can influence and manage. There is no point stressing about the things you have no control over.
2) Take the time to review the objectives for the business and your family. What do you want from the farm and how can you develop a sustainable system, that will take advantage of the much-publicised new emphasis on support payments moving away from agricultural support to ‘public good’.
3) For many years, many successful farm businesses have focused on maximising output but this has risks. Many dairy businesses have faced a forage shortage through the year. Would carrying fewer animals but ensuring the maximum production of home-grown feeds and less reliance on purchased feeds help? It could certainly reduce the stress on animals, staff and the financing of the business.
4) There may be opportunities to review cropping to reduce the risk of weather events affecting forage production and improve soil management.
5) Taking on extra land is a risk and every opportunity needs careful thought. Will that land be as productive as it might be or will it simply be better to farm your own land more intensively?
6) Another vital aspect where planning is essential to reduce risk is the issue of succession. Having a clear plan where all members of the family understand the priorities and business direction can help meet their objectives and let the business evolve without undue shock waves and financial worry.
7) Not all family members may want to be involved in the farming business in the future, and making plans early for tax efficient allocation of assets will reduce the risk on the business.
During these winter months, ensuring there is an understanding of the short and long-term risks facing your business and drawing up clear plans to mitigate them will be a core part of developing a successful and sustainable business.
For further advice on this subject please do not hesitate to contact me or your local Thomas Westcott contact.