Agri View Winter 201718

Rural update from fishergerman.co.uk

Winter 2017/18

Walking an uncertain path 02 Welcome

From David Merton

03 Harry’s View

The impact of raising taxes

04 Dairy farming

Is it time to go back to basics?

05 Protect your land

08 How the land lies

12 UK agriculture

Find out where you stand when it comes to public rights of way

From subsidies to labour, farm businesses have much to think about in leaving the EU

14 Farm machinery

06 The land market Despite uncertainty there are reasons for optimisim

10 Model farm Business on the virtual farm

Brexit’s unanswered questions Find success selling at auction

15 Meet the team

Introducing key personnel

Fisher German Agri View

Welcome With more changes ahead in the wake of Brexit, for many this is a time to refocus... welcome to Agri View

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David Merton Head of Rural Sector, Fisher German LLP 07770 333331 david.merton@fishergerman.co.uk

s the UK exits the European Union many farmers and landowners should prepare for a fall in the proportion of their income derived from traditional agricultural practices. However, they are no strangers to fluctuating fortunes and uncertain times; there is opportunity to focus on maximising alternative income streams. In this issue we hear from our farms team about how best to prepare for what will certainly mean changes in the key factors which affect UK farming after Brexit.

Although agriculture remains at the core of many farms and estates, making full use of all assets and resources available to create a range of income streams and capital growth is key to provide opportunity for income growth over the long term. With the acceleration of consumer interest in home-produced food with good provenance and traceability, there will be increasing opportunities for market-orientated farms to create viable businesses in this area. In this issue we highlight the growing market for raw milk where a number of farmers are cutting out the retailer and selling at the farm gate, direct to the consumer.

We also have an update to our Model Farm, with the results of the

2017 harvest and legislation updates that all should be aware of.

Farmers and lifestyle buyers are protecting the land market. Better quality commercial agricultural land, priced appropriately, continues to be sought after, attracting buyers albeit from a reduced pool of interest.

There are committed buyers with cash available and well-financed businesses looking to grow and expand. Those farmers with ‘rollover’ funds and progressive farming businesses continue to seek out opportunities as close to home as possible; we give our thoughts on the outlook for the land market.

However, as our chairman Harry Cotterell warns, with headline figures of the rates of income tax, national insurance and VAT highly sensitive politically, we can expect the Government to look further afield and to be more imaginative in how they look to tax. One of the most obvious asset classes to come under scrutiny will be property.

Front cover and supplementary images: iStock

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Austerity and tax / Winter 2017/18

Harry’s view With a likely rise in taxes required to bring an end to austerity, there could be far-reaching consequences for the housing market and house-building economy ne of the consequences of the Government’s proposal to end austerity is the absolute certainty that more money will be required to fund public spending and reduce the deficit. The Government has only two options to raise cash – they can borrow or they can raise taxes. On the assumption that the predicted slow down in the economy – coupled with the cost of leaving the EU – is likely to require an increase in borrowing and a deceleration in the deficit reduction process, in which the Tories have staked so much of their reputation for sound stewardship of the economy, it is a fairly safe bet that taxes are set to rise for all but the lowest rate taxpayers.

Raising taxes, while unpopular, is politically neutral for a Conservative Government in the current political climate as Labour are currently proposing what is a virtually unprecedented hiking of public expenditure ranging from the abolition of student debt, the scrapping of the PFI and a range of re-nationalisations that will require an eye-watering revamping of public sector finances.

Because headline figures of the rates of income tax, national insurance and VAT are politically highly sensitive, we can expect whatever Government is in charge to look further afield and to be more imaginative in how they look to tax, and one of the most obvious asset classes to come under scrutiny will be property. Property is attractive because, beyond the owner occupier,

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the majority is concentrated in the hands of either the wealthy or large corporations, and most proposals to tax property are quite popular when polled. The mansion tax, when it was proposed by Labour at the 2015 election, got an approval rating of nearly 70%, and the penal rates of stamp duty and capital gains tax (CGT) imposed on foreign entities have proved popular with the majority of the public, as has the maintenance of the rate of CGT on profits from second homes.

The introduction of new or higher taxes on property are easily administered and reasonably cheap to collect as property cannot be moved and values, gains or profits can

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be easily assessed and collected.

However, virtually any change to a tax regime impacts behaviour, and as we can see in London residential at the moment, if the tax is on transactions it can slow down market activity to the extent that property is only traded out of necessity. It does not take much imagination to see a Government with a commitment to build large numbers of new houses (a policy shared by all parties) finding land supply has dried up and resorting to compulsory purchase to achieve its objective.

Harry Cotterell OBE Chairman of Fisher German harry.cotterell@ fishergerman.co.uk

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Fisher German Agri View

Let’s drink to raw milk Dairy farming has suffered in recent years, but a back-to-basics approach can help it to become a cash cow again n these days of political uncertainty, clean eating and sensationalist anti-dairy press, the future of dairy farming appears murky. Milk prices have been in decline since 2014; the price as at September 2017 was 27p per litre. Of the 9,633 dairy farms across the UK, 300 stopped trading in 2016 alone.

The number of dairy farms has halved compared with 10 years ago, when the figure was 20,313. The statistics speak for themselves but, from personal experience, the number of times I have entered a farm to see a dilapidated, eerily quiet milking parlour is too frequent.

Increasing pressures on farm profitability and the exponential rise in non-dairy substitute products are further compounding the problem for many dairy farmers. All too often, the voices of animal welfare groups and their supporters are heard more loudly than our farmers and the public should be reminded that in the UK we have some of highest animal welfare standards in the world. This covers all aspects of livestock farming, not just the dairy sector. In January, Sainsbury’s reported that sales of its new ownbrand vegan cheeses were 300% greater than it had anticipated.

However, there could be a light at the end of the tunnel. A number of farmers are cutting out the retailer and selling raw milk at the farm gate.

Raw milk is unpasteurised and goes straight from udder to bottle. Vending machine-type structures are erected to allow the product to be sold

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directly to the consumer. So far, for many of these entrepreneurial farmers, the vending machine approach is working. Inviting the consumer to the farm tackles many of the above issues head-on as the customer drives through the farm gate and can see for themselves how a British dairy herd is run. It provides an outlet for the farmer’s voice to be heard on a much more personal level.

The reason for the success of raw milk is the quality of the product. It is richer, creamier and more luxurious when compared with its supermarket counterpart. This is not to mention the reported health benefits that come from raw milk due to its higher nutrient content and high probiotic content.

At £1 per litre, it doesn’t break the bank yet it ensures the margin is put back in the farmer’s pocket.

As with any business, location is key.

Farms situated next to busy roads, close to towns or a tourist attraction will prosper. Farms that are less accessible need to be well signposted to make them as simple as possible for the consumer to reach. Marketing is also important. The benefits of purchasing raw milk on farms need to be properly advertised and a brand established. Use of the internet can make marketing relatively cheap and hassle-free.

Any farmer looking to explore this option will need to consider how their objectives can become a money-spinning reality

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£1

At per litre, raw milk doesn’t break the bank yet it ensures the margin is put back in the farmer’s pocket and a robust business plan is crucial.

Due thought and advice should be taken on the planning implications, landlord and tenant matters (if it is a let holding) and ultimately funding.

Raw milk could help some farmers to future-proof their business through a slightly diversified income while continuing to provide liquid milk through a traditional contract.

Isabel Bingham Fisher German LLP 01844 267948 isabel.bingham @fishergerman.co.uk

Section 31 deposits / Winter 2017/18

Protecting your land When it comes to public rights of way, you should know where you stand – and where people can, if they so desire andowners and occupiers of land have responsibilities when it comes to public rights of way. Such thoroughfares can cross land in a number of different forms, from footpaths and bridleways to restricted byways and byways open to all traffic; they are normally recorded on the ‘definitive’ plan held by the local council.

The maintenance responsibilities for these rights of way are usually split between the landowners and the highways authority. The majority of paths are maintainable by the local highway authority (usually the county council) and the landowner or occupier has responsibilities that include not to obstruct public rights of way and to maintain any stiles or gates.

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AS A LANDOWNER CAN YOU BE SURE THAT THE PUBLIC ARE USING THE CORRECT RIGHTS OF WAY OVER YOUR LAND? As a landowner, you can protect the rights of way crossing your land holding through a declaration made under Section 31 (6) of the Highways Act 1980.

The need for a declaration may be particularly important if you have previously granted a permissive path under a Countryside Stewardship scheme and funding under the subsequent Higher Level schemes was not an option. If you have not notified the public adequately that these permissive paths are no longer

“The landowner or occupier has responsibilities that include not to obstruct public rights of way and to maintain any stiles or gates” in existence, you could be at risk of creating a new public right of way.

Public rights of way such as a footpath or a bridleway can come into effect by deemed dedication if created without force, secrecy and without permission, and if it has been uninterrupted for at least 20 years.

The Section 31 application confirms the route of any rights of way crossing the land and states that there is no intention to dedicate any further routes to the public through the declaration process. The application is made to your local authority,

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with a scale Ordnance Survey map and fee, if appropriate.

You may have previously made a declaration to a local authority; this should continue to be renewed every 10 years. However, new regulations came into effect on 1 October 2013 confirming any statements submitted after this date would be subject to a 20-year renewal cycle.

Louise Duffin Fisher German LLP 01858 411233 louise.duffin @fishergerman.co.uk

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Fisher German Agri View

Grounds for optimism Factors such as slower sales and Brexit may have created uncertainty in the land market but there are reasons to be positive too s the agricultural economy continues to come under pressure, location and productivity have become increasingly important and are dictating values achieved across the land market. The two-tiered market has further widened the disparity in values achieved, as purchasers become increasingly selective and cautious over where and in what land to invest. Such localised values are evident not just on a national and regional level but within and between neighbouring parishes.

Farmers are protecting the market as better quality commercial agricultural land, priced appropriately, continues to be sought after, attracting buyers albeit from a reduced pool of interest. There continue to be committed buyers with cash available and well-financed businesses looking to grow and expand. Those farmers with ‘rollover’ funds and progressive

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farming businesses are continuing to seek out opportunities as close to home as possible.

Mixed farms and estates with varied income streams remain popular, with poorer quality land in less accessible areas experiencing some downward pressure on values.

As the level of interest has reduced across most sectors, sales have been harder to achieve, especially where guide prices and expectations are set at more hopeful levels.

Logical and sensible guide prices must be seen to encourage the widest number of buyers.

The volume of land available on the open market remains close to historically low levels, and with continued pressure on agricultural incomes, farmers approaching or of retirement age are often taking the opportunity to restructure or opt out, leading to a number of disposals. Debt remains a secondary and increasing reason for sale. The restricted supply

has allowed us to produce some exceptional sale prices in 2017.

Looking forward, values will likely be dictated by future Government changes and, most critically, the Brexit negotiations; with ongoing political and economic uncertainty, both buyers and vendors approach the market with caution. As the land market tightens, average values are likely to remain stable in the short term.

If there is a substantial reduction in subsidy income to British farmers, as the UK exits from the EU, this may have a significant impact on the availability of land. Businesses may be forced to structure and rationalise their farming practices. Longer term investors appear less concerned based on the limited supply of farms and land coming to the market.

While we believe a reasonable proportion of the current Basic Payment Scheme monies will be redirected towards environmental schemes, we anticipate that securing these monies will require

Herefordshire Council smallholdings The sale of the Herefordshire Council smallholdings portfolio saw more than 4,000 acres presented to the sale market in 59 individual lots with an accumulative guide price of circa £38 million. This complex sale of farms, mostly with vacant possession plus some investment farms subject to lifetime tenancies, attracted enormous interest and competitive tenders that reinforced Herefordshire as

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a county of significant agricultural importance with dynamic agri-businesses seeking opportunities to expand. Acting as sole agents, the Worcester and Hereford offices of Fisher German, which handled the project, have been delighted with the level of sales, many of which have indicated a reversal in the view that the agricultural land market had plateaued.

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Land market / Winter 2017/18

“Agricultural Property Relief remains an important consideration for many buyers” additional effort and expense, above existing compliance policy.

It is likely that those with better quality arable land will be the most affected as support is likely to prioritise areas where farming is handicapped by geography, topography or climate.

However, uncertainty for some offers opportunities for others. The farmland market is resilient and the current political tax regime and weak sterling offer some support. Agricultural Property Relief remains an important consideration for many buyers, as does the generally low level of risk involved from an investment outlook.

Potential interest rate increases are more likely to impact the short-

term market sentiment over the coming years, particularly if commodity values, and thus incomes, shift downwards.

With support payments guaranteed until 2020, it is unlikely that the volume of land coming to the market will increase in the short term as certainty is sought.

Downward pressure has been building on arable rents alleviated by increases in commodity prices mainly due to sterling weakening against the US dollar and the euro. Those on Agricultural Tenancies Act rents have been the most affected as these are market produce price driven.

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Richard Gadd Fisher German LLP 07966 481487 richard.gadd @fishergerman.co.uk We are delighted to announce the recent arrival of Richard who comes from a farming family in South Nottinghamshire and benefits from ‘hands-on’ experience of farming.

Richard’s specialisation is the sale and acquisition of farms and agricultural land and he will be playing a leading role in that part of our business. Richard will work throughout the UK and will be part of our National Country Agency Team.

David Merton, Partner in charge of our Rural Sector commented, “Richard has a strong track record in both selling and purchasing and will be a great asset for our clients.”

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Fisher German Agri View

How the land will lie after Brexit From subsidies to labour, farm businesses have much to ruminate regarding the UK’s withdrawal from the EU iven the Government’s stated policy in Brexit negotiations of revealing as little as possible about its intentions, it is difficult for UK farm businesses to plan their futures with any degree of certainty.

However, farmers and landowners must do as much as they can to prepare for what will certainly be huge changes in the key factors that will affect UK farming after Brexit.

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BACKGROUND STATISTICS UK farming currently exports 38% of its lamb production to the EU and 26% of its pork production. However, the UK overall is still only 76% self-sufficient in home-produced food products and 62% self-sufficient in all food products.

This level of self-sufficiency is reducing as the population increases and our output remains static or falling.

The area of productive land per person in the UK is falling year on year, so we are now at a level of just below 0.1 hectares of productive arable land per head of population. This is at a similar level to India and well below nations such as Germany and France.

Many commentators both inside and outside the industry would point to farm subsidies as a reason for continued lack of productivity, an inability to improve our exports and indeed grow more of our own food.

IMPACT OF BREXIT While subsidies may ensure that farming activities continue in areas that would otherwise be unviable

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and almost certainly represent the vast majority of profit currently generated by most farm businesses, they have a limited impact on the profitability and viability of mainstream agricultural enterprises as opposed to land ownership. Increasingly, professional producers are expanding by way of land rental and management agreements which effectively exclude subsidy income.

Many specialist dairy, vegetable and increasingly combinable crop producers receive no subsidies within their farming business.

In the future, subsidies will be directed towards wider issues

relating to management of the environment, such as flood alleviation. We expect remaining land-based subsidies to be focused on environmental stewardship and conservation similar to the current countryside stewardship schemes. The Government has also confirmed that it intends to direct a substantial proportion of the current subsidy total towards improving productivity through technology and maintaining populations in rural areas through assistance in diversification.

It is clear that the current system, whereby a flat rate of subsidy is

“The UK is 76% self-sufficient in home-produced food products” fishergerman.co.uk

Brexit / Winter 2017/18

available purely on the basis of owning or occupying land, will end.

The Government has confirmed that it will not seek to be a member of the EU single market or Customs Union going forward but wishes to secure a favourable trade deal with the EU alongside trade deals with other countries outside of the EU. Many of these other countries will have strong agricultural sectors and see the UK as an opportunity to increase their exports, thereby posing a threat to UK food producers.

Clearly the currently low value of sterling protects the UK to some extent from these exporters but after Brexit we will be exposed entirely to this world market and any increases in the value of sterling will make our products less competitive.

Whilst all this uncertainty clearly represents a threat, it should also be seen as an opportunity as certainty of supply for UK consumers will become a much more important factor. Currently, the UK and particularly UK supermarkets can access fresh produce at 24 hours’ notice from the EU and further afield.

This situation may well change after Brexit, if tariffs and other barriers are imposed on our borders.

UK agriculture, particularly in the soft fruit and vegetable sectors, has benefited hugely from the availability of foreign labour. Given the stated intention of the Government to reduce the number of foreign people who are eligible to work in the UK after Brexit and the reduced economic benefit to those people due to devaluation of sterling, this position will undoubtedly change. While initially the impact will be on the cost of labour, more importantly, alternative labour will simply not be available to these enterprises.

Many will have to look to increased investment and mechanisation in order to redress this reduction in labour availability.

“In many ways, reduced subsidy levels may actually assist specialist agri-businesses that wish to expand as the availability of land to them will probably increase” EFFECT ON UK FARM BUSINESSES AND LANDOWNERS We expect the substantial change in the subsidy system to impact mainly on landowners; they will need to be prepared to diversify to generate other income streams. While it is impossible to forecast this change accurately, we are recommending to clients that they should plan for a reduction in net subsidy income of 50%. We expect the biggest impact to be felt by medium-sized owneroccupied businesses of between 500 and 1,000 acres, which have effectively used subsidy income to fund their living expenses for some time now. They will have to make substantial changes to their businesses to deal with the expected changes in their financial situation.

In many ways, reduced subsidy levels may actually assist specialist agri-businesses that wish to expand as the availability of land to them will probably increase; they will be able to expand on a lower-cost basis.

Given the acceleration in the interest of consumers in homeproduced food with good provenance and traceability, there will be increasing opportunities for market-oriented

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farm businesses to create viable businesses in this area.

Those businesses which fall between smaller-scale niche market operators and large-scale, efficient, technically excellent operators will find it very difficult to remain viable in the future.

Overall, we would suggest that farm businesses and landowners in the UK should prepare for Brexit by: • Planning for a substantially reduced income from subsidies • Focusing their output on market needs, both domestic and exported • Reducing costs of production by expansion, further mechanisation and investment in technology • Aiming to become more technically proficient • Investing in technology to reduce reliance on non-UK labour • Expanding to increase return on capital invested • Where income from subsidies is a key element of income stream, aiming to diversify into other sectors • For smaller businesses, or those that do not wish to expand dramatically, specialising in direct or near-direct sales of farm produce.

Richard Sanders Fisher German LLP 01858 411234 richard.sanders @fishergerman.co.uk

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Fisher German Agri View

Model farm

TIGER FARM is a virtual mixed farm based in Leicestershire.

240HA 128HA 40HA 111HA

Owned Agricultural Holdings Act Tenancy Five-year Farm Business Tenancy Contract Farming Agreement

Tiger Farm is a virtual farm that has been created by the Fisher German farms team to model the different business dynamics and scenarios that are often faced by real farms LEGISLATION UPDATE Greening changes As winter crops are established, it is important to ensure that greening requirements for the 2018 claim year will be met.

Several changes were announced in summer 2017, including: • Pesticide ban on Ecological Focus Areas (EFAs), including nitrogen-fixing crops, fallow areas, catch and cover crops.

• Buffer strip definition extended to include field margins. These margins must be at least 1m wide, and may be located against, for example, a watercourse or hedgerow. 1m length of field margin equates to 9 sq. m of EFA. • EFA catch crops must remain in place for at least eight weeks, from 20 August 2018 until 14 October 2018.

Previously, Tiger Farm had met its EFA requirements by growing spring beans.

Due to the pesticide ban, it will no longer be commercially viable to utilise the beans area. Therefore, a combination of hedgerows, buffer strips and fallow land (arable margins and unproductive field corners not included in the new Countryside Stewardship scheme) will be used.

This is likely to be the case for many claimants; it would be prudent to measure these lengths and areas ahead of the claim period to check that the requirements can be met, if this has not already been done.

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SHEEP UPDATE Lambs are extensively finished at Tiger Farm, meaning the first lambs will be ready for slaughter by the middle of July. Through the months of July and August, lamb prices were running between 182p/kg and 200p/kg, an increase of 2-10% on 2016 (liveweight prices sourced from the Agriculture & Horticulture Development Board).

The budgeted price for fat lambs was £80/head for a lamb finished to 42kg live weight. These prices equate to £76-£84/head before auction costs. This is the continued

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influence of exchange rate factors – however, it must be noted that input costs have also risen.

A robust replacement policy is essential to maintain flock performance – ewe replacement rates vary between 20% and 25%, with mortality rates at 4-6%. Strict culling regimes must be maintained.

The cull trade for September has run between £55 and £62 per head, below Tiger Farm’s budget figure of £65. Higher prices were available earlier in the summer, with the cost of replacements between £125 and £135 for crossbred theaves against a budget cost of £128 per head.

Model farm / Winter 2017/18 OWNED BY THE FOX FAMILY, the parents and eldest son work on the farm along with a full-time farm worker.

There are two other children not currently involved with the farm. The farm uses seasonal labour as required.

A farmhouse, cottage and buildings are located on the Agricultural Holdings Act Tenancy.

FARM UPDATE As with many similarsized farms with little diversified income, there is a heavy reliance on the receipt of the Basic Payment subsidy at Tiger Farm. Within the budget for the year ending 31 March 2018, the Basic Payment represents 132% of the profit after capital movement.

The prospect of the erosion of direct payments has prompted the Fox family to look into how resilient their business is in preparation for the uncertainty that the Brexit process will bring.

Among analysis more specific to each enterprise, the Fisher German

Images: iStock

ARABLE CROPS UPDATE

KEY DATES 31 December 2017: Submission deadline of Annual Inventory of Sheep and Goats to DEFRA. 1 January 2018: Start of 2018 Basic Payment Scheme year – relevant rules to be followed from this date.

Start of EFA period for hedgerows and buffer strips; fallow areas must be in place until 30 June.

1 January 2018: Start date for new Countryside Stewardship scheme NB: Even if Natural England has not confirmed acceptance to the scheme, farmers must comply with options they have applied for.

Harvest results (right) Just over half of the feed wheat was second wheat, which underperformed, producing 7.8t/ha, whereas first wheats averaged 9.5t/ha.

Winter barley again disappointed and, as discussed in our spring update, is only just profitable at current prices.

2018 crop establishment Winter oilseed rape was established in August, but despite more than adequate moisture, the crop was slow to establish. Cabbage stem flea beetles were again a problem

Current enterprises comprise combinable arable crops and a flock of mule ewes, currently finished extensively.

Brexit health check process will review the previous three to five years of accounts, stress-testing finance arrangements for changes in interest rates, remove or reduce BPS from future budgets, focus on cost of production for all commodities, establishing accurate break-even price levels for individual enterprises, and assess the impact of changes to the labour market induced by a reduction in the migrant labour force.

Not all farming businesses are in a position to diversify easily; the conclusions from our Tiger Farm Brexit health check will be included in the next update.

Crop Winter Wheat (feed) Winter Wheat (milling)

Budget Yield t/ha

Harvested Yield t/ha

Variance

9.5

8.5

-11%

9.3

9.4

+1%

Winter Barley

8.5

7.5

-12%

Winter Oilseed Rape

4

4.2

+5%

Spring Beans

4

4.1

+2.5%

and the farm is considering options to mitigate this pest. While earlier drilling and higher seed rates might help alleviate pest damage, it can leave the crop vulnerable to disease and lodging later in the season.

Drilling of winter wheat was delayed until October. A moist September had enabled the farm to employ stale seedbeds ahead of drilling.

Tom Paybody

Charlotte Gore

Fisher German LLP 07870 807236 tom.paybody@ fishergerman.co.uk

Fisher German LLP 07785 425317 charlotte.gore @fishergerman.co.uk

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Fisher German Agri View

Committed to supporting UK agriculture The vote to leave the EU leaves a lot of unanswered questions for agricultural businesses, but they are no strangers to uncertain times, says Andrew Naylor, Managing Director at AMC and UK Head of Agriculture, Lloyds Banking Group

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longside all the usual challenges of fluctuating commodity prices and the great British weather, 2017 sees us living in a post-Referendum, pre-Brexit period, with uncertainty on many of the issues that matter most to UK agriculture.

OPPORTUNITY AND INVESTMENT While we await more news from the Government’s negotiations on the terms of our EU exit, there are some implications that seem inevitable – potentially lower farming subsidies and less access to European seasonal workforce, for example.

But there are also plenty of potential upsides, and farmers are still moving to invest in the opportunities coming their way. Agriculture is generally stronger in the short-term thanks to the weaker pound making homegrown produce more attractive to consumers than expensive imports. Wheat, barley and rape prices are up 20% since the referendum, while livestock farmers have seen reduced price competition from foreign suppliers. While the weaker pound has also driven up the price of imported feed, that plays into the hands of home-produced feed suppliers. We can look forward to

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greater control over access to fishing in UK territorial waters and there is more land for sale, providing good investment opportunities.

FUNDING FOR THE FUTURE The industry has met the current challenges with typical resilience, and over the course of the year we’ve seen strong growth in the number of businesses looking to secure funding for investment.

Our lending book continues to grow at a strong rate and that points to robust confidence in the sector, particularly in the short-term with farmers looking to invest in growth, consolidation and diversification plans.

We have witnessed a reduction in lending for land purchase in 2017 compared with 2016, although top quality land in the right location remains in strong demand. But, while the best land is maintaining average values, there is a gradual continued

polarisation between the good quality, well-located land and that in less accessible locations.

The level of land purchase transactions contributed to a record year for us last year, and our overall lending figures for 2017 have so far shown a similar picture. While applications for land purchase currently account for about 40% of new business, there has also been funding growth for the restructuring of existing borrowing and for investment in diversification projects.

PROVIDING LONG-TERM SUPPORT Despite the uncertainty surrounding Brexit, many in the sector see opportunities ahead for British farmers to play a much stronger role in shaping UK agricultural policy to meet their needs.

Continued demand for good quality land in the right location and price

“We’ve seen strong growth in the number of businesses looking to secure funding for investment” fishergerman.co.uk

AMC Andrew Naylor / Winter 2017/18

growth also builds confidence. And, we are also benefiting from a period of incredibly low interest rates, even though the Bank of England has recently signalled that there may be a gradual increase in the not too distant future.

Faced with a volatile macroenvironment, knowing you have options, including the fixing of borrowing at historically low rates for up to 30-years, is proving to be reassuring for many.

existing produce by making artisanal ice cream or crisps, for example. Many farmers have also turned to tourism, hosting a B&B or day visitors.

When embarking on a new venture, it’s important to do your research first.

What is the market like? Is there any local competition? Think about the skills and knowledge that you and your team already have and how they could be used to add value to your business.

DELIVERING GROWTH THROUGH DIVERSIFICATION

Additional funding can be important to help these businesses invest in their

HERE TO HELP

One of the ways farmers are responding to volatility, for example, is by investing to broaden their income streams with the launch of new or complementary ventures. From event venues to biofuels or new poultry units, agricultural businesses are increasingly focusing on new ways to mitigate volatility.

Indeed, Government figures show 62 per cent of traditional working farms have developed an additional income stream. That can be through raising more exotic livestock, like rare breed pigs, or by adding value to

future while alleviating working capital pressures, especially during the important early set-up and growth phases of their plans.

There will, inevitably, be further challenges across the sector over the coming years, but our long-term funding focus aims to support farming and agricultural businesses through current and future generations.

We’re committed to helping Britain prosper by being open for business, and that means working to support agricultural businesses and help enhance the efficiency of production in a sustainable manner.

Andrew Naylor, Managing Director at AMC. AMC loans available for business purposes only, provided on a secured loan basis. Minimum AMC standard loan £25,001, minimum flexible facility £30,000. To meet customer requirements, lending criteria will vary.

Lending is subject to status.

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Fisher German Agri View

Farm machinery When it comes to selling agricultural equipment, we recommend going where the auction is hether it be retirement, business reorganisation or simply surplus stock, the on-site auction remains an effective way of disposing of farm machinery quickly and efficiently while providing complete transparency.

Selling items individually, by way of either private or direct-to-trade sales, can be a time-consuming process.

However, a machinery auction is a much quicker and simpler method of sale. Larger, more valuable items create exposure and interest, which then benefit the sale of smaller lots. These are often more challenging and take longer to dispose of. Buyers will frequently attend an auction with the intention of buying a particular item, but discover on the day other items also of value to them.

The auction will take place at a designated time, with potential private and trade buyers. Our auctions are

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advertised on both a local and national scale, ensuring your equipment has the widest possible coverage to the market and the best price is achieved on the day.

Fisher German LLP has significant experience in arranging sales and selling machinery at auction. In the last five years, we have sold more than £2.5 million-worth of machinery and equipment nationally. We have the benefit of portable offices, specialist on-site computer systems and dedicated professional staff, on hand to deal with any queries or issues.

Our connections and expertise give us exceptional knowledge to value farm machinery for formal valuation purposes. If you are considering business reorganisation or retirement, with a requirement for the disposal or valuation of farm machinery, plant and equipment, please contact Sam Skinner or Jack Healy, who will be delighted to advise on your options.

Sam Skinner

Fisher German LLP 07810 378188 sam.skinner @fishergerman.co.uk

Jack Healy

Fisher German LLP 07551 152689 jack.healy @fishergerman.co.uk

Agri-Facts Keep up to date with the latest news in agri-business

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The Euro set for 2016 BPS paymexchange Basic rate has Payme European ents for been Engla nt Sch set for nd are The prev Central eme calculati Bank set exchange in Euros The Rura ious year (BPS) ng 2016 ’s payme Basic rates and then window l Payments exchange conv Paym set nts rate ent Sche The RPA in Decemb Agency (RPA for 2015 in Septemb erted into me (BPS er, will sterling er. makes ) will mak BPS was be €1 ) paym and all paym €1 e full ents. paym = £0.73129. = £0.85228. the rate, an ents direc Waste ents on average tly into exemp 2016 of the bank BPS claim tion rem Waste acco exem s from unts by inder at www ption the open BACS .gov.uk/g registratio transfer. ing of uidance/ ns last for the paym register-y three year ent Russia s our-w aste-exeand many set to mptions-e will expir overtak The UN e this nviro Food e autu EU as season. nmentaland Agric mn. They world's perm ulture can now the RomWith whe its No.1 Orga at, rice be re-re grain coming e-based and pote nisation giste agric (FAO exp year. red onlin ntial ulture ) orter FAO e organisatly, after a has declared said that the ion said bumper with rebo in a relea US soyb world food se last unding ean harv is head mark wee maize Worldwid ets are est, oilse ed for output, k that “Rec likely record e cere pegg to rema eds all on are help ord glob wheat al prod ed track in “gen ing keep al prod uctio overtake at 742.4 for recoproductio Month (ex farm) n in million erally inventori uction forec the Wheat but well bala rd prod n this tonnes 2016 is set as es amp FAOFeed EU asts for Feed Barleyto rise uctio this July 2017 nced rema the world le and Oilseed this year to 2,569 Rape ” over n, ’s large year, with ins conf In fact, £140.00/t Currency price 's whe India the million st whe £119.00/t s low.” ident Aug 2017 at and tonn to FAO as a result at expo , the USA £320.00/t that of these rice harv £131.00/t , cere rter, acco and Russi es, up 1.5%£/€ = 1.1476 the less econ al-ba rises, the £109.00/tlevels Nov 2017 ests, alon a lead from rding sed food of prod £292.00/t omic 2015. ing prod £136.00/t to FAO from €/£ = 0.8687 g s and total FAO value this state ally secu uctio £115.00/t uctio Milk Data of food anim n seen analysts. re area £303.00/t n incre has wheat of affai Av Monthly Proje In its impo $/£ s of the al products =cted 0.7763 Price ases; productio will keep rs. rts is Russia UK Farmgate Milk Priceline assessme world Top Contract wheat n , who will record expected nt, FAO supplies is poise use is with dem 27.28p/litre se curre to fall Annual Average falls also set d to said ample Muller Milk - Tesco that Fuel/Straw/Silage and after by that ncies However to jump and are gene offset rising11% in dolla 28.61p/litre a long demand for , price , desp Price (mak rally depr fruit and r terms perio Red diesel s low.

Fertiliser oilseeds ing food ite the this year d of exce vege eciating Orga 53.49p/litre is Price likely . price nisation’s ss to outst prodN are likely table price According 34.5% Big Sq baled wheat Cro s 10% AN (Bags uctio UK) straw ss rip£/tonne n. supply, £185 - £190 to be slow s. However Com£54/tonne higher than assessment and that Big bale hay pliance of glob they er to bene , 0:24:24 (Bags) £/tonne were al Date dairy £55/tonne £245 trend £255 fit this time key dat productio s, its mon Finished Pigs 20:10:10 last year (Bags) es £/tonne n is likely 1 st Oct 6th May ). (AM) thly Food £230 - £240 13th May to fall Regu p/kg dwt Price 20th May into lation 1 st Oct th May 154.99 27Inde x rose 155.60 by 2.9% Finished Steers CAP 156.35 from 6th May 157.22 Augu th May GAEC 13Cove p/kg dwt r crop 1 st Oct st 6 20th May must 352.40 27th May You may be esta Desc 354.40 Finished Lambs ription blished burn 355.60 areas heat SMR 1 6th May for EFA 357.00 from 13th May this dateher,20 by this p/kg dwt roug th h 1 st Oct You may gras date th (until May 406.60 (until 15 April s, gorse or 27 May 412.90 no long cont 15 Janu 1 st Oct ent to vacc ).

480.60 er BPS - late submissions ary) inium 498.30 tillage apply orga EE12 (until on land 31 Jan. land 15 th Oct and amendments nic man on in You ). soils whic upland ure EJ2,10 must The BPS deadline for not cut submissions h are with a high not shall up until 9th June. Applications without attracting from penaltiesMaiz read was e 15th mustMay but it isthis received after SMR still date 1 possible to make a lateow or sandily available be harv midnight accepted but will be on (unti 15th application May You may 2017, buteste N subject y from l 31 July) before d by midnight accepted. These deadlines to a 1% penalty for each working this date nolate. this date on 9th. June 2017 will be contentday longApplications conta are also applicable for applications made after er app .

Entitlement applications, 9th June will not be ct Ricfor the latter (until to to thegras ly orga Young slandFarmer 31 Jan. nic man and Young & New Farmer hard www.falthough penalty is increased on soilsPayment ). to 3% per It is also possible to make Santhe ure with working whicday ishechanges late. some ders – which h rgerma to an application up until 31st May and not shall a high read 01858was submitted by the May are Fisher between 31st May and n.c ow or ily avai deadline without 9th Germ June, but a 1% o.u 410200 penalties sand an is • Adding a landRegis k/rural- penalty will apply, these include: y from lable N a tered parcel; office limited this date consu • Increasing theRegu latedarea : 40 High liability partn eligible by of ltancy/ parcel; r Germ RICS a landStree • Changing theFishe t, Mark ership, regist use’ anof all‘land farms a has et Harb parcel; the advic LLP ered • Increasing the area in oroug tried e needto activate required h, LeiceEngland and to ensur ed entitlements.  

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stersh ire

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June 2017

other farming matters

s.

racy Regis LE167 decis To change an already and cann tered ions.

NX submitted online application, numb ot acce er: OC31 submit the new version. claimants must pt liabili 'create' 7554 The RPA needs to be a new ty for one, complete the changes application submitted informed via an email any errors and then by the that an amendment , fact has been made penalty, unless the claimant deadline. It is possible to withdraw an or opini to an application or part has been notifiedem of a claim ail:error of an aton.

Pleas any or of an inspection. time farm e dowithout (IT)

Renewable Energy in

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n.co.u Latest Eurostat data reveals the EU is on track k to reach its target of energy from renewable www.fi 20% renewable energy sources reached 16.7% sherge by 2020. In 2015, in the EU, this compares therma share of with just 8.5% in 2004. n.c (IT)

email: farms@fishergerman.co.u

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14

fishergerman.co.uk

www.fishergerman.co.uk

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o.uk

Meet the team / Winter 2017/18

Meet the team…

Our 16 offices provide local experts in all these work areas. If you would like guidance on any rural property matters, please contact one of us and we will ensure you get to talk to the very best advisor

Stuart Flint Head of Agency Sector Farms, Estates and Country House Sales 07501 720422

David Merton Head of Rural Sector Estate Management and Strategic Consultancy 07770 333331

stuart.flint@fishergerman.co.uk

david.merton@fishergerman.co.uk

Tom Heathcote

Darren Edwards

Holly Parry

Charles Meynell

John Ikin

Farm and Business Consultancy 07918 628983

Sustainable Energy 07918 677571

Expert Witness 07836 212307

tom.heathcote @fishergerman.co.uk

darren.edwards @fishergerman.co.uk

Valuation and General Practice 07501 720416

Compulsory Purchase 07887 627978

Kay Davies

Ben Marshalsay

Planning 07733 124551

Development 07771 974322

kay.davies @fishergerman.co.uk

ben.marshalsay @fishergerman.co.uk

holly.parry @fishergerman.co.uk

charles.meynell @fishergerman.co.uk

john.ikin @fishergerman.co.uk

Richard Benson

William Gagie

Richard Gadd

Building Consultancy 07768 552827

Minerals 07551 152691

Farm Agency 07966 481487

william.gagie @fishergerman.co.uk

richard.gadd @fishergerman.co.uk

richard.benson @fishergerman.co.uk

Agri View is intended to be an informative guide. It should not be relied on as giving all the advice needed to make decisions.

Fisher German LLP has tried to ensure accuracy and cannot accept liability for any errors, facts or opinion. If you no longer wish to receive Agri View or any other Fisher German marketing material, email info@fishergerman.co.uk.

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