A leading lawyer has suggested that UK farmers should diversify if they want to avoid the risk of financial difficulty after Brexit.
Claire Barritt, a senior associate at Ipswich law firm Prettys, is urging farmers to “revisit their business plans” to ensure they are not caught out by potential cuts in subsidies when Britain leaves the European Union.
The value of commercial farmland is expected to fall by 3.6% in the wake of Brexit, and there are warnings that it is likely to be the worst-hit in the UK’s residential and commercial property sector. *
One of the major challenges facing British farmers is a possible reduction in the amount of subsidies compared to what they currently receive from the EU. Their annual subsidies are mainly based on how much land they cultivate.
However, Environment Secretary Michael Gove is planning to drastically reform the system, arguing that it offers too much help to larger farms and not enough to smaller ones. He is proposing that subsidies after Brexit will go to farms which deliver environmental benefits such as clean water, flood prevention and wildlife preservation.
Farms can prepare for the financial impact of post-Brexit changes by diversifying, says Claire, who will be discussing Brexit and the agricultural landscape at a Prettys’ Developers’ Club gathering this month.
“We still don’t know for sure what the long-term subsidy strategy of the Government is going to be post-Brexit,” she said.
“If, as expected, subsidies are reduced, then farmers will certainly have to look at diversification and efficiencies in how they run their businesses.”
Opportunities to raise additional income could include growing different crops, converting redundant barns to residential property and looking at ways to create commercial property as well as tourist accommodation.
Claire added: “An emerging school of thought is that the EU subsidy regime may have stifled innovation and entrepreneurial decision-making among some farmers.”
She was joined at a Developers’ Club meeting earlier this month at Suffolk Food Hall by William Hargreaves, director and head of rural at estate agents Savills’ Ipswich office.
He said it was encouraging that many farmers in the east of England are seeing the current political landscape as an opportunity rather than a threat.
“They are attempting to mitigate uncertainty by listening to new ideas and embracing innovation,” he explained.
“The concept of natural capital is a prime example of this and one which farmers and landowners will have to grasp if they are to take advantage of new government policy.
“Increasingly they will have to find new ways in which the public can benefit from their landownership if they want to diversify their income.
“To that end, it will be the farm business that evolves into a consumer-focused, environmentally friendly brand, differentiating itself in the marketplace, that is set to thrive.
“New development opportunities will no doubt play a part. Whether it’s converting an existing property into a holiday let, exploring the potential for recreational activities or selling parcels of land for new housing – dynamism and diversification will be key to any fruitful enterprise, as will the use of technology and adopting efficient farming systems.”
Prettys’ Developers’ Club will be heading to Essex County Cricket Club on 14 March where Claire will be discussing topics including why farmers sell their land, trends in rural land values and types of legal structures in place for development agreements.
Prettys has held its Developers’ Club for more than 10 years, bringing together surveyors, contractors, property developers and lawyers to network and gain insight into a number of big topics in the industry.