The phasing out of EU farm subsidies that helped create Europe’s once infamous ‘butter mountains’ and ‘milk lakes’ is one of Brexit’s less controversial opportunities, but the dairy farmer in Somerset Tom Kimber is now counting the costs of that decision in cold hard cash.
Kimber received £30,000 last year in European-style direct grants for his 450-acre farm in the South West of England, but from this year that sum – which is around a third of his profit annual – will start to decrease by around £6,000 a year. year, until it reaches zero by 2027 following Boris Johnson’s decision to end subsidies based solely on farm size.
In the South West of England alone, a new report by the Countryside and Community Research Institute, a rural research centre, calculated that the wider region – comprising Devon, Dorset, Cornwall and Somerset – would lose £883million in direct subsidies by the end of 2027 .
The Tories pledged in their 2019 election manifesto to maintain the £2.4billion annual budget of subsidies for England’s agricultural sector until 2024-25, promising to redirect direct subsidies to new management schemes Environmental Lands (Elms). Scotland, Wales and Northern Ireland have separate schemes.
Ministers say these will bring far greater benefits to the rural economy than the old system of direct subsidies, which led to the richest 10% of farmers taking half of the available money.
“Our plan for agriculture is the right thing to do,” said Agriculture Minister Victoria Prentis. “We’re spending the same amount of money, but it’s reallocated so that it actually supports our farmers for the work they do.”
However, Chris Short, co-author of the CIRB report, said farmers and rural businesses still face deep uncertainty about how the money would be reallocated to Elms and other initiatives, especially during the transition years.
“The concern is that by 2024 – when the new programs are available and the manifesto commitment to maintaining the existing budget ends – you are going to see declining funds as farmers struggle to adopt the programs,” he added.
In the meantime, farmers can use a calculator on a Department of Agriculture website that allows them to see how quickly their payments will decline, with larger farms experiencing faster drops.
Farmers like Kimber are therefore taking their own steps to fill the cash gap.
“We’re already putting plans in place to try and generate more revenue,” Kimber said. These include raising more Christmas turkeys for sale at the family farm store near the town of Wincanton and raising more replacement cows than in previous years so surplus animals can be sold.
The removal of direct subsidies to farmers will not only directly affect many of the UK’s 200,000 farms, but also all the diverse businesses – from veterinary practices and food dealers to solicitors and tractor dealers – who depend on farmers’ income.
“When an agricultural business stops trading, more than the business is lost because there is a wider impact, like ripples in the water when a stone hits, on the rural economy,” the report said. CCRI.
But Kimber, who voted for Brexit and doesn’t regret her decision even though it turned out “not quite as rosy as we were led to believe”, isn’t despairing. He thinks that while the removal of subsidies may push some farmers into early retirement, most will adapt.
One avenue to explore will be a range of new government payments and incentives that will be given to farmers in return for environmental improvements until the start of the Elms program in 2024.
Kimber has already applied for a Annual Country Stewardship Grant it will pay him £8,500 to grow 15% of his grassland as ‘herbal light’ – a rich mix of herbs designed to encourage pollinating insects. Crucially, unlike EU funds, UK government payments are no longer ‘money for nothing’.
Karl Tucker, president of Yeo Valley Farms and chairman of the Heart of the South West Local Enterprise Partnership, said that in the current economic climate, it would be difficult for many farmers to make the necessary investments to take advantage of the new programs. “It is – and will be – complicated, and to assume that farmers have the ability to do this on their own is naïve.”
The National Farmers Union, however, welcomed the fact that post-Brexit payments will now be directly linked to food production via the Sustainable Farming Incentive, which rewards farmers who improve soil and animal welfare. .
But David Exwood, vice president of the NFU, said farmers still lacked clarity on the new schemes. “There are still very few details and the initial payment rates and standards are very limited,” he said. “There will be a drop in revenue – there is a huge funding gap ahead.”
Economically downstream from the Kimbers’ farm, views are mixed on the financial effects of the upcoming changes, which have been somewhat masked by sharp increases in meat and milk prices this year which have temporarily inflated income.
Nick Heal, managing director of Redlynch Tractors, the Kimbers’ farm machinery dealership, which sells a single tractor for £200,000, expects some consolidation from local farms but believes it could actually be good for business . “It’s the larger and more efficient farms that see the benefits of our machines.
Giles Barber, managing director of local milk merchant Barber’s cheese in Shepton Mallet, which processes the Kimbers’ milk and is himself a major local dairy farmer, is also optimistic about the future of British farming outside of the CAP.
Its exports are booming, including to EU countries like France and Germany where consumers are acquiring a taste for vintage English cheddar. The challenge, he warned, would be to compete for market share with subsidized EU competitors, particularly the Irish, who do not have to wrestle with costly Brexit bureaucracy to export their products.
“As a buyer of milk and cheese, I can say UK farmers are productive and not dependent on subsidies,” he said. “But as an exporter to the EU, I’m competing with products made by a heavily subsidized industry.”
Ultimately, said Stewart Horne, a regional trade adviser who worked on the government’s Future Farming Resilience Fund pilot project, the whole of the UK’s farming industry and rural economy is on the mend. dawn of a period of upheaval. “I don’t think we’ll see a lot of people walking away,” he said. “But we will see a lot of changes.”