BPS Removal

We are all too aware of the imminent disappearance of the BPS, and the arrival of the much-heralded ELMS scheme. BPS will be approximately halved by 2024, and it will disappear after the last payment is made in 2027. The requirement to farm the land after 2024 will also go. The serious detail of the ELMS scheme is still awaited.

What is plain is that there will be an inevitable financial gap between BPS and the new regime. However, the size of the gap is unknown, as the detail of ELMS (and the SFI) is shrouded in mystery. Some details on various aspects are occasionally released, such as the ‘lump sum exit scheme’, but this is hardly relevant for a continuing farm business.

What I feel is crucial is that you must not be lulled into a false sense of security by the high output prices prevailing now. Prices of most farm outputs are booming, but do not expect they will be that high for ever.

For instance, the Farmgate Milk Price is now 29.72ppl (for March), but the five-year average Farmgate Milk Price for the five years (yes – that long!) up to March 2020 was only 26.97ppl, around 3ppl less.

Similarly, for beef steers, the current (May) GB deadweight price for R4L steers is around 414p/kg. But for the year to December 2020, it averaged just 359p/kg, and two years before that it was just 325p/kg.

Arable output prices are similarly very high now, with feed wheat at around £210/T, having been just £120 at harvest 2020, less than two years ago. And oilseed rape has gone mad currently, at around £460/T for harvest this year.

We all know agricultural output prices vary, and there is little that most farmers can do about this – except get closer to the ultimate consumer (which is not advisable for many). But what you must not do is to base your plans on the high output prices prevailing now, when they could well be substantially less in a few months or years’ time. Just talk to pig farmers about low output prices.

So, just be realistic in your business planning!

Contact Charles at charleshot@fcgagric.cm or your local FCG Office, to put in place plans to counter the financial gap left from BPS removal.

Posted in Business Management, Grant Funding, Lincoln.