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Where is farming heading in 2024?

Where is farming heading in 2024?
Is this a make or break year for British farming?

I'm not going to sugar coat this, nor can I accurately predict what 2024 holds for British farming. But one thing I am sure of is that it’s not going to be easy. 

So buckle in, site tight and here are my predictions for farming in 2024.

Cash is going to be king

Now this might sound like old advice but particularly this year, cash (or availability to cash) is going to be more important that ever. 

Remember that:

  • BPS reductions are now down to around 50%
  • despite increased SFI funding of around 10%, the application window doesn’t open until the summer and payments not until December
  • farmers will be using inputs bought last year when input costs were much higher than they are now.

So there is a large funding gap that will need to be filled.

How you do this is up to you but having availability to cash is going to be key to surviving the next 12 months.

Effective risk management

What I mean by that is basically to spread your risk and diversify out with your core farming operations.

BPS was the financial buffer that enabled many farms to cope with high levels of volatility from year to year. But farming is a capital-intensive business and the levels of working capital required for continued operation of the farm are increasing significantly with input cost inflation. 

Commodity prices are down, interest rates are up so I predict many farmers are going to have to be more thoughtful in how they drive efficiency, while at the same time, managing their exposure to risk in terms of cropping and land use decisions.

Environmental Schemes

Whether you like it or not, more and more emphasis (read revenue!) is going to be placed on environmental schemes. Announced yesterday at the OFC was:

  • 10% increase in funding for SFI schemes
  • Up to 50 new options introduced to the SFI programme
  • Streamlined application processes

But I don't see that as a bad thing, in fact I think it gives farmers a load more options to de-risk, find alternative income streams, diversify and strengthen their farm businesses. So embrace it, don’t shy away from it. 

General Election

I hate chatting about politics but with farming being a pawn in a political game, it’s very difficult to avoid. 

We are entering a general election year and whoever succeeds, whoever comes out on top, there is going to be change. We’ve heard some big statements coming out of all parties at the Oxford Farming Conference but whether these can actually be delivered before the general election is another thing.

This further highlights the importance of cash and having enough of it to see yourself through the next 12 months to deal with the uncertainty that is coming. 

Until next week......