Half of UK's farmers face ruin as subsidy cuts bite, experts warn

Half of Britain’s farmers face financial ruin from subsidy cuts, experts have warned.

Monday, 25th October 2021, 4:45 pm

Advisers at tax and accountancy firm Douglas Home & Co said that up to half of farmers could see their profits wiped out within three years, leaving many facing incredibly challenging times.

Under-pressure farmers are being urged to seek immediate help to weather a subsidy shake-up that is likely to herald the start of big changes to modern farming.

Financial specialists warn that subsidy cuts are at the forefront of a cash, labour and environmental triple whammy.

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Financial specialists warn that subsidy cuts are at the forefront of a cash, labour and environmental triple whammy for farmers.

Victoria Ivinson, head of the agricultural team with Douglas Home & Co, said: “For many farmers, these subsidy payments prop up the business. Our estimate is that at least 50 per cent of farmers could see their profit wiped out.

“While most may break even, many will be running at a loss once the subsidies are cut. That is a horrifying prospect.

“At the moment, this money is essential to help them smooth out the challenges posed by major weather events, fluctuations in yields and grain prices and many other unpredictable variables.”

The firm’s assessment is based on decades of experience, with more than 1,000 of its 3,100 clients operating as rural businesses.

As part of Brexit, the Basic Payment Scheme is being phased out between 2021 and 2028, meaning farmers could lose between 50 per cent and 70 per cent of their subsidy by 2024. Deeper cuts and further changes will also continue well beyond 2024, experts warn.

Ivinson, whose husband is a beef and sheep farmer in Penrith, Cumbria, added: “We are entering a decade of massive change across farming and the rural economy. Brexit, climate change and major labour shortages are already causing sleepless nights.

“Yet subsidy cuts are an even bigger threat to survival, particularly for those with no other income stream or alternative financial support. Frankly, some farmers are terrified.”

The firm claimed that many farmers are overawed by the complexity of the replacement system, which has not yet been fully fleshed out by the UK government. While regulations differ slightly between Scotland and England, experts said all farmers face similar prospects.

Ivinson added: “It can be challenging to change long standing farming practices, particularly for those who are passionate about traditional methods.

“In some cases, farmers may need to move away from old enterprises and embrace a new farming mix. However, this ability to adapt and change can help a business survive during such uncertain times.

“Starting now is vital, because this is just the tip of the iceberg. We are in the midst of a climate emergency which means more government regulation is coming. Acting now could help farmers reduce the sting for years, if not decades to come.”

Douglas Home & Co was founded and remains headquartered in the Scottish Borders where it has four offices, with further bases in Edinburgh, East Lothian, Cumbria and Northumberland. It has 70 staff and saw a 4 per cent rise in turnover to £4 million for the financial year 2020/21.

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