PLAN YOUR CASHFLOW

This entry was posted on Wednesday, April 24th, 2024 at 11:19 am

Whether we like it or not we are in a world marketplace and the last six months have shown that very clearly.  In the face of extremely wet conditions in the UK that will create a significantly reduced yield this year both from poor crops and from crop failure the grain price should be rocketing.

The only reason that the trade remains in the doldrums with wheat around £175 per tonne on the spot market is a world supply particularly from Russia and the Ukraine.

It is nearly 8 years since the UK voted to leave the European Union.  Farmers thought they would have more control over their own destiny by bringing political decision making back to the UK and to some degree this has been true in agricultural support. But with over 20 options available to farmers and growers through the SFI scheme, and more to be announced in the summer, it is difficult to know who is actually in control. This has been good for agents and advisors but even they struggle to keep on top of all the options and regular changes.

Pig farmers will not feel they have left Europe as cheaper pig meat continues to be imported from the continent and we are less than 60% self-sufficient.  This is less emotive now at a time when home production is profitable but becomes highly significant when the trade turns and production costs are higher than market price.

Above all, the UK remains in the European Court of Human Rights and the consequences for farming may be far reaching. This unelected body has recently found that Switzerland has not made adequate provisions to mitigate climate change by methods to reduce greenhouse gas.  More cases are in the pipeline and the effects on current farming practices could be far reaching and imposed upon us.

The increasingly tense situation in Israel, Iraq and Ukraine may soon create a shockwave with far reaching effects on supply, demand, and prices not just for commodities but also for inputs.

If taking more control by coming out of Europe has not been the solution for farmers, taking more control yourself should be your goal.  Without Basic Payment to fall back on each year to meet the winter bills, and in the face of a very moderate harvest, cash flows need planning now based on the adage ‘’Hope for the best but plan for the Worst’’.

That may mean squeezing or improving any other enterprises on farm, so that the farm is not totally reliant on crop sales for income.

It may mean releasing some savings to fall back on to carry you through the next 12 months.  It may mean selling some assets to ensure cash is available when required. Whether this is some machinery, a rental property or an off-lying block of land we would be happy to help.

If you want advice to understand your options now, please contact one of our team for a valuation on 01904 489731.

Rod Cordingley FRICS FAAV

rlc@stephenson.co.uk