Further considerations for farm diversification

Following our popular ‘The Diversification Dilemma’ webinar earlier in the autumn, we are delighted that Gary Markham, director of farms and estates at Land Family Business, joined us earlier this week to talk through some of the key considerations for farms thinking of diversifying their businesses.

Gary opened the discussion saying: “Based on our client benchmarking, we know that on average 84% of our arable farming clients’ profit comes from the current BPS payments. Income from diversification has increased, whilst income from arable farming over the last three years has been fairly static.”

“It is clear,” he continued, “that with the Pathway to Sustainable Farming earlier this month, farms will need to think about finding additional sources of income to reduce that reliance on BPS contributions.”

Whilst this seems a daunting consideration for many and a time of huge change, at Arthey Associates we are clear that this is also a time of immense opportunity, when businesses take steps to diversify in the correct way.

“There are undoubtedly opportunities for our clients,” said Tom Arthey, director of Arthey Associates, “and it is great to see businesses thinking this way; however, it is really important to speak to experts like Gary and our team here to see what you need to consider when it comes to structuring your new enterprise.”

We would be delighted if you join us to watch Tom and Gary discuss farm diversification further on the video linked below – some of the key points are summarised below:

  • Diversification can have many guises, including trading or investment income, with several knock-on effects from a tax, and particularly inheritance tax, point of view.
  • Tax rates – 19% for companies, partnerships start at 20% but build up to 40% and even 45% – a huge consideration and implications on those different paths, so getting the right one for your structure is essential.
  • Renting buildings out is a very popular and straightforward diversification with redundant farm buildings being used for livery and holiday lets most popularly, but there are some interesting tax implications there.
  • Renewable energies are an opportunity too.
  • There are ways to build up value in your business and spread it out amongst the family through setting up a new company for your diversification with different family members as shareholders – succession planning is a huge part of the diversification process.
  • Sit down early and have succession discussions with your family to understand expectations and assumptions from everyone – the biggest contribution to a lack of profit in businesses is dysfunctional families.
  • Get in early with your plans, you can do things like gifting land within agriculture to help structure the taxation and manage inheritance tax.
  • Is the market there for what you are interested in doing? Market research is critical and be market led, not product driven. Speak to your accountants too, one that knows the family, and remember there may be grant funding that we can help you with too.

Arthey Associates can offer a full suite of services for those looking to diversify. We have the expertise to help you rationalise ideas and concepts, undertake market research, produce business plans and projections, put together applications for funding with lenders or via government grant schemes, obtain planning permission, assist with project management of the development, website building, marketing, PR and business administration from launch onwards.    

From growing cereals to welcoming breakfasting guests– arable farm diversifies into exclusive holiday cottages

Working with local independent property and farm business consultants, Arthey Associates, arable farmers J P and M Sharpley and Son, have recently launched three exclusive holiday cottages in Thornhaugh, Peterborough, near Stamford, making use of the Rural Development Programme for England (RDPE) Growth Programme grant to fund 40% of the cost of works and provide not only a diversified income stream but also support local businesses in the building, fitting and servicing of the cottages.

Peter Sharpley (left) and Tom Arthey (right) at Croft Farm Barn Holiday Lettings

Offering flexible accommodation for up to 18 guests across three properties (two of which can be connected) and marketed exclusively with Sykes Cottages, the 400 year old Croft Farm Barn Holiday Lettings are a local conservation project, with the application for the RDPE grant taking 18 months from the concept through to confirmation that the funding had been awarded in July 2019. The cottages were completed and welcomed their first guests in early October 2020.

Peter Sharpley said: “We are thrilled that with the RDPE grant, arranged by Arthey Associates, we have been able to not only bring life back to an old farm house at the centre of the village, but also that we are now making use of what were completely unused barns. Whilst providing us with a diversified income, the work that the grant allowed also provides ongoing work for local businesses such as cleaners and laundry services.”

Peter continued: “We are working to put together options for guests to pre-order goods from local farms and shops, whilst the furniture and fittings were mostly sourced locally, including all the glassware from Sinclairs of Stamford. Without the work that Arthey Associates put in to securing this grant for our project, including local market research, we would never have got this off the ground.”

Tom Arthey, director of Arthey Associates, said: “It is really pleasing to see a project like this finished and welcoming its first paying guests. In what has no doubt been a turbulent year, the Sharpley family have worked hard at keeping the project rolling and launching it to take advantage of a new generation of ‘staycationers’ whilst ensuring that the accommodation complies with the latest Covid-19 guidelines. To see a completely redundant set of buildings finished to such a high standard is a great example of the kind of diversification that farms should be looking to undertake to maximise existing and unused assets.”

Tom continued: “Arthey Associates are pleased to be working on a number of similar diversification projects, and whilst the RDPE Growth Programme funding route is no longer open to new applications at the current time, we  always look to make use of any grants that become available and fit with a clients project.”

Arthey Associates are farm business consultants based in Northamptonshire, offering a range of services to clients from the East Midlands and East Anglian regions, and indeed further afield. Their expertise includes property consultancy and planning, business planning and  bookkeeping, as well as community engagement, PR and marketing to ensure that new and existing businesses reach their end customer, whether that is business-to-business or direct to consumer.

If you would like a no obligation meeting to discuss diversifying your farm business or any of our services, please contact Tom Arthey on tom@artheyassociates.co.uk or 07748 295448 / 01832 270269

Webinar – The Diversification Dilemma

If you missed our webinar on ‘The Diversification Dilemma’ earlier this month, you can now view it in your own time by clicking on the video below.

The third in a series of webinars hosted by the East of England Agricultural Society, Tom covers:

  • Initial market research and feasibility
  • Project planning and funding opportunities
  • New planning rules
  • Marketing and publicity – the best channels

As always, Arthey Associates would be pleased to discuss any initial thoughts that you have on diversifying your enterprise. With a dedicated team of marketing and PR and business support advisors, we are ideally placed to support your business from the get-go.

To speak to one of the team today please call 01832 270269, or email tom@artheyassociates.co.uk

Your last opportunity to benefit from Countryside Productivity Small Grant Scheme

DEFRA have recently announced the opening of the third round of their Countryside Productivity Small Grant Scheme, with a £25 million pot to help farmers boost their productivity through business efficiencies, whilst helping the environment.

Arthey Associates director, Tom Arthey, says: “As the third round of this grant scheme becomes available, we are advising any of our clients who are looking to support increased productivity on their farm to see if any of their plans include equipment that qualifies for the funding, as this is likely to be the last opportunity under the current EU-based funding regime.

Under the scheme, farmers can apply for grants on equipment between £3,000 and £12,000, from livestock monitoring cameras to precision technology – anything that either boosts your farm’s efficiency and productivity, or supports the environment, can be applied for. The deadline for applications is 4th November 2020.

DEFRA also advises that farmers who have had previously successful grant applications in either of the previous two rounds of funding, can still apply for different pieces of kit in this final round, in what they say will encourage farmers to ‘streamline other elements of their business’ and ‘start the move towards farming more sustainably.’

Tom continues: “Whilst DEFRA have insisted that powers included in the new Agriculture Bill will allow the government to provide financial support to farmers to invest in equipment, infrastructure and technology, their focus is on this support aligning with their ‘public money for public goods’ and environmental focus, and farmers should definitely bear this in mind as they assess their future plans for their business and whether this final round of the Small Grant Scheme can benefit them.”

Should you require any advice in understanding what equipment can be grant funded or would like us to assist in making the application, please do not hesitate to contact Tom on 01832 270 269 or 07748 295 448, or email tom@artheyassociates.co.uk.

Overwintering cattle on fodder beet in Norfolk

Earlier this year, before the Covid-19 pandemic hit, Arthey Associates’ Amy Woolliscroft was pleased to attend a joint meeting of the AHDB and Stabiliser Cattle Company in East Harling, Norfolk, discovering the cost and health benefits of outwintering suckler cows on strip-grazed fodder beet with Richard and Sue Evans’ herd of 133 Stabiliser cattle.

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Richard said: “We’ve all got to drive down the costs of keeping cows. To survive in the industry we have to do two things: add value and keep numbers as high as possible to keep costs down.” Richard introduced Stabiliser genetics to his suckler herd in 2006 and hasn’t looked back. The herd is performance recorded and performance motivated, selecting mostly for calf vigour and mothering ability, as well as 400 day weight. Richard continued: “We are not loyal to Stabilisers but haven’t found anything that does the job better on our land.”

The right land is essential to make this form of strip-grazing work, and with the sandy soils of Norfolk, Richard is able to outwinter all of his Stabiliser females together, with heifer calves remaining on their mothers until four weeks before they are due to calve again. Richard explained: “This means that these young females cost us nothing to keep, whilst we have seen no detrimental effects to the subsequent calf with daily liveweight gain of male calves maintaining a steady 1.35kg/day.” Richard has fine-tuned the field stocking rate as the strip grazing moves across the field slowly, whilst adjacent grassland is essential as the cows are introduced to the system to avoid health complaints.

The benefits of keeping all 133 females together also include reducing labour and fuel costs, as Richard is able to open the next strip of grazing in a 20 minute window twice a day, leaving time for managing the output of the farm, the store bull calves. There is also a handling system within the outdoor system, with cows having to walk through it to get from the grassland to the fodder beet when they are fed; Richard finds that this reduces stress on the cattle when it is time for veterinary checks or vaccinations.

Amy said: “It was a pleasure to visit Richard and his family, and see the benefits of his system. It is certainly hard to argue against the results that the enterprise is producing, with a tight nine week calving period, and all bull calves sold away as stores and finished at 12-14 months.”

If anyone would like any more information from the event, please contact Amy on amy@artheyassociates.co.uk

What does end of ‘greening’ requirements mean for you?

Farmers and landowners in England are likely to welcome the news from DEFRA this week that greening requirements adopted from the European Commission surrounding the three-crop diversification rule and ecological focus areas (EFA)  will be scrapped as the government transitions from the current Basic Payment Scheme (BPS) to the new Environmental Land Management (ELM) Scheme, but what will this mean for you?

  • Reduced administrative burden as no need to comply with EU greening policy in 2021 scheme year
  • No effect on the overall payment received by each farmer as the 30% associated with greening will instead be reallocated to farmers’ entitlements under BPS
  • This is a first phase of the seven-year transition to the new ELM scheme, rewarding farmers with ‘public money for public goods’, and due to start being introduced fully in 2024

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  • Farmers can continue to apply to Countryside Stewardship (CS) schemes until the ELM scheme is rolled out
  • Particularly beneficial to contract farmers, where the crop diversification rule, and its impact on crop rotations within each holding, has had impractical outcomes on their ability to grow crops efficiently
  • Farms with limited storage will no longer need to find space to store three or more crops

Arthey Associates’ Director Tom Arthey said: “We are pleased to provide ongoing advice and support for our farming clients on their current and future BPS and CS schemes, and we know that this cut of the so called ‘greening’ will help to simplify the administrative requirements and environmental management on farms. We also welcome the permanent removal of the three-crop rule which, as had already been shown last winter, was too prescriptive for many farmers.”

Tom continued: “However, there is still an alarming lack of detail on what the new ELM scheme will look like, and, like our agronomy colleagues, we would advise that farmers don’t rush into making wholesale changes to their farming systems until more details emerge.”

“Environment Secretary, George Eustice, has said that they will be setting out more detail in the autumn on how they intend to ensure a smooth transition for farmers. The plans are for a “fairer agricultural system”, which will reward farmers for the hard work that they do to protect the environment, but on what basis that will be is still largely unknown.”

Arthey Associates are farm business consultants based in Northamptonshire, offering a range of services to clients locally and nationwide. Their expertise ranges from land agency to cash-flow forecasting, and business modelling to bookkeeping, as well as community engagement, PR and marketing to ensure that new and existing businesses reach their end customer, whether that is business-to-business or direct to consumer.

If you would like a no obligation meeting to discuss the impact of ELM Scheme on your business or any of our services, please contact Tom Arthey on tom@artheyassociates.co.uk or 07748 295448 / 01832 270269

Covid-19 Arthey Associates update

“Following the advice and measures put in place by UK Government to combat the spread of Coronavirus, Arthey Associates have modified our working arrangements but are still here to assist our valued clients and customers as usual during these uncertain times.

Our staff are set up for full remote working, and we would therefore encourage you to contact us on our mobiles rather than the office number if you should need to speak to us, –  Tom Arthey on 07748 295 448 or Amy Woolliscroft on 07858 656 444.

We are committed to supporting our clients in any way we can during these uncertain times, and are available to provide business support, PR and marketing advice to businesses new to online communications.

Our policy regarding face to face meetings is that these should be at the discretion of the individuals involved, and depending on the level of risk this poses to staff, clients and public at large. We are, however, fully set up for conference and video conference meetings where this provides a practical solution.

As things stand, Basic Payment Scheme and Countryside Stewardship applications are still working to existing deadlines, and we are on hand to assist clients with these in the usual way. Please get in touch for further advice.”

Countryside Stewardship and Grant Funding Update

Farmers and land managers have until 31st July 2019 to apply for Mid-Tier stewardship schemes, whilst those applying for Higher Tier have until 3rd May 2019, to complete their application.

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Key diary dates for the current schemes are:

Higher Tier (18th Feb to 3rd May 2019 application window)

Mid Tier (18th Feb to 31st July 2019 application window)

Wildlife Offers (18th Feb to 31st July 2019 application window)

Hedgerow & Boundaries (18th Feb to 3rd May 2019 application window)

Tree Health (open for applications all year)

Woodland Management Plans (open for applications all year)

Woodland Creation (open for applications all year)

15th May 2019 – CS/ES revenue claims deadline (without penalty).

31st May 2019 – deadline for making certain changes to a submitted CS/ES revenue claim without penalty submitted before 15th May 2019.

The Brexit waters are still muddied, but we do know that as things stand, the current Basic Payment Scheme will be phased out with funding for environmental benefits and public goods at the front of the new agricultural policy. At Arthey Associates we strongly encourage our customers to make use of entering Countryside Stewardship agreements now, to be well-placed to benefit from the new Environmental Land Management (ELM) system, which is due to be introduced 2024/2025. This will follow three years of piloting the new system nationally.

You can view all of the CS/ES deadlines here and for help with submitting your application, please speak to Tom on tom@artheyassociates.co.uk or 07748 295448.

All Rural Development Grant Programs are currently closed to new applications except for community and charitable initiatives. Many of these grant schemes, such as the Growth Programme, Countryside Productivity Scheme, and local LEADER grant programme are unlikely to reopen on the same basis as before, as most funds have now been allocated. There is the possibility that grant application windows will open for small grants such as the Countryside Productivity Small Grant scheme to allocate any remaining funds. If you would like to be specifically notified when any grant scheme windows open, please complete the form below:

Planning for a dry summer – forage crops and grassland

Local agronomist, Neil Woolliscroft, shares his advice on planning for a dry summer.

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Forage stocks coming out of Winter 2018 were low to non-existent and low reserves continue to be a concern as we head into Summer 2019.  There has been some success however with those growers who took a little risk and established new grass seeds last autumn and are currently in the process of taking a large first cut.  So what can be done to improve your prospects of a higher return from your land?

·         Always start with the basics; up to date soil analysis particularly checking the pH status with adequate P and K.

·         How long has your grass ley been down – is the ley predominated by weedy and low output species?

·         Are weeds competing with your pasture or hindering establishment of your ley?  There are many herbicide products offering cost effective solutions to weed control.

·         Nitrogen delivers the best return on investment. Are you correctly implementing a nitrogen management plan?

Both livestock and arable farms should be looking at opportunities from neighbouring farms and how their farming enterprises could complement each other. Combinable crop farms continue to battle with blackgrass and many would gladly give up growing OSR – grass leys or forage maize offer a valuable break to the arable farmer. For the livestock farmer, grass re-seeds have become more difficult since the revocation of chlorpyrifos leading to uncontrolled wireworm and leatherjackets.  Combinable crops grown between re-seeds would offer a valuable break. 

Incorporating forage crops into an arable crop rotation is not as scary as you may think! Many growers are already using spring cereals to combat autumn germinating blackgrass.  A crop such as stubble turnips established after a winter cereal harvest offers a cheap source of overwinter feed for grazing.  Many arable farmers are also growing overwinter cover crops ahead of spring sown cash crops. The best cover crops are those that can be utilised with the nutrients returned to the field via grazing!  Growing maize in rotation with combinables can be made a success. Recent breeding developments have meant many varieties are now sufficiently early maturing, and without yield penalty, to enable wheat to be easily established in October. 

Try not to focus solely on your own farms limitations and consider what opportunities for mutual benefit exist in your locality.