The report examines how councils can best support farmers in an increasingly difficult economic landscape.
Over the past few months, the York and North Yorkshire Combined Authority has conducted a review to assess the current financial state of different types of farm businesses in the region and models a number of scenarios to understand the impact of key changes facing the farming sector.
These included the phasing out of the Basic Payment Scheme and the introduction of the proposed inheritance tax changes. The study also involved an online survey and produced a range of case studies enabling farmers to share their thoughts on the challenges and opportunities they currently face. Given Yorkshire is the only rural combined authority, it is in a unique position to bring these issues to light.
The report has identified that 52% of county farms do not make a profit and proposed changes to inheritance tax could increase the proportion of farms with an unsustainable profit to 61%, even with tax planning, and to 73% if businesses don’t seek advice.
Labour Mayor of York and North Yorkshire David Skaith has today launched the report following a meeting the day before with NFU President Tom Bradshaw, hosted on NFU Crops Board Vice-chair James Mills’s farm in York.
Mayor Skaith is the first mayor of York and North Yorkshire, elected to his position in May last year, and chairs a group of local councils in the area known as combined authorities. During the meeting, Mayor Skaith resonated with the NFU’s messages on food security and recognised that rural growth is critical for Yorkshire.
The meeting with the NFU comes at a crucial juncture on the eve of the report’s launch. Following a major redesign of local government, regional mayors have more powers which allow them to oversee a more joined up approach in their regions.
Focus on food production and profitability
During the meeting, the Mayor toured James Mills’s farm, and heard how farming and the environment can work hand in hand. However, NFU representatives highlighted that, above all, food production must be profitable in order for farming businesses to thrive.
Photograph: L-R NFU Crops Board Vice-chair James Mills, Mayor of York and North Yorkshire David Skaith, and NFU President Tom Bradshaw
Mayor Skaith’s new report talks about how farmers can improve their own profitability and performance to deal with policy pressures. In discussions, the NFU agreed but made clear that, like any industry, the conditions for success need to be in place, especially in the policy area.
“Since the Second World War there has been an understanding around how farmers produce food, but that understanding is being tested more and more,” NFU President Tom Bradshaw told Mayor Skaith.
Tom described farm businesses as “the bellwether of the rural economy”, adding that many have curtailed investment on their farms because every penny they have, or could have borrowed, will now have to go on saving the future of the farm.
He added: “From Yorkshire builders to vets and feed merchants, fencers, machinery dealers and tool manufacturers, there’s been talk of calls drying up and order books looking sparse for the rest of the year as their customers – county farmers – face a cash flow and confidence crisis.”
Rural communities
The Mayor recognised the need to “keep our rural communities alive”, agreeing that the value of rural communities cannot be overstated from an economic, but also social perspective, and that farmers remain the heartbeat of their communities.
The government’s planned changes to inheritance tax were also included in the Farming Finances and Challenges Faced report.
NFU President Tom Bradshaw and NFU Crops Board Vice-chair James Mills highlighted to Mayor Skaith that the current policy treats business wealth as personal wealth – and that ultimately they aren’t the same thing.
They highlighted that everything is reinvested into a farming business, which would be threatened by the changes to APR and BPR (agricultural property relief and business property relief).
Read the report in full at: GOV.UK | Review of the state of farming finance and challenges faced.
