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Farmers will receive early support payments as Defra seeks to ease cashflow pressures caused by high input costs. Early support payments ‘to ease farm cashflow crisis’

• BPS payments in two instalments

• Half from July, half from December

• Measure will remain next year too

Farmers will receive early support payments as Defra seeks to ease cashflow pressures caused by high input cost.

Direct payments from this year onwards will be made in two instalments. It means farmers with a Basic Payment Scheme (BPS) claim for 2022 will receive half the money from the end of July with the remainder paid from December.

Defra said the move would support farmers facing cost pressures caused by rising input costs and global instability. Direct payments would be paid in two instalments each year until the payments are phased out completely by 2028, it added.

With agricultural commodities closely linked to global gas prices, farm input costs have risen by an average of 46% over the past 18 months – and much higher for some individual products such as synthetic fertiliser and fuel.

Reawakened economy

Gas prices have quadrupled in just 12 months – a price spike caused by heightened worldwide demand as the global economy reawakens following the Covid pandemic and global instability following Russia’s invasion of Ukraine.

Defra says it is clear that farmers should continue to buy their inputs as usual – at least according to  the Agriculture and Horticulture Development Board (AHDB). It says early direct payments will enable farmers to do so.

Announcing the early part-payments, Defra  secretary George Eustice said: “While increasing farm gate prices may mean that farm profitability remains stable, we recognise the short term pressures on cash flow.

“We have decided to bring forward half of this year’s BPS payment as an advance injection of cash to farm businesses from the end of this July. It will give farmers some additional cashflow earlier in order to provide some confidence.”

Mr Eustice said it would be a permanent change to the way BPS claims are paid in future.  “In the days of the EU, this would never have been possible due to the way audits worked and the need to enforce the three crop rule during the summer.”

‘Welcome boost’

Rural Payments Agency chief executive Paul Caldwell said bringing forward half of this year’s BPS payment would boost cash flow on many farm businesses during uncertain times.

“This is not just an opportunity to support farmers here and now through a cash injection. It’s a permanent change to bring direct payments in line with what will be a more regular payment system under the new environment land management schemes.”

Mr Caldwell said the decision buillt on a package of measures to support farmers announced in March. These included a delay of at least a year to changes which would have restricted the use of urea fertiliser.

The government has also clarified guidance around Farming Rules for Water; unveiled slurry investment grants; and published details of its Sustainable Farming Incentive to encourage farmers to use  organic-based fertiliser products.