Lack of business plans pose risk for farmers

• Plan to cope with end of payments

• Farmers need to manage transition

• Innovate to overcome uncertainty

Farmers without a business plan could struggle to cope with the withdrawal of the Basic Payment Scheme, say experts.

Most farmers lack formal business planning and fail to seek external professional advice, suggests a survey of rural businesses conducted by the National Innovation Centre for Rural Enterprise (NICRE).

More than six out of 10 farms surveyed said they did not have a formal written business plan. And almost 80% of respondents said they had not accessed external support from any advisory service.

Regulations and red tape were the most commonly-cited obstacles to farm business success with 71% of farms identifying them as a key concern, compared to less than half of other rural businesses.

“This is a period of monumental change for farmers,” said NICRE co-director Janet Dwyer.

“While our findings showed that farms fared better than rural businesses in respect of the negative impacts of Covid-19, this doesn’t mean that they are better placed to cope with ongoing and future challenges for the rural economy.”

Potential risk

Farms were less likely than other rural businesses to engage in formal business planning, said Professor Dwyer. This was a potential risk as farms sought to cope with big policy changes and the slow roll-out of new environmental schemes.

“Careful medium-term planning and building in headroom to innovate, remain essential tactics for farms’ survival just as much as for other rural businesses, in these challenging times.”

Prof Dwyer said the government should deliver its new policies in ways that were truly accessible. This would help more farms deliver a high-quality environment alongside excellence in food production, energy generation and other key services.

Nearly three-quarters of farms reported that they generated a profit or surplus, compared to 66% of other rural businesses. Almost four out of 10 farms reported no impact of the pandemic, compared to just one in 10 other businesses.

Family support

The study also found that farms were much less likely to use the government’s Covid support measures than other rural businesses. Just over half (54%) of all farms took advantage of Covid support, compared to 70% of rural businesses.

The survey suggests farms were more likely instead to draw on family support to reduce their pandemic-related costs, typically family members working longer hours, or family money being used to support the business.

Defra farm minister Victoria Prentis said: “Our new farming schemes will be simpler, fairer, more proportionate, more accessible and more effective, supporting the choices that individuals make for their own holdings.

“That’s why we’re working with thousands of farmers across the sector to co-design them to ensure they work for them. Engaging in formal business planning is important as farms prepare for future challenges.”

Defra’s Future Farming Resilience Fund provides free business advice to farmers across England. Over 9,000 businesses have already benefitted from the service, with help available for a further 32,000 farmers and land managers.