RURAL business experts have warned that up to half of UK farmers could see their profits wiped out within three years, leaving many facing incredibly challenging times – unless they take action soon.

Under-pressure farmers are being urged to seek immediate help to weather a subsidy shake-up that’s likely to herald the start of big changes to modern farming.

With subsidy cuts at the forefront of a cash, labour and environmental triple whammy, financial specialists say that farm owners and operators cannot afford to stick their heads in the sand.

Head of the agricultural team with tax and accountancy firm Douglas Home and Co, Victoria Ivinson, said: “For many farmers, these subsidy payments prop up the business. Our estimate is that at least 50% of farmers could see their profit wiped out. While most may break even, many will be running at a loss once the subsidies are cut. That is a horrifying prospect.

“At the moment, this money is essential to help them smooth out the challenges posed by major weather events, fluctuations in yields and grain prices and many other unpredictable variables.”

The firm’s stark assessment is based on its decades-long experience, with more than 1000 of its 3100 clients operating as rural businesses.

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As part of Brexit, the Basic Payment Scheme is being phased out between 2021 and 2028, meaning farmers could lose between 50 to 70% of their subsidy by 2024. Deeper cuts and further changes will also continue well beyond 2024

Mrs Ivinson, whose husband is a beef and sheep farmer in Penrith, Cumbria, added: “We are entering a decade of massive change across farming and the rural economy. Brexit, climate change and major labour shortages are already causing sleepless nights.

“Yet subsidy cuts are an even bigger threat to survival, particularly for those with no other income stream or alternative financial support. Frankly, some farmers are terrified.”

The accountant said that many farmers are overawed by the complexity of the replacement system, which has not yet been fully fleshed out or explained by the Government. Regulations also differ slightly between Scotland and England, however all UK farmers face similar prospects.

Another common problem is that many are unaware which parts of their business are profitable and which are not. Mrs Ivinson’s team of agricultural experts has drawn up a three-step plan to help farmers make the difficult decisions needed for survival.

Step one sees the team helping farmers understand their numbers, like labour costs and profit and loss across different aspects of the business. This allows farmers to understand the profitability of each individual farm enterprise.

Step two involves carefully assessing ways for struggling farms to bridge the income gap. However, step three is the most crucial part, as the team can help farmers discuss how to adapt particular enterprises so they are more profitable, or can suggest proactive diversification opportunities which will broaden the number of income streams to the business.

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She added: “It can be challenging to change long standing farming practices, particularly for those who are passionate about traditional methods. In some cases, farmers may need to move away from old enterprises and embrace a new farming mix. However, this ability to adapt and change can help a business survive during such uncertain times.

“Starting now is vital, because this is just the tip of the iceberg. We are in the midst of a climate emergency which means more Government regulation is coming. Acting now could help farmers reduce the sting for years, if not decades to come.”3 225082