As we wait to see whether the UK takes a soft, hard or no-deal exit from Europe, many Scottish farming businesses are exercising caution and delaying decisions on any likely restructuring until a more certain outcome is reached. The recently published Agriculture Bill in Westminster has sparked widespread political debate and indeed outcry from some. The extent to which Scotland will follow suit is as yet, unknown, but it appears that direct agricultural support payments to Scotland's farmers are likely to be radically restructured and reduced over the next five to seven years. There remains much uncertainty, however, about future funding levels for Scottish agriculture in the immediate aftermath of us leaving the European Union and the conditions that will attach to this funding.
While the current period of uncertainty gives rise to concerns about what the future holds, let's not forget that Scotland's farmers are well known for their resilience and stoicism. Change brings opportunity as well as challenge, something which our Brexit Advisory Group is seeing across all sectors as it continues to assist clients who sit on the cautious and proactive sides of the fence.
In the Highlands, attitudes are mixed; caution along with a sense of getting on with business. There has been a notable decline in the amount of land coming to the open market, yet there is strong buyer demand for it and we've seen a number of farm sales and purchases come to fruition in the past 12 months.
Similarly, there's less appetite in the region for new contract farming agreements to cover new areas of land, yet recurring or renewing contract farming agreements continue to be in demand. We recently acted in the letting of several sizeable farms on ten year MLDT lease agreements, where in the vast majority of cases, the landlords are historic landlords who have either never farmed in hand, or have no plans to do so.
Certainly in the Highlands, we have yet to see evidence of farmers seeking to adjust or exit their business and let out land which they themselves have traditionally farmed. Yet, it is encouraging to see demand from prospective tenants who appear willing, perhaps because of the uncertainties facing them, to expand their businesses. It's also worth noting that the reform of tenancy laws, has yet to have a visible impact on encouraging the letting of land to genuine new entrants.
Whilst all farmers would probably prefer to operate their businesses without reliance on a recurring subsidy, the reality for many in recent years is that the subsidy is an integral, essential part of annual farm income. Yet the possible withdrawal of that subsidy could force many businesses to shake up the status quo and look at it as an opportunity to scale up their operations and adopt new ways of working, innovatively and collaboratively.
If the subsidy funding for Scotland's farmers is to decline, some businesses will almost certainly seize the opportunity to restructure or rationalise. It's understandable that a period of inertia may occur whilst political and economic landscape mapping in a post-Brexit world is completed. However, we're already working closely with farm businesses who are taking this opportunity to get their house in order now, for the challenges ahead. We have no doubt that despite the uncertainty, with careful planning for change, there can be a bright future ahead, whatever that holds.
For any further advice or information on any of the points raised above, please get in touch with Martin or your usual Brodies contact.
This blog originally appeared in Farm North East
