Level funding for farmers

HM Treasury has stated that level funding for farmers in the form of direct payments will be made available in 2020: Support confirmed

Level funding does mean a decline in real terms because of inflation, currently running (CPI) at fractionally over 3 per cent. The basket of goods used by farmers as inputs may differ from the CPI rate and indeed from one farm to another.

The NFU welcomed the statement, but remains concerned about future trade policy and imports: NFU response

Quite what form the new ELMS payments will take remains to be seen. I have heard that at least three versions have been discussed within Defra. The key is to develop a scheme that provides genuine incentives for farmers to engage in environmentally friendly behaviour whilst giving a fair deal for taxpayers.

I am still not convinced that sufficient attention is being paid to climate change, although that was a major deficiency of the CAP where attempts to introduce a climate change pillar were (in my view) defeated by the agri-industry lobby.

Why we need research on vegetables

A celebration of seventy years of crop research at the University of Warwick's Wellesbourne campus: Seventy years

One of the greatest privileges of my academic career was to take part in two projects with scientists at Wellesbourne. I recently completed a book chapter relating to one of them on biopesticides: RELU project

The crops research centre is continuing practical work on biopesticides through the use of levy money: Amber project

As more people become vegetarians or vegans, but, perhaps more importantly, others reduce their meat consumption, the research done at Wellesbourne is more important than ever.

High performance will help farms survive Brexit

Strutt and Parker look at the effects of a no deal Brexit on agriculture: No Deal impact

They argue, 'The best insurance for a farm business remains to be as high performing as possible. Top-performing farms (in terms of the ratio of what they produce compared with the inputs needed to produce it) are in a far stronger position to cope with the changes.'

Another paper looks at the effect of changes in the funding of farm support: Funding gap

The paper argues, 'The changes will most affect farms that are highly reliant on Basic Payments - cereals, mixed and lowland livestock farms. Sectors like dairy will be less affected.'

They advise, 'Farm as efficiently as possible; the top 25% businesses are less reliant on direct payments and more resilient to volatility. Farmers should continue to look for ways to improve their farming systems, in terms of outputs and markets for their products, variable and fixed costs.'

Post Brexit tariff regime angers farmers

The NFU is annoyed about the removal of tariff safeguards for a number of agricultural sectors in the event of a no deal Brexit: Tariff review

Government policy appears to be driven by a desire to keep food prices low. Minette Batters, NFU president, said that the Government had 'betrayed' the industry.

Dairy sector also faces Brexit challenges

Much of the discussion of the impact of Brexit on agriculture has focused for understandable reasons on the livestock sector, particularly sheep farming. However, the dairy sector also faces challenges.

Rising production and static demand is currently creating an over supply problem in the liquid market. Muller has blamed its recent price cut to farmers on a 37 per cent reduction in the cream price.

Cross-border cream sales have been relieving pressure on the liquid market, but would face a tariff of £972/t in the event of a no deal exit, ruling out export sales.

Kite Consulting, a leading dairy consultancy, are advising farmers to ensure that feed stores are full on October 31st to lock in prices. That should include minerals and fats that come in by EU trades. They should also hold back on investing in new machinery until after Christmas: Kite's advice

Farmers fury over cull cancellation

Farmers are angry about the cancellation of a proposed badger cull in Derbyshire days before it was due to go ahead. The Government has given the green light to culls in 11 other new areas.

A cull has never been cancelled so close to the time it was due to go ahead. The decision was taken by Defra secretary of state Theresa Villiers on the grounds that badgers are being vaccinated against bovine TB in Derbyshire.

However, some see the hand of Boris Johnson's partner, Carrie Symonds, in the decision. Dominic Dyer, the chief executive of the Badger Trust, met her in Downing Street last month. She has helped him carry a banner when out campaigning against the cull. Mr Dyer wrote to Boris Johnson about the cull and three days later it was called off.

Farmers back no deal Brexit

A surprising number of farmers back a no deal Brexit given that many of them would suffer financially as a result. At least that is the case if one believes polls from Farmers Weekly. A health warning is always necessary about these polls as respondents select themselves and the Ns are often small. A poll which purported to show that a majority of farmers backed Brexit in the referendum has nevertheless embedded itself in the public mind.

43 per cent of 'about 300' farmers said they would be happy with a no deal Brexit while 57 per cent said they would not. Concern about leaving without a deal was strongest in Northern Ireland, Scotland and Yorkshire and Humberside. Optimism about farm business prospects is at its lowest level since the survey started a year ago.

A snapshot 24 hour poll found that 53 per cent would choose to leave the EU with no deal if they could vote again. 38 per cent said they would vote remain and just 9 per cent said they would back the withdrawal agreement backed by Theresa May.

It is interesting that the first poll is below a story about the impact of a no deal Brexit on the sheepmeat sector. About one-third of the UK's production of lamb is exported and 95 per cent of this goes to the EU. 40 per cent tariffs and regulatory barriers would almost wipe out exports.

The Government has ruled out culling as a response to such a crisis. It looks as if they favour a combination of a headage payment on breeding ewes and a slaughterhouse premium. The UK breeding flock already reduced by about 30 per cent in the 2017-18 breeding season as farmers responded to an uncertain future.

Mike Gooding, director of Farmers' First, one of Britain's biggest lamb exporters, told Farmers Weekly: 'Essentially, Brexit risks excluding UK produce from the EU market. A no-deal Brexit would result in the same outcome - but with that risk greatly increased.'

He predicted a substantial fall in sheep farming in the UK. 'My own personal view is that there will be far fewer farmers managing what sheep there are in larger flocks - possibly across multiple holdings.'

What chances of a green agricultural policy?

In the latest issue of Euro Choices Viviane Gravey asks whether Brexit will lead to a green agricultural policy. She notes, 'while UK governments have pioneered and pushed for many green instruments in the CAP, their overarching priority remained to limit funding – both EU and national – for agriculture.' Moreover, the four nations of the UK have developed divergent policies under the flexible umbrella of the 2014-20 CAP.'

She points out that 'the UK's long‐standing reluctance to increase EU‐related spending has repeatedly constrained the UK's commitment to agri‐environment schemes.'

She concludes, 'while the UK government's current commitment to "put the environment first" calls for radical post‐Brexit change, the policy‐making process does not augur well for such change. Instead, it bears sharp similarities to CAP debates old and new. Within the EU, the UK's commitment to greening agriculture was repeatedly undermined by its opposition to increased spending for CAP and its growing euroscepticism.'

'Outside of the EU, the UK's renewed commitment to greening agriculture risks faltering once more due to broader national and international political tensions. These difficulties are linked to fraught power sharing under devolution, the challenges of guaranteeing a shared environmental baseline across the UK, and agreeing a fair budget for agriculture policy throughout the four nations, as well as the uncertain contour of any UK‐EU deal and future UK trade policy.'

No deal Brexit a big hit on farm profits

A no deal Brexit would wipe £850m off the farming industry's bottom line according to research from farm business consultant Andersons. A Brexit no deal scenario would see a 18 per cent fall in profitability as against 18 per cent for a no deal scenario.

Andersons recently conducted research on behalf of the BBC to assess Brexit's potential impact on the profitability of UK farming, 9-12 months after Brexit taking place. To undertake this analysis, Total Income from Farming (or TIFF) was seen as a useful measure to look at the farming industry as a whole. It is an aggregate, so hides differences between sectors and individual businesses, but provides a simple measure of the profit of ‘UK Agriculture Plc’. In technical terms, TIFF shows the aggregated return to all the farmers in UK agriculture and horticulture for their management, labour and their own capital in their businesses. To allow for yearly variations in weather conditions and exchange rates for example, a three-year average (2016 to 2018) was used as the basis for comparison.

The assessment considered the potential impact of tariffs (including the UK’s March 2019 announcement on its No-Deal Brexit tariff schedule), non-tariff barriers and tariff rate quotas. Importantly, it was assumed that support levels to UK farming were kept constant as the UK Government has committed to farming receiving current levels of support until the end of this parliament (scheduled to be 2022).

Like all top-level industry averages, there is significant variation within the overall estimate. For instance, where output is concerned, substantial declines are forecast for sheepmeat (-31%), whilst output for cereals, milk and beef production are also down. Some increases are projected for horticulture and intensive livestock (pigs and poultry) provided there is sufficient labour available for undertaking operations.

With respect to costs, some decreases are forecast for inputs which would be affected by the introduction of lower UK import tariffs under a no-deal scenario. Examples here include animal feed, fertiliser and plant protection products. However, other inputs such as veterinary costs are projected to rise as it is anticipated that there would be a significant increase in demand for veterinary staff to assist with border inspection operations.

With many farms already struggling to break-even and the projected hit on profitability in some cases likely to significantly surpass the industry average, the viability of many farming businesses will be in jeopardy. Unsurprisingly, grazing livestock farms (particularly sheep) would be the most exposed given the output declines mentioned above, but a no-deal would also result in a significant downturn for dairy farming in Northern Ireland, given its reliance on having its milk processed in the Republic of Ireland.

Climate change dilemma for farmers

Farming accounts for around 9 per cent of greenhouse gas emissions in the UK, well in excess of its share of GDP. It produces three gases particularly damaging to the climate: nitrous oxide from fertilisers; methane from livestock and carbon dioxide from fuel for machinery such as combine harvesters.

56 per cent of the roughly 49m tonnes of CO2 equivalent emitted annually comes from methane. N20 accounts for a further 33 per cent and CO2 11 per cent.

In the midst of Brexit uncertainty, farmers consider that they are ill prepared to change their practices to cut greenhouse gas emissions. Building enclosed storage for manure to stop methane from escaping could be expensive. Changing cows' diet by adding different proteins and minerals to the feed may offer a better way forward. Arla Foods claim to have secured a 30 per cent reduction in methane emissions through this route.

There is clearly something of a policy vacuum which the new secretary of state could try to fill.

Farmers concerned about lack of Defra continuity

The lack of ministerial continuity at Defra following the replacement of Michael Gove by Theresa Villiers concerns farming leaders: Farming reaction

She is the sixth Defra secretary of state since 2010.

Michael Gove had a very clear agenda in terms of emphasising public goods and environmental benefits in future payments to farmers. Whether Theresa Villiers will continue with this agenda remains to be seen.

Farmers have, however, welcomed the appointment of Norfolk MP Liz Truss, a former Defra minister, to the post of international trade secretary.

Therese Coffey, the MP for Suffolk Coastal, has been promoted to minister of state in the department.

Blueprint for Britain's farming future

The Royal Society of Arts Food, Farming and Countryside Commission has published a report on the future of agriculture in the UK: Our Future in the Land

The report argues, 'Decades of policy to produce ever cheaper food has created perverse and detrimental consequences. Farm gate prices are low; and whilst food in the supermarkets is getting cheaper, the true cost of that policy is simply passed off elsewhere in society – in a degraded environment, spiraling ill-health and impoverished high streets. The UK has the third cheapest food amongst developed countries, but the highest food insecurity in Europe.'

Among the recommendations are:

• 1. Designing and implementing a ten-year transition plan for sustainable, agroecological farming by 2030
• 2. Backing innovation by farmers to unleash a fourth agricultural revolution
• 3. Making sure every farmer can get trusted, independent advice by training a cadre of peer mentors and farmer support networks
• 4. Boosting cooperation and collaboration by extending support for Producer Organisations to all sectors
• 5. Establishing a National Agroecology Development Bank to accelerate a fair and sustainable transition.

Direct payments to farmers would be retained at one-third of current value. In addition, farmers would be incentivised to follow agroecological principles including planting trees, creating and restoring habitat corridors and natural grassland restoration. The report does not contain any recommendations of the value of these payments for delivering environmental measures. This is always the difficulty with such proposals.

Hunt's £6bn handout is not what is needed

Prime ministerial candidate Jeremy Hunt has promised £6bn to help farmers, the food industry and fishermen with the consequences of a no deal Brexit. However, farmers would much rather compete on a tariff free market and food processors would rather not have to face more complicated customs declarations. Continuity in trading relationships not compensation is the way forward.

Of course, Jeremy Hunt would say that he prefers an orderly exit with a deal, but we are in a danger of talking ourselves into a no deal Brexit.

Meanwhile, after two decades of negotiations, the EU has concluded a trade deal with Mercosur. Farm organisations are complaining that the interests of their members have been sold down the river so that other sectors can benefit and certainly agri-business interests in Brazil are celebrating.

However, the broader point is that the UK on its own will find it more difficult to secure a good deal with the likes of Mercorsur.

China trade deal offers beef farmers new hope

A trade deal with China that has ended a ban on exports of British beef offers new hope to beef farmers, but also raise broader issues about UK strategy post Brexit.

A ban on British beef exports to China was imposed following the BSE crisis in 1996. The UK-China Beef Protocol is expected to generate £230m of trade over the next five years. China is the world's largest importer of beef. However, it is expected to be 2021 before supplies start flowing.

In the meantime beef prices are at a low level. Large stocks of frozen beef bought ahead of the original Brexit deadline are still feeding into the system. There has been a collapse in the global leather market affecting hide prices.

More significant in the long run is growing consumer antipathy to red meat because of health concerns and the impact of cattle on the environment, particularly in relation to climate change. 'Flexitarians' are a bigger challenge than vegans.

The broader issue is how far Britain wants to move closer to China after Brexit rather than the United States. There are export opportunities, but also broader concerns about human rights, not least in Hong Kong.

Agriculture and the current political landscape

My presentation to the Geo-Agriculture conference in Beverley this week discussed the political landscape as it related to agriculture. I got it wrong in the preceding year when I forecast an eleventh hour fudged compromise given that EU decision-making was characterised by last minute deals. This would have left many issues unresolved that would have to be addressed during the transition or implementation period, but during that period economic relationships would continue much as before.

Why did I make a false prediction?:

• An exit decision for a member state could not be fudged like a CAP reform
• The member states showed more solidarity than I had anticipated
• MPs were more intransigent than I had thought likely

The Agriculture Bill has been the victim of Brexit chaos. It finished its progress through committee in November 2018 and continues to wait for its Report Stage debate to be scheduled, now over 200 days since it was debated The NFU would like to see more emphasis on food production and food security, help for farmers to better manage risk and periods of poor market returns.

It is important to bear in mind that farm businesses vary considerably and this affects their ability to respond to Brexit. Some of the variations include climate/terrain; soil type; ownership structure: owned, tenanted, mixed (increasingly common).

Resilience enables farmers to withstand unexpected shocks and changing conditions. Farmers are being urged to unite, build resilience and look after one another, but there is a limited record of cooperation in the UK. It can lead to an emphasis on survival rather than adjustment and adaptation.

Farms are reliant on EU subsidies

16 per cent of farm business make a loss, but that is forecast to increase to 42 per cent as basic payments are phased out. Direct payments account for 61 per cent of farm net profits. An accountant who represents 100 agricultural businesses in the Highlands estimates just one would be profitable without subsidy. Average Highland estate receives two-thirds of its income from EU subsidies.

Some farms and sectors are more challenging than others, but enterprises can be well managed in difficult conditions. AHDB/Andersons study found that top-performing farms are generating £50,000 more, on average, than those in the bottom 25 per cent.

Top beef and sheep farms in less favourable areas (LFA) yielded an income of £45,200 a year compared with -£1,600 in the bottom 25 per cent. On lowland grazing systems, the difference between top and bottom was £55,100. The study states, ‘Almost all the determinants of success are down to the individual; the decisions made on the farm and how they are implemented.'

Brexit

Farmers Weekly sentiment tracker for April shows a continuing upturn in how farmers view their prospects (+3.18). There has been a slight improvement in commodity prices. Even though more see input prices rising faster than outputs, the gap is narrowing. There has been a slight improvement in how they think Brexit will affect their business. Overall producers remain more negative than positive about Brexit with half thinking it will be bad for their businesses, compared with 21 per cent who think it will be positive. Index (1.0 negative, 5.0 positive) has increased from 2.51 at the beginning of the year to 2.66.

It is difficult to get good data on how farmers voted in the referendum or what they think now. The Knight Frank rural sentiment survey (N just 200) shows they are deeply divided (as is the country). 26 per cent want a hard ‘no deal’ Brexit; 25 per cent want a second referendum leading to ‘remain’ (would it?); 22 per cent the EU/May deal; 16 per cent soft Brexit customs union;10 per cent other; 2 per cent, 2nd referendum leading to leave.

How are farmers preparing for Brexit? 51 per cent said they were making not making any preparations, which may not be irrational given the prevalent uncertainty. Top changes: Diversification; more land into conservation; make existing business more efficient; plant more trees; buy/sell land (the 'bigger is better' orthodoxy is being challenged, although there are still economies of scale).

As far as diversification is concerned, most low hanging fruit has been taken. It does require different business skills and capital costs can be high. Popular options include farm contracting; tourism; on farm niche food production (ice cream; yoghurt; cheese); farm shops; storage facilities or office space; leisure activities; eventually the farm can be just a context for the business.

We should not forget that the CAP has been a dysfunctional policy. It was not designed with UK agriculture in mind or contemporary problems. Basic payments have been only tenuously linked to outcomes. Policy instruments were poorly designed and often impact farm businesses without securing desired outcomes. It encouraged intensification of agriculture.

New policies in England

In England current land-based payments to farmers will be phased out over a seven-year period starting in 2021. They will be succeeded by public funding for public goods at the core of which will be the Environmental Land Management System (ELMS). Under the new system, farmers and land managers can enter into a contractual agreement with the government to produce environmental land management plans providing outcomes, for which they will be paid.

The National Audit Office has issued a highly critical report. Farmers will have little time to prepare for participation in a three year national pilot of ELMS, which will run from 2021 to 2024, because Defra is not planning to set out the environmental outcomes it will pay for or how much it will pay until April 2020. This is less than a year before the start of the pilot and when their payments will start to be reduced. Defra has consulted with farmers as it designs the Programme, but it has not provided the necessary guidance to enable farmers to plan how to adapt their businesses or how to work collaboratively with other farmers.

Defra has recently scaled back its ambitions for the level of take-up of ELMS during the first year of the three-year national pilot, from 5,000 farmers to 1,250, but is seeking to increase participation as the pilot progresses. It is not clear whether this lower number in the first year of the pilot will provide sufficiently robust evidence across the range of farm types and locations to inform further development of the Programme. This means that Defra only has two years to test how well ELMS will work at scale.

What the NAO is saying in coded language is that preparation is poor and it could blow up in Defra's face. Defra currently has no plans to test its assumptions about the level of take-up of the new system. If take-up is low, Defra will need to find alternative ways to achieve environmental benefits. Farmers that do not participate may leave farming or replace direct payment income by adopting more intensive farming methods that could damage the environment.

Trade effects

Under a no deal scenario, tariffs would apply to UK food exports (I do not think GATT 24 applies). Fresh lamb carcase and barley exports are likely to feel the largest impact given that the UK is a net exporter The sector facing the most challenges in a ‘no deal’ scenario is sheep meat. Tariffs under a ‘no deal’ Brexit would make exports uncompetitive, the sector is very reliant on exports to the EU.

There is concern about terms of trade agreements with third countries (the focus is often on the US, but there are problems elsewhere). Agriculture may be sacrificed for gains in other areas of the economy. There is concern about price competition from countries with lower standards, e.g., on animal welfare. But some countries are simply more price competitive.

The AHDB suggests that critical to doing things better on farms is to minimise overhead costs. Higher outputs account for 10-30 per cent of higher profits in top quartile farm businesses, but lower costs contribute 65-95 per cent. Farmers should set goals and budgets (business plan); benchmark; improve people management; be self-critical and use skills effectively.

It is difficult to say what the future holds. A no deal Brexit would be damaging. Perhaps Boris could deliver a compromise that he could get past the hard line Brexiteers, but the chances aren't good.

As far as the EU are concerned, the negotiated deal is one between the EU and the UK and it won’t be re-opened. Why would a different PM be able to persuade them otherwise? They will not abandon a small peripheral member state like Ireland. They don’t want to encourage others to exit.

A no deal Brexit is not in the EU’s interests, particularly Germany. There is scope for further negotiation on the political arrangements. It might be possible to offer a timetable on the backstop and alternative arrangements. The changing dynamics of the Franco-German relationship is the biggest uncertainty.

In questions, I was asked if I would advise sheep farmers to bail out now, given that production decisions need to be taken well in advance. My advice on balance was to hang in there.

I was asked how the attitude of banks and other finance providers might change. This is something I have researched in the past. The attraction of agriculture for lending is that it has been a stable sector with asset security. This will change to some extent after Brexit, but banks have considerable understanding of the sector and will be able to make informed decisions about future lending.

Robotics are the way ahead

Beverley: Robotics are the way ahead in farming, claimed Max Perris at the Geo-Agriculture conference today. Production costs would be reduced, yields would go up and less labour would be needed, although he admitted that there would be new risks. There were big upfront costs.

He referred to a system where robot Tom looked after the soil, Dick was concerned with feeding and Harry with planting. Wilma was the brains of the operation, telling the robots what to do and when to do and making sure that they did what was needed.

Robotic milking could take half the time of conventional methods. In barn cameras could be linked to GPS so one could observe the movements of the stock (sounds like Animal Farm made real to me). Drone surveillance could monitor the temperature of animals.

I put it to him that the combination of expensive kit in the fields and fewer staff around sounded like an invitation to criminals when we have a rural security crisis. He admitted there were cyber attack risks. However, he argued that robots would take over the repetitive work, leaving staff to undertake more creative interventions to improve yields.

What are the pros and cons of robotic milking?

Some dairy farmers see this as a way of 'Brexit proofing' their businesses. Between 900 and 1,000 UK herds are now using the technology or around one in ten of all herds. It is. however, a relatively expensive solution and one more appropriate to larger units. It requires a different style of working and presents new animal welfare challenges.

As far as cost is concerned, a farmer would need one unit per 55 low yield milkers. Each unit costs £100k - £120k and a new shed may be needed as well. So a farm with 100 milkers, not a particularly large farm by today's standards, would need to invest £300k. This would be spread over 15-20 years with bank borrowing, but units typically have a life of 10-15 years.

EU productivity grants have been available which cover 40 per cent of the capital cost, but I am uncertain whether these would be available after Brexit, although they would be consistent with a technology oriented investment strategy. No one knows what will happen to the milk price over the next decade, but I would be surprised if it went up in real terms.

With a robotic unit the cow is typically asked to find her own way to the milking unit and milk herself. This necessitates training for the herd person and the cow. It is important that there are no obstacles in the way of the cow, hence the need for a new shed in many cases. The cow will need access several times a day during an unhindered and uncomplicated route.

Staff need to be available 24/7 as the units send out alerts if there is any kind of problem and they need to be able to sort out software glitches. We all know how IT problems can drive us crazy, especially in the early hours of the morning. Staff need to learn new skills.

It does imply a new way of working with less repetitive work: being in a traditional herring bone parlour with cows urinating in all directions can be challenging. However, farmers need to think through how well they would adapt to this new technology and about its impact on impact on animal welfare, potentially positive but with new challenges.

Brave new world in farming

Beverley: Max Perris of Crawford and Company gave a fascinating presentation on the technological frontier in agriculture at the Geo-Agriculture conference here today. I will deal with what he had to say about robotics in a separate post, but his overall theme was that there is going to be more technological change in farming in the next twenty years than in the last two hundred.

He forecast that by 2040 only forty per cent of protein would come from animals produced for meat. Insects would become important as they offered protein, well balanced nutrients and were high in fibre along with low carbohydrates. We had a sample of crickets on our table. I must say they reminded me of the fried wasps I was offered as a delicacy in a remote part of China: fortunately my driver ate them. But attitudes could change. The Guardian considers whether the 'yuk' factor may decline: Fashionable food of future?

Vertical farming using hydroponics offered many possibilities with the speaker referring to an operation under Clapham Junction in London. The produce was non-seasonal, there were fewer food miles and uniformity of product was achievable. However, the initial capital cost was high and it was important to get the lighting right. One could produce crops like salads and tomatoes but not wheat.

Risks included machinery breakdown with replacement parts having to be sourced from abroad. If there was a fire, debris removal would be costly. I wouldn't like to be one of the troglodytes that worked there!

Pesticide rules could be weakened after Brexit

Concern has been expressed about the way in which EU pesticide rules are being translated into UK law by the University of Sussex Trade Policy Observatory: Not just a technical exercise

The commentary notes, "These changes to pesticide regulation in the UK can hardly be characterised as ‘technical’; they will weaken the rigour of the process by which pesticides are approved and monitored in the UK."

The EU could, of course, prohibit the import of crops from the UK produced with pesticides of which it did not approve.

Farmers divided about Brexit deal

Farmers are divided about how or whether they want Britain to leave the EU according to the Knight Frank 2019 rural sentiment survey. It should be noted that the sample size is just 200, but it probably does reflect a measure of confusion and uncertainty among farmers.

26 per cent of farmers wanted a 'no deal' Brexit, which would certainly be damaging for at least some of them, but 25 per cent wanted a second referendum leading to a remain conclusion. 22 per cent backed the deal with the EU negotiated by Theresa May and 16 per cent preferred a softer Brexit including a customs union.

30 farmers said they would change how they voted in 2016 and 80 per cent of them would switch from remain to leave. They blamed Brussels for the UK's inability to reach a deal.

51 per cent of respondents said they had no plans to adapt how they farmed to deal with leaving the EU. Those planning for Brexit envisaged diversification, putting more land in conservation schemes and making existing businesses more efficient.

The report can be read here: Knight Frank

Warning about government's new farm policy

The National Audit Office has issued a report on the government's new farming policy. Gareth Davies, the head of the NAO comments, 'Defra is moving forward with a policy which is a radical departure from the CAP farm payment regime we have known for forty years. Because it is such a big change, from acreage-based direct payments to an environmental stewardship scheme, we have looked at Defra’s approach to implementing its policy at an early stage.'

'We urge Defra to give itself time and space to fully test and evaluate the policy, and for comprehensive planning, to avoid any unintended consequences for the farming community, our environment or ability to feed ourselves.'

The report notes that 'The government’s new farming policy will be a significant change for farmers in England and the Department for Environment, Food & Rural Affairs (Defra) has a lot to do to prepare for its implementation at a time when its resources are already under immense pressure from its preparations for EU Exit. The National Audit Office warns that government must approach its roll-out carefully to ensure farmers can prepare in the way they need to.'

'The UK farming industry provides over half of the food the UK eats, employs 474,000 people and comprises 217,000 farms. While a member of the EU, the UK takes part in the Common Agricultural Policy (CAP). Under CAP, farmers in England received €2.4 billion in subsidies in 2017. To prepare for exiting the EU, Defra is developing the Future Farming and Countryside Programme (the Programme) to implement a new agricultural policy and regulatory arrangements to replace CAP.'

'The key part of this new programme is the Environmental Land Management System (ELMS). Defra hopes to have 82,500 farmers enrolled on ELMS by 2028. Under CAP, most payments to farmers are based on the amount of land they farm. These direct payments will be gradually phased out over a seven-year period starting in 2021. Under ELMS, farmers will be encouraged to enter into a contract with the government to produce environmental land management plans, and be paid for the environmental outcomes they deliver, often working in collaboration with other farmers. The policy represents a major shift away from traditional farming towards a system that pays public money primarily for delivering environmental benefits.'

'Farmers will have little time to prepare for participation in a three year national pilot of ELMS, which will run from 2021 to 2024, because Defra is not planning to set out the environmental outcomes it will pay for or how much it will pay until April 2020. This is less than a year before the start of the pilot and when their payments will start to be reduced. Defra has consulted with farmers as it designs the Programme, but it has not provided the necessary guidance to enable farmers to plan how to adapt their businesses or how to work collaboratively with other farmers.'

'Defra has recently scaled back its ambitions for the level of take-up of ELMS during the first year of the three-year national pilot, from 5,000 farmers to 1,250, but is seeking to increase participation as the pilot progresses. It is not clear whether this lower number in the first year of the pilot will provide sufficiently robust evidence across the range of farm types and locations to inform further development of the Programme. This means that Defra only has two years to test how well ELMS will work at scale.'

'Defra currently has no plans to test its assumptions about the level of take-up of the new system. If take-up is low, Defra will need to find alternative ways to achieve environmental benefits. Farmers that do not participate may leave farming or replace direct payment income by adopting more intensive farming methods that could damage the environment.'

'The success of the Programme depends on government assumptions about how the farming community will respond to the new policy. Direct payments from the EU currently account for an average of 61% of farms’ net profit. Without these, 42% of farms would have made a loss between March 2014 and February 2017. The Department expects the withdrawal of direct payments to be offset by improved business approaches, new entrants to the sector taking over farms that have ceased to be viable, and productivity gains across the sector. However, there is limited evidence that many farms are equipped to increase their productivity.'

'Defra is starting to specify its digital requirements for the Programme before key decisions have been made about how the new policy will work in practice, increasing the risk that it will need to make significant technology changes late in the Programme. For example, Defra has not yet decided which environmental outcomes will be rewarded or how much farmers will be paid.'

'The NAO recommends that Defra gets a plan in place with realistic timescales, that has sufficient flexibility to allow changes to be made as more is learned about how farmers react to the new farming policy. It should extend participation in its pilots to a wider range of farmers and land managers to test their willingness and ability to participate in ELMS, and determine the level of ELMS take-up it needs to justify investment in its design and development.'