Harvest 2023 has now been largely gathered in. Combinable crops appear to be described as “an ok average” by many farmers whom I have spoken to, with many commenting figures will not be as good as 2022. The market has certainly fallen away from the highs of 2022 on pricing and much higher input costs were experienced by many. Those who did sell early are also having pricing issues, as crops are somewhat below the expected quality, hence they are seeing deductions from their headline price.
That all said many farmers are still predicting profits and, whilst many looking at significant balancing tax payments in January 2024, they also accepting that there is a big risk in reducing the payment on accounts.
Many held back 2022 crop into 2023/24 to be sold (I have certainly seen significant stock levels across my client base at March 2023) but, after spending well on equipment in 2022/23, the desire for replacements this year seems more muted.
This all couples with the rise in the interest rate they might have to pay if their profits, and hence payments on account are reduced too far, to leave it a greater financial risk to reduce POA too far.
More of the talk seems to be of the very wet October weather which has caused significant damage to sown rape, winter wheat and barley in the ground. I have travelled around the east /south over the past two weeks and have seen significant examples of standing water in fields, so the prognosis for lost crops is quite high.
One farmer was trying to convince me last week the wet weather was so bad it had solved his issue with Rape Beetle, as they had all drowned!
In my last review I concentrated on the review of taxation of environmental schemes. At this point there has been no response on the consultation. It is hoped one may come out around the time of the Autumn statement and as an industry we will have to digest this in due course.
As part of annual conference, I had some time behind the scenes with our keynote speaker Daniel Zeichner, Shadow Minister for Environment, Food and Rural Affairs. He, like many politicians, was not to be drawn on Labour’s detailed plans for agriculture but I was heartened that he was prepared to listen and did not see Labour, as such, looking to make major changes to farming policy overnight if they are successful at next year’s election. Most farmers are long term business that like to see long term scheme so they can appropriately plan their businesses. They do not like the uncertainty they currently find themselves mired in. As mentioned earlier, they have sufficient challenges dealing with the weather, let alone not knowing what the rules or support schemes there might be for 24/25 season, as they start over the winter to make their agronomy plans for next year.
Let’s hope that more certainty about all aspects of the available schemes comes forth soon.
*The views expressed are the author's and not ICAEW's.