Brown and Co says 25% of farmers preparing to leave sector

That is one of the conclusions of a survey conducted by Norfolk-based rural agency Brown and Co.

The firm, which has offices across East Anglia, is one of the organisations offering free consultancy advice under Defra’s Future Farming Resilience Fund (FFRF).

The fund was established to help farms during the transition away from the Basic Payment Scheme (BPS) - part of the EU's system of subisidies which are being phased out by 2027 in favour of post-Brexit environmental incentives.

During the first phase of the FFRF scheme, which began in August 2021, Brown and Co said 86% of the 1,400 farmers it supported recognised the need to make "significant changes" to their business within the next five years.

The firm's survey also says 48% of farmers plan to diversify or increase productivity, or both - while 25% plan to leave the sector altogether.

Henry Harrison, an agricultural business consultant with Brown and Co (Image: Brown and Co)

Henry Harrison, a Norwich-based agricultural business consultant, said the majority of those were through natural business succession (17%) or retirement (6%) - but 2% were considering selling up and quitting altogether.

"25% leaving the sector seems like a very large number, but the bulk of that really relates to a change of business principles," he said.

"Of those, 17% are leaving the sector through succession, passing on to the next generation because the business principle, the farmer, is looking to leave the sector within the transition period.

"Then 6% relates to retirement, and that generally involves a change of structure, going contract farming or letting out the farm on a FBT (farm business tenancy).

"The other 2% is out-and-out sale of the farm, packing your bags and off you go. 

"The key point is that 25% of the individuals we were speaking to will change within the next five years, so there will be someone else responsible for that business.

"It reflects that we have got a more elderly farming population and we are starting to see that succession and progression."

Agriculture is undergoing a period of significant change at the moment which Mr Harrison said is likely to continue during the transition period. 

"There will be increasing complexity of regulation and other things going forward," he said.

"Hopefully by getting the younger generation through, with their enthusiasm, they will be well-placed to target these challenges and take on technological advances, while elderly farmers reaching the end of their careers might be less keen to really tackle them."

Mr Harrison said the number of farmers considering leaving the sector may have risen since the survey was taken, as the impacts of the war in Ukraine, soaring production costs and higher interest and inflation rates have taken a tighter hold since the first phase of FFRF.

Under the second phase of the scheme, farmers across the country can now access tailored one-to-one advice worth a total of £32m until March 2025.

The six "packages" available cover budgeting and business planning, technology adoption and collaboration, land and property, natural capital, greenhouse gas "footprinting" and specific support for tenants.

Mr Harrison added: "There are numerous short-term challenges facing the industry - cost of production, cashflow pressures, interest rates - but while there is support available being funded by Defra it is really logical to take advantage of that."

Greg Beeton, an agricultural business consultant with Brown and Co (Image: Brown and Co)

Greg Beeton, an agricultural business consultant who analysed the research, said "considerable restructuring" had been identified, with 80% of farmers planning succession or family changes within seven years.

"This aligns with the age profile of the project farmers, with 32% of the farmers we worked with over 65 years old," he said. 

Mr Beeton said tenants and livestock farmers have particular challenges to address as BPS subsidies are removed and new markets develop.

"BPS represents on average 11% of turnover across all farm types but 68% of profits," he added.

Sales from livestock and crops constitute 66% of income on average, with the remaining third from diversified enterprises, BPS payments and environmental schemes.