Farmers warned subsidy payments may fall 20% after Brexit

The Basic Payment Scheme (BPS) is the biggest of the European Union’s rural grants and payments to help the farming industry
The Basic Payment Scheme (BPS) is the biggest of the European Union’s rural grants and payments to help the farming industry

The Basic Payment (BPS) subsidy scheme for farmers will probably fall by 20% after Brexit and is likely to continue to decline after 2020, according to Strutt & Parker.

The rural estate agent was speaking at the 2017 Rural Land Briefing and said farmers had two years 'to get their house in order' before the impending 'hard' Brexit.

"Subsidy support will be less and trade tariffs may well apply, and even if not, then our markets are at risk of being undermined by cheap imports from elsewhere in the world" said, George Chichester, a partner at the farming department said.

The Basic Payment Scheme (BPS) is the biggest of the European Union’s rural grants and payments to help the farming industry.

Farmers apply once a year - normally in May - and payments begin in December.

Continue to decline

Mr Chichester said he believed that the unique nature of the agriculture industry meant that some form of ongoing subsidy support would remain, but it would probably be channeled into environmental stewardship schemes, or require greater environmental accountability of farmers if existing payments were to continue.

It would therefore be wise to assume that the Basic Payment would fall by 20% in 2020 and is likely to continue to decline after that, he added.

The Strutt & Parker Rural Land Briefing was held on Thursday, 2 February 2017 at the IET London with attendees hearing the firm’s specialists offer their thoughts on future prospects for the land market, forestry sector and rural property.

'More variable than in living memory'

Mark McAndrew, head of the national estate and farm agency department, said that prices for farmland had become more variable than in living memory, which was good news for buyers, but more challenging for some sellers.

"Supply is no longer the driver of the market – it is demand, which has become very localised.

"It is strong in some places, but weak in others. This means more land is remaining unsold, but what is selling is selling well.

"It is possible we are moving into a different market due to Brexit, but we don’t think this is the case for a number of reasons.

"Firstly, demand from non-farmer buyers should remain if the tax regime remains supportive and secondly, if we look back at previous farm policy reforms, while we saw a fall in the amount of land for sale, there were not falls in price. Assuming the new UK farm policy offers some support to help farming profits, we do not expect a significant fall in farmland prices in the medium term to 2023."