Arable farmers told to take control as subsidy support fades

Arable farmers must rethink crops, costs and succession as subsidy support fades and weak grain prices put margins under renewed pressure, the Central Association of Agricultural Valuers has warned.

Jeremy Moody, secretary and adviser to the CAAV, said arable businesses were at a critical point after years of tight or negative margins.

Speaking at the Cereals Event at Diddly Squat on 10 June, he said farmers still had opportunities if they were prepared to refocus their businesses.

With support payments disappearing and margins under pressure, growers needed to make clearer decisions about which land to crop, which enterprises to back and how to plan for succession.

Mr Moody warned that winter wheat was losing money on standard costings, leaving growers gambling on where grain prices would be next summer.

He said: “On standard costings, winter wheat is losing money – the real gamble is where grain prices will be next summer.”

Input costs are already under pressure, with any prolonged disruption to the Strait of Hormuz likely to increase the cost of fuel, fertiliser and other key inputs.

Mr Moody warned: “The longer the Strait of Hormuz is closed, the shorter we will be of fuel, fertiliser and other inputs, with consequences for costs.”

Farmers are also facing uncertainty from the EU reset, which could affect access to more plant protection products, while questions over future export agreements are making planning more difficult for arable businesses.

At the same time, global grain stocks remain high, although Australian plantings are down and British plantings are expected to follow.

Mr Moody added: “My suspicion is that not all land will be worth that gamble – some is already being withdrawn from production.”

Many farmers are likely to reconsider rotations this autumn and beyond, with growers expected to focus more on crops that improve soil health, withstand extreme weather and require fewer chemical inputs.

In the longer term, Mr Moody suggested the changes facing the sector could be even more significant.

With support payments disappearing, farmers were less tied to government schemes and had more freedom to decide whether land should stay in production, move into different crops, be let, diversified or restructured.

Changes to inheritance tax were also prompting farmers and families to review succession and long-term plans.

Mr Moody said: “The comfort blanket of the past 30 years has gone.

“In 70 minutes of the Chancellor’s Budget speech in October 2024, a generation of expectations dropped off a precipice.”

He argued that agriculture was not a priority for the government, but that the withdrawal of subsidy also created greater freedom for farm businesses.

That shift, he said, would require a major change in mindset.

He said: “This drives a major shift in thinking; difficult for some but an opportunity for others.

“Where you take your business in the next 10-15 years is an individual decision – take advice to get a wider perspective, and from someone who can break open family conversations around succession.”

Management would be central to future success, with Mr Moody citing Andersons Centre figures showing that 95% of the difference between the top quartile of farm businesses and the rest came down to management.

Getting land into the hands of good managers would be key to improving productivity and profitability, he argued.

Mr Moody said: “In the UK, farming makes up 0.6% of Gross Domestic Product – in Holland it’s 1.6%.

“They don’t have much agricultural policy, but they do have a national policy of being pro business.”

The government could still support the sector by adopting policies that encourage business growth and treat farming as a more ambitious part of the wider economy, he argued.

Mr Moody said: “We should set a target for farming to grow to 1% of GDP – and mean it.”

He pointed to permitted development rights, tax incentives to encourage farm tenancies and improved investment allowances as measures that could help unlock rural growth.

Mr Moody said farming needed policies that rewarded business growth, encouraged tenancies and investment, and recognised efficient farming as a success in its own right.

He added: “We need to use the language of success – and celebrate good and efficient farming as a value in its own right.

“And remember that the government can help as well as hinder.”