Farmers are being encouraged to use the agricultural transition period to 'their best advantage' as next year will be the last ever BPS application process.
Direct payments are being phased out over a seven-year agricultural transition period, starting in 2021 and ending in 2027.
Next year will see farmers fill out their last ever BPS application form, with the payments expected to be halved and delinked in 2024.
When payments are delinked, recipients won’t have to farm the land to receive the payments. Delinked payments will be phased out by the end of 2027.
The UK's new environmental schemes replacing the EU's system - such as the Sustainable Farming Incentive - is not intended to replace that income for most farmers, the Central Association of Agricultural Valuers (CAAV) warns, requiring them to look to improve their businesses.
Because of this, the specialist professional body says it is vital that producers 'focus on the business' during the transition to a no-subsidy era.
“We’re looking at a monumental time of farming change: It’s a generation’s transformation in a decade,” says Jeremy Moody, secretary and adviser to the CAAV.
“In 2022, the average farm will take 85 percent of its income from trade and 15 percent from subsidy."
For an arable farmer selling 3.5t/acre of wheat at £250/t, a 10% shift in yield or price is equal to 117% of their 2022 Basic Payment. “It’s therefore really important to focus on the business.”
Given the massive range in performance between the top and bottom quartile of producers in any sector, there are clearly gains to be made, he adds.
“Good businesses will be prepared and will carry on getting better. Others will find themselves in 2028 wondering where their BPS cheque is."
Preparations will include investing in farm infrastructure, focusing on efficiencies or diversification, examining the business structure and succession planning.
“The right people on the right land will seize the opportunities," according to Mr Moody.
In future, land use will be far more varied, with 60% of food output by value coming from 30% of the land, he explains.
As farm types become more varied, they could fall into five categories: Producing food under cover, efficient commodity production, added value, more extensive production with other income streams - including from environmental services - and direct environmental land management.
Grant schemes and environmental payments will help people to adapt, but ultimately the direction of travel will be decided by individual business owners, he adds.
“Given the pace and magnitude of the changes facing farming, it will be vital to seek expert advice.
"There’s going to be huge demand for rural land management advice; as trusted advisers we have a fundamental and critical role in helping businesses through this.”
