2015-09-02  

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Farmers Concerns for the Future Highlighted

The fourth in a series of agricultural surveys conducted by MHA MacIntyre Hudson, a member of the UK-wide group of accountancy and business advisory firms MHA, reveals that for the majority of farmers’ optimism for growth, whilst still high, is declining and succession planning is even more of an issue.

The MHA Agricultural Insight Survey was conducted at Cereals 2015 in June and compares this year’s findings with those of 2014. The survey takes into account the views of more than 150 farmers nationwide.

Key findings include:

  • Despite falling prices, optimism for growth is high with 59% of those who responded expecting growth; however, this is 10% less than last year.

  • Expansion is an aspiration for many, with 66% planning to increase their acreage compared to 59% in 2014.

  • 72% of respondents are concerned about succession planning, which is an increase of 7% over last year.

Sarah Dodds

Sarah Dodds

Sarah Dodds, head of the MHA MacIntyre Hudson Agricultural Sector commented:
“It’s heartening to read that this survey shows that even with the lower arable prices a high percentage of the farming community can still maintain a level of optimism. This includes livestock producers, who usually benefit from a fall in cereal prices but whose revenues are showing that this does not appear to be the current situation”

Aside from the concern of available land, planning for the future of the business is a growing worry for many. Of the 72% who stated that succession planning was a concern, 16% explained that it was a ‘great concern’.

Sarah Dodds added: Our survey also highlighted the increased concern about cash flow – stemming from the prospect of a late harvest and the uncertainty about the timings of support payments. We are advising our farming clients that it is vital they make sure they have a facility in place to manage a reduced cash flow and to contact their lenders sooner rather than later about this. It is always better to ask for a facility a month or two before it is needed rather than the day the overdraft limit is breached.”

“Much needed stability was also welcomed with the confirmation in the summer budget that the level of Annual Investment Allowance (AIA) will now remain, for the foreseeable future, at £200,000 (a reduction from £500,000) from January 2016. However, given the current concern about cash flow this might be of limited use over the next 12 months. If a capital spend is being considered then to benefit from the full tax advantages this should be made before 31 December 2015”.

Of those surveyed by MHA, a significant 75% would consult their accountant when making decisions about their business. Sound financial advice is essential whether a farmer is planning to expand or looking to hand over the reins to the next generation. Agricultural accountants are well placed to comment on both the practical and taxation aspects of the business, as well as provide an independent assessment of the business.

The increases to Inheritance Tax allowance limits announced in the summer budget make it more important than ever that wills and succession plans are reviewed and issues and opportunities identified.

For a full copy of the report or for more information about MHA MacIntyre Hudson contact Sarah Dodds at sarah.dodds@mhllp.co.uk

MHA

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