British farmers should gear up for the possibility of a hard Brexit, with subsidies likely to drop by 20% by 2020, land agency Strutt & Parker said.
George Chichester, partner in Strutt & Parker’s farm department, said farmers had two years to “get their house in order” ahead of Brexit, with the prospects of a “tougher five years” to follow.
Mr Chichester said that in the years following Brexit there was a danger that “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”.
Mr Chichester said it was likely that some form of subsidy support would remain, but it would probably be focused on environmental stewardship and accountable.
Farmers should assume that the basic payment will fall by 20% by 2020 and is likely to continue to decline after that, he said.
But Mark McAndrew, head of Stutt & Parker’s farm department, said demand for land would be remain strong in some areas, with prices unlikely to fall sharply.
“It is possible we are moving into a different market due to Brexit, but we don’t think this is the case,” Mr McAndrew said, noting the role of non-farmer buyers in the UK, who are less sensitive to farm policy.
“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,” he said.
Forestry to remain stable
And forestry was seen remaining resilient against the potential turmoil.
“The forestry sector is relatively unaffected by the uncertainties of Brexit,” said Jon Lambert, at Strutt & Parker’s independent forestry arm.
“Forestry has been the top performing asset type in the UK over the last 15 years – with commercial conifer forests showing annual capital growth of around 15%,” he said.
Mr Lambert was upbeat on prospects for UK timber prices, which have already risen thanks to the falling value of the sterling.
“Looking to the future, a fall in commercial plantings during the early 1990s means that the UK is facing a shortfall in timber by 2030,” he said.
“Given we currently import 70% of the timber we use, prices for home-grown timber should increase over the long-term, underpinning continued growth in the sector.
(Source – http://www.agrimoney.com/news/expect-uk-farm-subsidies-to-drop-20percent-after-brexit–10406.html)