Agriculture budget strained? Strategies for maximising your profits
By Andrew Heskin, Partner and ARA specialist
The agricultural industry has faced uncertainty in recent years, with the combination of inflation, loss of income and the transition away from the Basic Payment Scheme.
This uncertainty has been compounded by the news of the recent underspend of £358 million in the Department for Environment, Food and Rural Affairs (Defra) budget.
Adding to the pressure, the NFU has made a fresh plea on Back British Farming Day (11 September), urging the Government to increase the agriculture budget to £5.6 billion.
This increase, according to the NFU, will provide the confidence farmers need to invest in the future of their businesses and the wider industry.
As farmers look for ways to maximise profits and extend their budgets, it is important to adopt strategies that will help them continue to find success despite the challenges they face.
Focus on cost control and efficiency
Managing costs will help with maintaining profitability.
Reviewing operational costs and identifying areas where savings can be made without compromising quality will help farmers stay competitive. Strategies to consider include:
- Energy efficiency
- Fuel management
- Bulk purchasing
Expand income streams
The need to diversify is more pressing than ever in a volatile market.
Relying solely on a single type of agricultural output can leave farmers exposed to market fluctuations and weather conditions. Consider looking at:
- Offering farm stays, seasonal events, and tours, which can generate additional income. This may include hosting events, farm shops, or petting zoos to attract visitors.
- Renewable energy ventures, such as biomass, wind turbines, or solar energy, which can generate an extra source of income and help with sustainability efforts.
- Creating value-added products such as cheese, jam, or honey which can increase profit margins and appeal to local markets.
Embrace innovation and technology
Technological advances continue to revolutionise farming, providing tools to enhance productivity and reduce costs.
Farmers should take advantage of precision farming technologies that use data to optimise crop yields, water usage, and fertiliser application.
Develop a long-term financial plan
A well-thought-out financial strategy can successfully weather the financial ups and downs.
Farms should review cash flow trends, set aside reserves for unexpected expenses, and explore options for financing new investments. Our team can help you by:
- Reviewing cash flow trends that will help identify high and low-income periods, allowing for better decisions around spending and saving.
- Contingency planning for unforeseen costs, such as extreme weather or equipment breakdowns, will provide peace of mind.
- Identifying the latest Government schemes and grants that may apply to your farm.
For further support and financial planning, contact us today.