Farming through 2024

By Brian Harvey, Partner and Head of the agriculture team

At this time of year, I often take the opportunity to look back at the year that has gone and look forward to the year ahead. In looking back at 2024, where do we start?

I guess for me the year started in the Royal Cornwall Hospital where I had a tumour removed from by bowel.

The importance of team support

As an accountant the thought of being out of action for the month of January seemed unthinkable but thankfully through the hard work and support of my team, for which I am extremely grateful, it was business as usual for our clients and all deadlines were duly met.

I guess there is a message here to us all that we are perhaps not as indispensable as we might think.

Thankfully, I was able to return to work in February and received good news from the surgeon. My bowel cancer story has been brilliantly covered by Athwenna Irons in the Western Morning News in the spring. I certainly consider myself to be very fortunate and I fully appreciate that the outcome could have been quite different.

My message is to get yourself checked out if you have any worries. Don’t put off until tomorrow what you can do today.

Weathering the storms of 2024

I often find myself talking about the weather and once again 2024 has seen its weather challenges. The summer seemed to lack heat and sunshine, but we were able to have three days of pleasant weather for the Royal Cornwall Show which is always a highlight of the year, this year being particularly true given previous turmoil.

The talk of the show was the forthcoming general election and what the future political map of the UK might look like. In the end Sir Kier Starmer won at a canter with the rural blue South West being all but removed from the political map.

Economic trends in agriculture

In terms of the year for our clients, it has been variable depending upon what sector you operate in.

The long-term decline of direct support is now noticeable. This is because of inflation, which has eroded the value of support as well as the direct decline due to changes in the structure of support and the well reported Defra underspends which is clearly frustrating. Recent months has seen a wider uptake in SFI and Countryside Stewardship schemes and this must still be encouraged.

Whilst the variable costs of fertiliser, feed and fuel have fallen which is beneficial, so have output prices and it is arguably the fixed costs of labour, machinery and finance that are providing continued challenges for many with cash flow for some being particularly tight.

Employment of labour remains a key issue both in terms of availability and the cost with increases in the national living wages and employers’ National Insurance being difficult to absorb and this will be an increasing challenge in 2025.

Global uncertainty and it’s effects

We live in a world of increased geo-political uncertainty and tension, and this will undoubtedly have its impact of global agriculture. In this equivalent article last year, I spoke of the chances of Donald Trump being re-elected as US President. We wait and see what his second term might look like, but it is very clear that he has the political backing of the US farmer and no doubt he will try and look after their best interests and what that might mean for us we don’t yet know.

The Budget!

I cannot conclude this piece without mentioning the recent budget, the first of Rachel Reeves as Chancellor.

I have often spoken and written about the value of Agricultural Property Relief (APR) and Business Property Relief (BPR) to the rural community and how it should not be taken for granted but like the most of us I was not ready for the changes that have been announced which will undoubtedly have a major impact on the farming community and my working life, having never been so busy.

To date, despite the best efforts of the NFU, CLA and other organisations there seems to be little traction in terms of any back tracking or concessions from the government.

We will see what 2025 brings and hopefully some sense will prevail. I have been lobbying for at the very least see APR/BPR allowances becoming transferable between spouses, ideally for the 100% allowance to be bigger to take more active farmers out of IHT (a tax that many cannot afford) and hopefully would like to see some leeway being given to the older members of the farming community where the making of gifts, and surviving seven years is not a realistic option.

Please watch this space for more detail to follow in the new year with the detailed legislation. For now, our advice is not to panic and to get proper advice on this matter. For many, planning will help alleviate any inheritance tax exposure and help protect the family farm, noting that for some such options are not clear or obvious. However, succession planning must be on the agenda for 2025!

A milestone in my career

Finally, I have noted in writing this article that today marks the 25^th anniversary of my joining of the accountancy profession having joined Arthur Andersen in London in December 1999. At that time the talk of the day was the Millennium Bug and what was going to happen as we entered the next millennium!

So much had happened and changed over the following 25 years and I have been fortunate to work with and meet so many interesting and inspiring people and learned so much. I feel privileged to advice the agricultural community across the South West and I thank you all for your support over what has been an interesting year!

Here’s to the challenges and opportunities that 2025 brings us and I remain confident in the resilience of the British farming community to cope with them.

Wishing you all a Merry Christmas and a happy and prosperous New Year