As the agricultural sector faces a period of funding transition and change, many landowners will be looking much more closely at different options for their farming businesses. As the Environmental Land Management (ELM) funding programmes crystalise, there will be some opportunities but also a funding shortfall to work through for many. Allied to this, market factors are causing farm business owners to consider diversifying their business model to help maximise value and also manage the risks of transition towards post-EU schemes.
George Badger, Partner of Ceres, says: “Farming businesses will face new financial pressures through the transition, as the dependence on Basic Payment Scheme shifts to finding new funding sources and business lines - having a plan for this is critical.”
It is likely that an injection of additional capital, or the option to do so to smooth out the transition to a new funding programme or business model, may be required. While strong gate prices have offset the challenges for many for now, the need to plan for the business on a rolling basis has never been more important. Preparedness for what is to come means being fully aware of the potential for any cash flow or capital shortages to deliver the business plan, getting ahead of any needs and ensuring your business is ‘lending ready’ to enable a stress free and timely support process.
Technology platform Figured, an agri-specific cloud-based financial management tool that integrates with accounting app Xero, enables a farm or estate plan to be set and monitored with minimal work and effort. With Figured set up and a budget being monitored, professional advisers and the whole farming team are looking at the same information all the time, bringing a higher level of common understanding of the business plan. There is also innovation occurring in the technology to access funding, where businesses that have up-to-date management accounts can access funding quickly and easily versus a traditional bank process.
“Farming businesses with tested and monitored business plans are typically the ones who see the opportunities quicker, can respond and are more successful at managing new ventures,” says Neil Adams, Managing Director at Promar International.
Agri-businesses looking to secure funding in the future will need to be particularly well prepared for the potential tightening of access to facilities, and it’s never been more important to get the right team, the right plan and the right technology in place.