Many farm businesses will receive their Single Farm Payment (SFP) during December. This could mean that some of those experiencing financial stress may feel it is alleviated for a short time however as most of us are aware, SFP is changing in 2015 to the Basic Premium Scheme and Greening, (BPS). This is a change that will make a big financial difference to farmers. After 7 years all active farmers will be paid exactly the same BPS for the acres that they are actively farming and have entitlements for. From 2005 to 2014 the amount of SFP was dependent on the amount of premium claimed and the amount of milk produced historically. This gave some farmers very high payments per acre, while others had very low payments per acre. Under the BPS the payments to individual farms will increase or decrease in equal stages over the next 7 years.
DARD figures indicate that for many farmers the SFP is equal to their profit for the year. The changes will have huge financial implications for some farmers. Those with high payments per acre may see income drop fairly quickly. The changes may also result in a substantial loss to cash flow and profitability. Businesses will have to look at what commitments they have going into the future. For example, if land has been bought, or major capital spent on the farm recently and this has been financed with borrowings there could be a heavy repayment schedule. Someone in this position will have to consider, will the business be able to meet the repayment schedule with this reduced cash flow? Can the business find new cash flow opportunities? Would the repayments have to be rescheduled? Would assets have to be sold to relieve the pressure? Can costs be reduced? Can the business support all the members of the farming family or families involved?
The best time to consider the implications of these changes and potential options is before reduced cash flow starts to bite. Doing nothing in a situation of increasing financial pressure is not a solution. Rural Support’s message is that it is a positive step to ask for help. Often getting another perspective on issues you are experiencing can be an opportunity to identify options and find a way forward. Through financial mentoring you could be supported to do this.
If you are experiencing financial stress Rural Support can provide up to three sessions of free, confidential, face to face support from a Finance Mentor to analyse your current financial/ farm business position and help prioritise actions which may improve the situation. This may include considering changes to the farm business and developing a future plan. Rural Support will support you to take action to address financial problems and this should ease the burden of dealing with financial stress alone.
Rural Support urges anyone who is experiencing worry or stress regarding their financial situation to contact their helpline to find about how they can get help. Availing of financial mentoring is very straightforward. All it requires is an initial call to the helpline number.
To speak to someone in confidence contact our helpline on 0845 606 7 607. The helpline is available from 8am to 11pm seven days a week (voicemail and support options available at all other times).