Tuesday, December 27, 2016

Is there a future for smallholders?

Summary:  Is the small farm becoming extinct? Are property prices making a few acres no more than a dream for many?   This analysis suggests there are opportunities and a future, and gives good reasons why the small farm sector should not be abandoned by either politicians or farming unions.

“What are the prospects for smallholders today?” was a question posed by a reader this morning. “The small farms seem to be disappearing around here (Derbyshire) with the big boys expanding like nobody’s business. Are there any small farms left near you?”  Farms are increasing in size, and big ones expand at the expense of the smaller ones. With houses in the country fetching high prices there’s an incentive for farms to be divided. 

Small farms are being sucked up by larger ones by:

1.  Sellers can divide the property into two. The house, buildings and five acres, and there's the land to be sold in one or a number of lots.

2.  A farmer wanting more land buys a complete farm and then divides it into house + buildings as one lot which is sold and the land which is kept.

3.  Smaller farmers can decide to stop day-to-day farming yet remain an ‘active farmer’ through contract agreements. Or rent land on tenancies drafted to maintain eligibility for Agricultural Property Relief for inheritance tax.

4.  Faster tractors with larger loads increase the feasible range of operations for off-lying land. 

My caller wanted to know the future. I replied it is surely based on how entrepreneurial they are. Many use their limited land much the same as a regular farmer, selling stock in the mart, but the returns are very small, if positive at all. It surely is a life-style choice, nothing more. But if the microscopic income from their small farm is enhanced by a generous pension, or work off the holding, or a separate and profitable business on the holding, why not enjoy the the life-style? Far more interesting than many other occupations, like golf or cruising.

The current popularity of ‘country’ - 4x4s, Agas, clothing, boots, farm fresh food, dogs and so on - stimulates the attraction and value of country properties. Those in possession have a useful asset, even if it’s not one producing much income. Those aspiring to farm will find smallholdings don’t provide the entrĂ©e into the business that it once did. The initial 20 - 60 acre holding is over-priced for those wanting to farm conventionally. 

Yet a few acres and some reasonable buildings plus a polytunnel of two have the potential to provide a worthwhile rural business, but it won’t be selling a few fat lambs or a steer or two, or selling a few tons of corn. 

Direct selling to the final customer is obviously key, and the range of vegetables, herbs, flowers and exotics is considerable. Specialising in off-beat varieties of plants or livestock can be very significant. The popularity of 'bronze' turkeys among the food writers has developed a demand which, a few years ago, was quite specialised. Less common varieties can often find a premium price which more than off-sets lower yield. 

Providing a service for local, and less local farmers is another route to financial stability. The smallholding has the potential to provide a base, be it farm contracting, secretarial work or something entirely off-piste which matches the skills and interests with the local, or even national market. While many standard farm contractors are off-shoots of conventional farm businesses, others can build up successful operations in pest control, woodland work as well as fencing and other needed jobs which the ever-expanding conventional farmer needs to buy in. 

The future of the smallholder is far from dull and those involved shouldn’t see themselves as a dying breed. Regulations and risks will always be a part of their lives, as they are for anyone with any type of business. The popularity of their main asset, the property itself, says they are not alone in valuing both life-style as well as finding they can achieve an income which pays the bills and maybe more besides.

Small farms post-Brexit

The chances of Whitehall and Westminster downgrading the farming sector is likely. The demands on public funds from health, education and defence are very likely to overshadow the needs of farming. Not only will this threaten payments it is likely to result in am effort to reduce the administrative costs of farm subsidies.
Cutting out small farmers would make a big reduction in the work of the Rural Payments Agency, as well as making the job of application easier as well. HMRC have simplified VAT for small companies, so there’s a precedent. Farm subsidies for small holdings could be made on a formula or algorithm that is easy to use.
There’s a danger that payments might be reduced, on the basis the holdings are part-time, hobby sized, unimportant. It is an argument which could be quite logically used by the farming unions in their negotiations, on the basis their membership is made up of larger full time farmers.
This would be a mistake. Small farms, family units, are an important source of British born labour and provides starters with the chance of getting going. Building a farm business from a low base remains possible.   

Further reading: 
  • Swiss dairy farmer rents out his cows - and keeps their milk!  Alpine 20 cow dairy herd engages those interested in the traditional way of life and cheese production, and has self-catering accommodation for members to use. Practical Farm Ideas 25-3
  • Rabbit netting machine rolls out and buries netting - 1000m/hr  Practical Farm Ideas 19-4
  • Garden playground ideas, all made in farm workshop  Practical Farm Ideas 18-2

Every issue has innovations and ideas with the potential of building to a business based in a smallholding.