Government spending cuts herald new era for farming

Cuts in Defra budgets announced as part of the overall spending review herald a new era for UK agriculture in which farmers will need to become less dependent on support and increasingly focus on new business opportunities.

That was the reaction of Gareth Oakley, Head of Agriculture at Lloyds TSB, in response to the news of a 29% cut in Defra spending over the next four years.

These cuts should prompt a more self-reliant mindset across the industry, not least because they may well be followed by further significant changes come the review of the Common Agricultural Policy over the next few years, says Mr Oakley.

He urges farmers to look for the opportunities rather than dwell on the implications of reduced support.

Farmers must build both economic and environmental sustainability into their long term business planning, and the review will present opportunities, adds Mr Oakley. For instance, the commitment to increase Higher Level Stewardship funding by 80% might be the prompt for some farmers to alter their business strategy, whilst other opportunities may arise as the government and local authorities look to contract out some of their services.

Whether through co-operation, diversification, adding value or increased efficiency, farmers must use these cuts as a catalyst for change that will secure their futures.

As farmers make changes to their businesses, Mr Oakley acknowledges that banks also need to respond to a changing agricultural business landscape.

Banks have a vital role in providing the financial support that will enable businesses to respond appropriately to new opportunities and grow successfully as a result. This will require in depth understanding of the farming industry and its challenges and the right resources on the ground. Lloyds TSB is committed to building its already strong network of regional agricultural managers who can give farmers the support they need. We also continue to develop a range of products that allow farmers to minimise risk and maximise new business opportunities.

Defra will cut its budget by 8% a year over the next four years with a reduction in the Rural Development Programme of grants in England of around a third or 66 million. But it has committed to increasing the Higher Level Stewardship Scheme by 80%. Farmers will have to share greater responsibility in bearing the costs of animal disease control, but Defra has promised to cut red tape and has already announced the closure of nearly two thirds of its quangos. For more details see  http://ww2.defra.gov.uk/news/2010/10/20/comprehensive-spending-review/

Lloyds TSB Agriculture: Lloyds TSB Agriculture provide a personalised banking service to farmers and rural businesses delivered through a network of over 150 staff, made up of over 80 specialist agriculture managers and 70 support staff, based in 43 rural offices throughout the UK. In recent years Lloyds TSB Agriculture has seen strong growth in its acquisition of new customers – the rate of customers moving to Lloyds TSB Agriculture from other banks currently stands at around 800 farmers per year.