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Pause, reflect and looking towards 2022 in the Agricultural sector

 

Oliver McEntyre, National Agricultural Strategy Director for Barclays, discusses his thoughts on 2021 and what 2022 could have in store.

Autumn is closing in fast and the nights are getting darker already, even before the hour comes back at the end of the month. It feels like 2021 is drawing to its close a little – after the massive disruption of lockdown in 2020 and into early 2021 for some parts of the UK it does feel like we are on a more even keel with regard to coping and learning to live with the pandemic.

So what of the year UK agriculture has seen, it started with the news a trade deal with the EU had been reached, which was good news for the UK’s producers – especially the sheep sector. Also, the initial trickle of information regarding Domestic Agricultural Policy at the tail-end of 2020 has turned onto more of a steady flow with pilots for Environmental Land Management Scheme (ELMs) starting alongside more information on potential grants, an advice service, the Exit Scheme and a potential New Entrants Scheme. By far and away the greatest clarity has been on the reduction in Basic Payment Scheme (BPS) income in the coming 3 years as it starts its journey to zero by 2028 – the income will be replaced by income from ELMs and to a degree also bolstered by grants for investment in infrastructure and technology. However, this reduction will begin to focus the challenge farmers in England (many policy decisions for the devolved nations within the UK are yet to be finalised) will face.

If 2021 was a year of policy information trickling into the sector, then 2022 has to be about beginning the change process. Starting with reviewing the farming business, looking at the farm’s potential for income generation in light of the reduction in BPS. That could be from environmental schemes, diversification or investment in infrastructure and technology to make the business more efficient in its production to remain competitive, all with the backdrop of the Net Zero challenge.

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