The decision to leave the EU is a hugely significant moment for agriculture, ending more than 40 years of British farmers operating within the Common Agricultural Policy (CAP) framework.

There are currently big unknowns about trade arrangements, what will replace the CAP, and what these changes will mean for the countryside, which is home to a fifth of us, and the rural economy, which generates about £230 billion/annum.

However, while there will be challenges, we are also absolutely sure that there will also be opportunities.

So three months after the historic vote to leave, what do we now know and what are the key issues farmers and landowners need to be thinking about in order to prepare for the future?

Agricultural policy and subsidies

• The creation of our own domestic agricultural policy will fundamentally change the way people farm.
• However, we have the opportunity to rewrite agricultural policy so it is in line with UK conditions, rather than a compromise with 27 other countries.
• British farmers would welcome a concise farming, food and environmental policy that makes it clearer what is expected of them.
• The government has guaranteed that agricultural funding under Pillar 1 of the CAP (direct payments) will continue at current levels until 2020.
• After 2020, we don’t yet know – but the debate has already started about what should happen, with some radical proposals put forward.
• The budget will be under pressure with increasing demands from the NHS and elsewhere.

Trade

• When our currency weakens, UK exports do become more attractive, so we could see some positive moves in commodity prices in the short term.
• It’s impossible to predict what new trading arrangements will look like as the final deal is likely to be bespoke.
• Some trade barriers look likely as we don’t think the UK will be prepared to offer free movement of people in exchange for free access to EU markets.

Red tape

• Brexit is unlikely to reduce regulation - if we want to trade with other countries, there will be minimum standards they expect us to adhere to.
• That said, we may see simplification of the application process for support payments, which many farmers feel is overly complicated.

Land prices and rents

• The decision to leave the EU has created uncertainty, which will make some farmers reluctant to invest in farmland.
• In the short term, it’s possible that we could see a decline in the number of transactions, and average prices in some areas may come under pressure.
• Taking a longer view, land remains a diminishing and essential asset, so we remain confident about an increase in values over the longer term.
• If there are fewer buyers in the land market, it will offer an opportunity for people who are confident about their business and want to expand.
• If the pound remains weak and farm profitability increases, then the rental market would be largely unchanged.
• However, with a different subsidy regime in place post-2020, a shake-up of the rental sector would be inevitable.
• This could herald the end of smaller, unproductive let farms and lead to a complete restructuring of some rural estates.

Preparing for the future

• Estates need to look at what is going on within their own business and the wider rural economy.
• The post-Brexit strategy must address an overexposure to agriculture and identify ways to drive a diversified estate economy.
• There needs to be some serious thinking done that puts estates in a place of strength for the reality of a new farm policy.
• With long-term borrowing costs at an all-time low, the opportunity to re-gear and invest for a bright future has never been better.
• Farm businesses must also be in the best possible shape for what lies ahead, diversifying farm income to spread risk.
• The key is prudent and sensible management, making sure farms are budgeting to make a profit, even at lower commodity prices.
• Re-examining labour requirements and keeping a tight rein on capital expenditure will be an important part of this.

Final thoughts

• Farmers and landowners face significant change as a result of Brexit.
• There will be challenges, but those that plan for change now will reap rewards
• If we get our agricultural policy right, with a focus on productivity, then we should be in for a bright future.
• We’ve got the right ingredients – good land, good climate and some very capable farmers.
• With continued investment in research and development, we can lead the way.
• It’s time to look forward, not back.