– Oliver McEntyre, National Agricultural Strategy Director for Barclays
Setting of the exchange rate for Basic Payment Scheme 2016 is done, dusted and long in the past, now the wait for payments begins.
Clearly the weakening pound has had an upward effect on farmgate prices, and also a positive impact on BPS payment levels for 2016, giving over 16% favourable movement in payments than 2015, and the best exchange rate since 2011. Another small breath in the sail for the industry after a couple of very tough trading years.
If the setting of BPS exchange rates feels like it is from way back, then the result of the Referendum on European Union membership must seem like a memory from the dim and distant past. The implications of the exit vote of course continue to resonate throughout the industry, with industry bodies holding talks, seminars and feedback sessions with farmers and industry stakeholders across Wales and the rest of the UK.
Now it is time for industry leaders to make decisions based on those sessions and feedback to the policy makers. In order to help the medium-longer term shape of the industry, the support systems and operating structure can be laid down to give everyone involved in farming the clarity to allow them to plot a direction for their business.
Currently, with no future policies in place and a minimum of a 2 year process to leave the EU the outlook is still uncertain. However we are seeing confidence and resilience continue in the market: demand for lending from farmers is still as strong as at any time prior to the vote, and our overall lending is up on the same period as last year.
Many are wondering how the US election results will affect UK agriculture, with the immediate aftermath being, to be honest, very little. The largest ‘shared’ commodity is grain, but the weaker pound is protecting UK prices at present on the global market. In the longer term, the victor has said he will shake up global trade agreements, just how this fits when combined with the UK exiting the EU remains to be seen.
How the post-EU policies will direct the industry is still a matter of conjecture at present. However, Barclays has been supporting clients for over 325 years, and throughout that time the industry has seen many periods of change and challenge.
The resilience of farmers and the farming industry has been demonstrated time and time again, with individual businesses making decisions on core production, diversification and adding value in just the same way as they always have. In July we announced a £100million fund to help farmers and we continue to support requests for funding when it is the right direction for the individual business to take. At Barclays Agriculture, we remain committed to the sector and will support farmers planning for 2017 and long into the future.