Time to take stock of your farming business

Show season is always an exciting time in the Scottish agricultural sector and this year there has been a heightened buzz at the shows so far following the enforced hiatus because of the pandemic. Agricultural shows provide an opportunity for the sector to come together, reacquaint with friends and contacts, and have some of the face-to-face conversations we have all missed these past two years.

There has been a lot of “taking stock” in the sector, driven not only by some of the realities of the pandemic, but also by the moving economic landscape within which the agricultural sector operates.

For some, this has led to a decision to come out of farming altogether, perhaps because family do not wish to follow them into the farm business. For others, it has meant a re-focussing of the farm business enterprises, with a view to what will work best in the coming years.

In all cases it has been interesting to be involved in the thought process with our clients, to work through the relevant issues, highlighting the pros and cons of proposed decisions and talking through the financial, tax and business implications of their proposed course of action.

Big decisions like selling the farm, starting or ceasing a particular farm enterprise are usually taken after a significant period of consideration, but taking the time to talk through the implications of these big decisions with your advisors is always time well spent.

For example, we recently advised a client in relation to ceasing a particular farm enterprise, an enterprise which had been key to the financial viability of the farm, but with changing economic conditions over recent years, is no longer sustainable. A host of issues arose, including banking covenants, contracts with suppliers, employee status, as well as consideration of the impact on tax reliefs and farm value. All of these issues had to be worked through to ensure that the correct path was being followed in arriving at the final decision. The farm business has come out of that process in a much healthier position

with a farmer who is more optimistic for the future than they have been for some time.

Each and every situation is different, but the common factor is the need take the time to fully consider all the implications of a proposal. At EQ we look forward to being involved in many more conversations with clients who are “taking stock” of their farm business as they look ahead to the future.

Graeme Davidson, Partner