Farmer Focus: The cashflow pitfall of grant funding

We finally seem to have had some sunshine, and the maize, which was looking a bit unhappy, is now motoring with the help of some magnesium sulphate and foliar nitrogen.

The arable crops are starting to go off and the countdown to harvest is on, which has made me realise how behind with grain store cleaning I am.

We have also been reviewing the results of last year’s harvest, with oilseed rape and its unreliability proving a final straw for the crop.

The high input costs and the risk of full crop failure means it just isn’t a sensible choice for us.

See also: 9 steps to obtain accurate combine yield data this harvest

About the author

Charlie Cheyney
Arable Farmer Focus writer Charlie Cheyney farms more than 480ha land in Hampshire in partnership with his father. They run a mixed arable and 450-cow dairy enterprise, growing cereal and forage crops on varying soils, from chalk to heavy clay.
Read more articles by Charlie Cheyney

Looking at crop gross margins, the effect of the declining Basic Payment Scheme is also evident. I have tried to replace that funding with all the new schemes that are on offer.

I have adapted cropping strategies to maximise this, as well as tailored machinery and capital investments to make best use of grants.

As my grants are accepted and I near summer and autumn (when all my new mixes can be planted) I am realising the flaw in the system.

Applying is the easy part, finding the capital and cash flow, however, is not.

These seed mixes are expensive, and the cash flow dips from machinery purchases put the business under pressure, especially in the short term.

I understand some would argue that these grants should be treated as bonuses and not relied upon, but I cannot believe this is the case for most farmers. A 40% grant is a considerable amount to be a bonus.

At their best, grants allow the business to progress and modernise sooner.

At their worst, they distort markets and force farmers to make purchases that are not correct for the business.

This is the same with Sustainable Farming Incentive cropping options that are making unprofitable cropping now viable without any uplift in demand, or actual value.

Therefore I proceed with caution, making sure I keep the goals of the business at the forefront and only use grants and schemes when they are aligned with the business, however tempting they may look on paper.

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