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Rural areas vital for economies

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Areas of growth, opportunity, and inspiration: OECD report claims

RURAL areas are vital to national economies and addressing global challenges, according to the policy statement released at the 11th OECD Rural Development Conference held in Edinburgh.

The policy statement, which provides guidance to governments to support rural economic development, also declared that innovation will be critical to the future competitiveness and sustainability of rural economies. It also outlines the case for focusing on rural areas as engines of national prosperity and how policies should leverage this opportunity.

Jose Enrique Garcilazo, Head of OECD’s Regional and Rural Policy Unit, said: “Rural regions are not synonymous with decline or agricultural specialisation, but places of growth, opportunity and inspiration, yet rural is still not central to government policy. Rural areas have a key part to play in some of our major global challenges. They are best placed to develop new energy sources, to help sustain our natural environment and to ensure food security.

“In an increasingly interconnected world, opportunities are emerging to promote rural prosperity. Digitalisation will propel rural economies forward, and the conference has highlighted that supporting innovation in rural areas will be key to the future prosperity and wellbeing of rural regions.”

The policy statement identifies 10 key drivers of change predicted to influence the future of rural economies and communities and their potential to prosper, including additive manufacturing (for example 3D printing); decentralised energy systems; digital connectivity; the future of health; shifting values and preferences; drones; and driverless cars.

The statement also recommends that, in addition to prioritising rural innovation, a robust rural policy should place social, environmental and economic wellbeing at the forefront of policy decisions and take an integrated view across policy sectors to avoid one policy detracting from another.

The 2018 Conference, Enhancing Rural Innovation, was hosted by the Scottish Government and co-hosted by the European Commission and the UK, to provide a forum for key policy officials and academics from OECD member countries to engage and share ideas and experiences on rural policy.

It is the eleventh in the OECD Rural Conference Series, which has been held all over the world since its inception in 2002.

Prior to the main conference, a series of interactive sessions, led by the European Network for Rural Development, showcased exemplary projects and approaches already launched by rural communities to embrace 21st century challenges and opportunities.

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A vision for Welsh upland farming

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A NEW NFU Cymru report highlights the unique contribution that the Welsh upland farming community makes to food security, environment, the economy, rural communities and the Welsh language.
The NFU Cymru Vision for Welsh Upland Farming report, which was underpinned by a survey of over 750 farmers, was launched at the Vision for Welsh Upland Farming virtual conference on Tuesday, November 24.
The document reveals that 96% of farmers surveyed believed their role as food producers was very important or fairly important, with 95% saying that food production and sales were very important or fairly important to the viability of their business. 88% said it was very important that future Welsh agricultural policy should underpin food production and ensure consumers have a stable supply of affordable food.
The biggest worry for Welsh upland farmers to surface from the research was farm business profitability, with 85% of those questioned stating this was a ‘significant threat’ to the sector. The vast majority of those questioned (92%) said it was vital that future Welsh farming policy included measures that ensured farmers could make a reasonable living. However, just 18% of farmers answering the poll felt Welsh Government’s Sustainable Farming Scheme proposals to replace the CAP were very good or fairly good at specifically addressing the needs of upland farming, with 37% labelling the proposals fairly poor or very poor.
With the Brexit transition period coming to an end, 84% of farmers surveyed said that future trade deals were a significant threat to upland farming, while 80% stated that future policy was a significant threat.
NFU Cymru said the findings of this research work provide ‘another compelling argument’ as to why future Welsh agricultural policy should include a stability measure to help ensure the safe supply of food and as an economic foundation in rural communities, alongside the other multiple benefits provided by Welsh farming, amid changing trade and climate conditions.
The new NFU Cymru study also shined a light on Welsh upland farmers’ attitudes towards the environment. 80% of those surveyed had carried out one or more environmental actions on the farm in the last 10 years, while 83% said that future policy measures to tackle climate change were very important or fairly important. 54% of farmers surveyed were in Glastir agri-environment schemes and together had delivered more than 70 different environmental actions on Welsh farms.
The survey data further emphasises farmers’ role as drivers of the rural economy. 30% of farmers surveyed said their business supports or buys from 21 to 50 different businesses, with a further 10% stating that their business trades with or buys from more than 51 other businesses.
The important contribution of Welsh upland farming to rural communities and Welsh culture was also revealed. 83% of respondents were involved in one or more voluntary activities within their community, while over half of those answering the survey identified themselves as fluent Welsh speakers.
Diversification remains an important income stream for many Welsh farms; 43% of farmers responding to the survey stated that they had a non-farming element to their business. The most popular diversification enterprises were renewable energy (43%) and accommodation (42%).
Discussing the importance of NFU Cymru Vision for Welsh Upland Farming project, NFU Cymru LFA Board Chair Kath Whitrow said: “In recent years, despite their extent and significance, we have seen upland farming policy de-emphasised. As our relationship with the EU changes, the economic rationale for upland livestock production is threatened. Global environmental challenges, such as climate change and biodiversity decline, are viewed by some as drivers for land-use change without any consideration of the wider impacts.
“At this pivotal time for Welsh farming as we transition out of the CAP and into a new ‘made in Wales’ agricultural policy, the NFU Cymru LFA Board wants to ensure that the voice of Welsh upland farming is clearly heard in this debate. This is a message that has resonated strongly with Welsh upland farmers and, despite the limitations placed on us as a result of Covid-19, the voice of farmers across Wales has been clearly heard with our survey attracting a fantastic number of responses.”
NFU Cymru President John Davies said: “The Vision for Welsh Upland Farming report launched at today’s conference is one of the most comprehensive pieces of research work undertaken by NFU Cymru. Its findings are of strategic importance not just to the people living and working in the Welsh uplands, but to the whole of Wales.
“This research provides another compelling argument that future Welsh agricultural policy should include a stability measure to support farmers by protecting them against the increased volatility that affects businesses, trade and production. Such backing would ensure our farmers can continue providing safe, affordable food, as well as boosting the economy, enhancing the environment, caring for our cherished landscapes communities and being champions of Welsh language, culture and rural communities.
“I urge our policymakers in Cardiff Bay to carefully consider the report’s key recommendations and work with us to ensure that the people and communities of the Welsh uplands can continue to deliver for the whole of Wales.”

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Potato production up despite tough year

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THE TOTAL harvest of British potatoes this year will be 5.3m tonnes according to provisional estimates – up two point eight per cent (2.8%) on last year’s figure but just below the five-year average of 5.4m tonnes.
This estimate by the Agriculture and Horticulture Development Board (AHDB) has been released during a time when growers have battled an exceptionally wet harvest period for the second year running.
They have fared better than last year, as on 10 November it was estimated that two per cent of the planted area was yet to be lifted. This compares with 11 per cent of the crop that was estimated to be unlifted on 12 November 2019.
This production figure follows an AHDB estimate that the planted area this year is the third-lowest on record.
Alice Bailey, Senior Analyst at AHDB said: “This overall net yield sits in line with the five-year national average (2015-2019). Anecdotal reports suggest that yields have been somewhat variable from farm to farm, even field to field. Yet overall, crops are within farm expectations so it is not surprising that the national yield is in line with recent years.
“We saw planted area drop by two-point three per cent this year, yet we are estimating a two-point eight per cent rise in production. This is based on both a slight increase in yields year-on-year and the fact that a large area was left unharvested last year. The unlifted area in 2019 was estimated at six per cent, whereas in 2018 less than one per cent was estimated to be left in the ground and we would anticipate similar this year.”
It was also noted that the estimate could be amended in the coming weeks, with 2.1Kha still to harvest in the East of England, and some members of the 450 strong AHDB Grower Panel still to return their survey information.

WINTER MARKETING CAMPAIGN

Meanwhile, Potatoes Strategy Director Rob Clayton announced that AHDB would be launching another promotional campaign in reaction to the market conditions caused by the coronavirus. This follows on from a similar campaign in the summer that reached 5 million shoppers via catch-up TV, social media and display advertising.
“Since the pandemic hit we have increased the amount of data we analyse from supermarkets and other areas of the marketplace. While potato sales at retail are up eight to nine per cent overall – analysis from Kantar Worldpannel shows baking potatoes lagging behind at a rise of three per cent.
“Jacket potatoes are a fantastic healthy and cost-effective option for families, so we will be launching a winter campaign to inspire shoppers to take advantage of all the great things they can do with bakers,” said Doctor Clayton.

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Farmers should prepare for IHT changes

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FARMERS should review their Inheritance Tax (IHT) and succession plans ahead of the Spring Statement as potentially significant changes are expected, according to rural accountant Old Mill.
There are less than six months before the Spring Statement, and changes to the IHT format – based on recommendations originally outlined by the Office of Tax Simplification (OTS) in July 2019 – are likely. “The recommendations were primarily geared towards streamlining IHT administration but may have the secondary effect of reducing some of the favourable reliefs available to farmers,” explains Catherine Vickery, associate director at Old Mill.
“Current IHT legislation can be very beneficial for farmers, giving confidence that they can pass down agricultural business and property assets to the next generation tax free on death,” she adds. “Unfortunately, the coronavirus pandemic has left the Government with a very large debt, so there’s potential that it will implement any OTS recommendations to increase tax revenue.”
So, with the Spring Statement anticipated for March, what can farmers do to mitigate any potential changes?
“Under the existing rules, agricultural land and property qualify for Agricultural Property Relief (APR) from IHT at up to 100%,” explains Mrs Vickery. Other land and property assets, like diversified enterprises, can qualify for up to 100% Business Property Relief (BPR) as part of an overall farming business which is at least 50% trading. “These reliefs can apply on lifetime transfers as well as on death where the conditions are met.”
Transfers on death currently also qualify for Capital Gains Tax (CGT) free uplift so that gains are effectively washed out. Lifetime transfers of agricultural land, property, and businesses which are at least 80% trading qualify for gift holdover relief, meaning gains can be deferred until a later disposal. 
However, a key OTS recommendation is to remove the CGT free uplift on death when IHT relief is also available. This would mean that the next generation would inherit the farm at an historically low base cost, leading to higher CGT on any future sale. The OTS has also just released its report into CGT simplification which echoes this same recommendation.   Proposals to alter the trading test for BPR, aligning it to the 80% CGT trading test could leave farmers ineligible for 100% BPR, which could result in assets having to be sold to pay IHT liabilities.
“The most tax efficient option has often been for farmers to continue to actively farm and hold onto assets until they die,” says Mrs Vickery. “Now, given speculation about potential changes, the best course of action is to get a succession plan in place as soon as possible and start implementing it.
“Plans need to be arranged based on what is right for you, your family and the farm right now, rather than how things might stand at a later date.”
This means establishing who is taking on the assets and if they have the skills needed to drive the business forward. “Pass over this responsibility while you still can and while you can be on hand to guide and support your successor,” advises Mrs Vickery.
It’s also important to review partnership or shareholder agreements, and consider the handing on of other assets. Additionally, farmers should collate any trust and gift deeds, so that paperwork is on hand to be reviewed.
“Though we suspect the new IHT rules won’t be favourable, farmers need to make use of the rules we have now as these are a current certainty,” says Mrs Vickery. “Succession planning is so easy to put off but it’s a vital tool in safeguarding the future of farming businesses.”

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