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FUW says ‘Single Payment exchange rate a further blow for Welsh farmers’

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Emyr Jones: “poor exchange rate could not have come at a worse time”

Emyr Jones: “poor exchange rate could not have come at a worse time”

THE FALL in the Euro-Sterling exchange rate for Single Payment calculations to its lowest level in seven years could not have come at a worse time, says the Farmers’ Union of Wales. The exchange rate, set by the European Central Bank at £0.7773/€1 on Tuesday (September 30), is the lowest since 2007, and comes against a background of falls in farmgate prices, a reduced Welsh CAP budget, and a 15% transfer to the Rural Development Programme (RDP) agreed by the Welsh Government – the highest rate in Europe.

Responding to the announcement, FUW President Emyr Jones said: “The Single Payment makes up a large proportion of Welsh farm incomes, and the poor exchange rate could not have come at a worse time given the collapse in what farmers are receiving for milk, lamb and beef.” The combined impact of the Welsh Government’s 15% RDP transfer, a reduction in the Welsh budget of around 10%, and an exchange rate of £0.7773/€1 means a farmer who received a Single Payment of £10,000 in 2013 will see their payment slashed by more than 20% in 2014, to around £7879. “The industry remains angry at the Welsh Government’s decision to reduce Welsh payments by the highest rate in the EU to fund the RDP, and with those who advised the government on this course of action.

“The poor exchange rate will add to this anger at a time when lamb, beef and milk prices have fallen dramatically. There will clearly be a knock-on impact on our rural economies.” Mr Jones said the imminent fall in farm incomes should further focus the Welsh Government’s attention on ensuring the RDP is used to increase farm incomes. “We cannot control the exchange rate, and despite our fierce lobbying against it, the decision to transfer 15% has been made. The only area where there is flexibility to act is in terms of ensuring Rural Development Funds are directed at bringing farm incomes back up, and not squandered.” Mr Jones said he was bitterly disappointed at the recent confirmation that the Welsh Government did not intend to use those funds to implement an Area of Natural Constraint (ANC) Scheme. “The FUW’s policy remains clear on this; without an ANC scheme we are at a competitive disadvantage to farmers in Scotland, Northern Ireland, Eire, and the rest of the EU, where such schemes are universally in place.”

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Farming

Warning to dog owners following recent attacks on livestock

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POLICE and Crime Commissioner Dafydd Llywelyn has issued a warning to dog owners that they face being prosecuted if they fail to keep their dogs under control when out walking the country side.

His warning comes following reports of several recent incidents whereby livestock have been attacked or killed by dogs in rural parts across the Dyfed-Powys Force area.

As a result of the recent incidents and the ever increasing concerns within local Farming Communities, Police and Crime Commissioner Dafydd Llywelyn has moved swiftly to organise a meeting with NFU representatives and the Dyfed-Powys Rural Crime team which will take place on 11 January 2021.

Police and Crime Commissioner Dafydd Llywelyn said; “This is a critical time in the rural community as farmers go into the lambing season, and in light of these recent, concerning incidents, I will be meeting with NFU representatives and our Rural Crime Team in the Force to identify ways of working collaboratively to tackle the problem.

“Dog owners need to take responsibility for ensuring dogs are kept under control while out walking the country side, especially as we enter the lambing season.

“They may think it is fun to run around animals in fields, but this is not the case and these animals often get scared, injured or killed as a result.

“We are grateful to the majority of responsible dog walkers in our communities, but we want to remind all owners that dogs should be kept on leads at all times around livestock – it is an offence to allow your pet to worry, kill or maul sheep, their lambs, or any other livestock”.

PC Esther Davies of Dyfed-Powys Police Rural Crime Team said; “Since the Rural Crime Team was formed some two and half years ago, we have received regular reports of livestock worrying throughout the force. These are incidents that occur throughout the year and can have a devastating effect on farmers and rural communities.

“Dog owners must take responsibility for their dogs and ensure that they are kept under control at all times. If dogs are being walked be it on the road, through a field or on a footpath, and especially somewhere where there is likely to be livestock, they should always be kept on leads. Incidents like this can and should be avoided.”

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Farming

NFU Cymru President’s New Year message

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NFU Cymru President John Davies provides his New Year message, looking back over an unprecedented 12 months and assessing what lies ahead in 2021.

 

“2020 was a year the likes of which we’ve never seen. The Coronavirus pandemic has challenged all of society. My condolences go out to all of those who’ve lost loved ones to this disease. My thoughts are with all whose livelihoods have been affected by the knock-on effects that the pandemic has had on businesses and our general way of life. I’d like to place on record my heartfelt thanks to our NHS workers and those supporting them on the front line for their courage in tackling this global health emergency. So often the term ‘hero’ is attached to those in films or on the sporting stage, but if this year has taught us anything it’s that, in fact, the real heroes are those people in our communities who have gone to work – putting themselves at risk – to care for the sick and keep the rest of us safe. Diolch yn fawr iawn pawb.

“The initial impact of the Covid-19 outbreak and the overnight closure of the hospitality sector had severe consequences for the food supply chain. The resilience of those systems was stretched to the limit as the supply chain frantically sought to redirect produce that would usually be destined for the out-of-home market to the retail sector, where panic-buying had resulted in empty shelves in many stores. I thank all our farmers who have worked throughout the chaos of the Covid-19 fallout to keep the nation fed. I know that for many businesses and sectors this hasn’t always been easy and some experienced significant losses as those supply chains struggled to adapt to new demands. However, the role the entire industry has played during such a fraught period will live long in the memory of many, and indeed recent polls suggests farmers’ favourability with the consumer is higher than it has been in a decade.

“I very much hope that lessons can be learned from this tumultuous year and if the past few months have taught us anything, it’s that the safe, reliable supply of high quality affordable food is now of paramount importance to the public. As farmers we are ready and committed to ensuring that the nation remains fed during this difficult time and through future challenges, too. Our farming systems, underpinned by a fantastic, natural asset base, mean we are well equipped to be the providers of the most climate friendly food in the world. NFU Cymru will continue to lobby Welsh Government to see the importance of food production recognised and protected as a cornerstone of future policy.

“Looking ahead and, with significant changes to how Wales and the UK trades with the EU and the rest of the world, one of the biggest challenges for 2021 is going to be making sure that Welsh farmers have the widest possible range of markets freely open to them, on the best possible terms. We are, of course, relieved that that a deal has finally been agreed between the UK and the European Union, providing some much-needed certainty for the farming sector and allowing Wales’ farmers to continue to send products to the EU27 free of both tariffs and quotas. All efforts must be now be focussed on finding ways of minimising the impact of red tape on the movement of our produce to the EU.

“A heartfelt thanks must go to the one million people from all walks of life who backed our food standards campaign. Their support was instrumental in delivering legislation to ensure that food standards will now have a ‘stronger voice in UK trade policy’.

“Of course, away from the pandemic and agricultural policy, there are still major issues that are affecting the nation’s farmers every day. Bovine TB continues to blight so many businesses across Wales – all too many times this year I have again learned of families’ heartbreak and herds, generations in the making, being decimated due to this horrific disease. Please be assured that NFU Cymru will continue to pressure government to act upon the science and take notice of the proven strategies adopted by so many other countries – an approach that seeks to tackle bovine TB across all its vectors.

“NFU Cymru maintains that a heavy-handed and inflexible approach to water quality through the proposed all Wales Nitrate Vulnerable Zone (NVZ) designation will not deliver the enhancements to water quality that we all want to see. NFU Cymru is committed to helping to deliver these improvements via an effective and proportionate framework that supports farmers to take action to improve water quality where it is needed. I am heartened that our Minister has recognised that these are not regulations to introduce at a time of crisis.

“Climate change remains a major challenge for all of us in society and the farming industry is putting its best foot forward to deliver on its net zero 2040 ambition. With the prestigious COP26 summit rescheduled to be held in Glasgow in 2021, it is clear this topic will, rightly, remain high on the news agenda next year. As a farmer, it’s important to me that farming’s contribution to mitigating the effects of climate change is fairly reflected in this debate. Recent research has pointed to the fact that Welsh livestock production systems are amongst the most sustainable in the world, but we know that there is much more we can and will do.

“With a Senedd election scheduled for May 2021 we will be speaking to candidates from across the political spectrum to push home the importance of Welsh food and farming. We are committed to working with the next government to deliver our ambitions for a productive, profitable and progressive farming sector that delivers for the people and communities of Wales.

“It has been a year like no other. With the vaccine rollout now underway I hope we will soon be able to consign the last pandemic-hit year to the history books and return to some form of normality, where we can soon meet at the agricultural shows and events that we all hold dear to our heart. Let us look ahead to 2021 and what we hope will be a bright, healthy and safe future.

“Blwyddyn Newydd dda.”

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Farming

Farmers face hidden tax hike

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POTENTIAL changes to rules on Capital Gains Tax could lead to a tax hike for those inheriting farmland and assets, financial advisers at NFU Mutual have warned.

Many farmers can potentially pass on farms to their children free from Inheritance Tax due to Agricultural Property Relief and Business Property Relief.

As capital gains are wiped away on death, children inheriting can sell and only face Capital Gains Tax on any rise in value between the date of death and a sale.

However, in a review ordered by Chancellor Rishi Sunak, the Office of Tax Simplification has recommended that gains should no longer be wiped away on death where the estate has claimed Agricultural or Business Property relief to reduce Inheritance tax.

Sean McCann, Chartered Financial Planner at NFU Mutual, said: “Many farmers choose to hold on to their farming assets until death on the basis that not only might they be free of Inheritance tax, but also escape Capital Gains Tax if sold shortly after death.

“The Office of Tax Simplification’s recommendation that gains should no longer be wiped on death where Agricultural or Business Property relief has been claimed to reduce inheritance tax will mean bigger tax bills for some farming families.

“The biggest impact will be on those who sell farming assets they’ve recently inherited. Those that retain the assets and continue to farm won’t face any immediate tax liability under the proposed changes.

“The Office of Tax Simplification also recommended a hike in Capital Gains Tax rates that would align them to Income Tax rates, leading to larger tax bills.

“However, it’s likely that any change would be accompanied by an allowance to take account of the rise in value caused by general inflation, so any tax is only levied on ‘real’ gains.

“It’s important to stress Rishi Sunak has not yet confirmed he will agree to these recommendations, but many farming families will be watching the March Budget with interest.”

[INSET BOX]

EXAMPLE

A farmer owns a farm worth £1m which he bought 25 years ago for £300,000. He dies and leaves it to his children, who sell for £1m shortly after his death. Under current rules, if he met the criteria for 100% Agricultural and Business Property relief, they would pay no inheritance tax on the £1m and no Capital Gains Tax on the sale.

Under the proposal to abolish the tax-free update on death, while there would still be no inheritance tax due – if the farmer’s children sold shortly after his death, they would face a Capital Gains Tax bill on the £700,000 gain. Based on the existing rate (20%) that would trigger a Capital Gains Tax bill of £140,000.

“It’s important to stress Rishi Sunak has not yet confirmed he will agree to these recommendations, but many farming families will be watching the March Budget with interest.”

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