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https://defrafarming.blog.gov.uk/2022/06/01/a-fresh-start-for-new-entrants/

A fresh start for new entrants

Posted by: , Posted on: - Categories: Payments for entering farming
Photograph © John / Adobe Stock

It's hard to get started in farming, or any related land-based business.

Newcomers to the industry (usually known as "new entrants") face all sorts of barriers. It's challenging for them to find land, secure finance and progress their businesses.

When we published the Agricultural Transition Plan towards the end of 2020, we said that we would establish a support scheme for new entrants, and make the whole process easier.

At a time when economic and environmental challenges make innovation and fresh thinking more valuable than ever, we want to do what we can to encourage new entrants to the industry, with all the new ideas and new business models they can bring.

We're also keen to encourage investment and growth in all manner of land-based businesses. This is not just about arable or animal farming, but also horticulture, agro-forestry and provision of environmental services, such providing livestock for arable farms as part of an agroecology system. When businesses use land for growing food and/or environmental benefits, we want creativity to be the lead.

This blog post is an update on what we've learned so far by working collaboratively with people across the sector, and the next steps.

Working with the right people

Early on in the process, we set up a steering group to bring in external expertise, made up of landowners, estate managers, support providers and some recent new entrants.

We've also been working with trade associations, banks, unions, research institutions and Young Farmers’ groups, just to name a few, as well as hosting a series of webinars to share the rich knowledge out there.

Among other things, we have learned that:

  • Starting in farming is a long game; it can take 5-10 years to get a business established, so newcomers need support that takes that timescale into account.
  • There are fewer council farms these days and support for new entrants varies around the country; council farms have traditionally provided an easier path into the industry.
  • Although ownership and tenancy models are widespread in the sector, there are lots of different business models available for farming entrepreneurs.
  • New entrants often struggle to get loans because they don't already have land or other assets to offer as security and generally lack a track record. Early-stage finance can help businesses establish themselves and grow.
  • Local support exists, but the amount and quality on offer varies. We’ve learnt that support, such as mentoring, peer group learning and applied business skills training, is valuable, but new entrants can't be certain that they'll have access to suitable support in their area.
  • Even after getting started, it's hard to grow a farming business and obtain more land because landlords see newcomers as risky investments.

Testing solutions – pilot incubators

Our collaborative work has also begun to identify potential solutions, which we now want to test.

This month we are putting out a call for proposals from organisations to lead pilot incubator projects over the coming autumn and winter. These incubators will provide tactical support to young businesses through the early stages of development, nurturing would-be entrepreneurs to further develop a business idea, and fostering innovation and growth.

The pilot incubators will support new entrants of any age, at different stages of their journey: those with practical experience now looking to start-up their own land-based business and those wanting to scale-up their business in the first 10 years. These incubators will cover a reasonable geographical spread and both rural and peri-urban situations, which tend to pose different challenges.

We want to use these pilots to see what works in terms of increasing the chances of new and recent entrants’ accessing the land and finance they need to develop innovative new land-based businesses. Landowners and finance providers want to support fresh, innovative business thinking, and we want to work with them to understand how to make new entrants less risky as an investment.

While the incubator work is very important, it is not the only work that will feed into the design of the final scheme. For instance, we want to look at how to attract a more diverse range of people into land-based businesses. This is not the only government activity in this space, as we have also funded The Institute for Agriculture and Horticulture to work to develop a comprehensive career development platform for people in land-based businesses, whether they are starting their own business or not.

If you would like to apply for this opportunity for your organisation to lead a pilot incubator project this autumn and winter, please respond on the Defra e-tendering portal.

To find out more about co-design, or take part in future co-design sessions and webinars, please email us at: ffcpcodesign@defra.gov.uk

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19 comments

  1. Comment by Simon Ward posted on

    It is not so much a problem of new entrants but new entrants with different experiences and culture that is the industry weakness. The larger farming businesses offer excellent training and provide routes for those into the industry (in the same way as larger retailers provide training in the retail sector) but there are few of these. I think the objective is entrepreneurship and the awareness of other industries to transfer technologies and new entrants in itself is not the solution.

    Reply
    • Replies to Simon Ward>

      Comment by The Team posted on

      Hi Simon,

      Thanks for taking the time to comment. You're right - diversity in any industry makes it stronger, agriculture is no different. We’re doing all we can to nurture this. We’re working with TIAH (The Institute for Agriculture and Horticulture) to look at the broader issue of careers in land-based businesses. From the pilot, we’re also hoping to understand more about the barriers to entry for people who aren’t from farming backgrounds.

      Best wishes,
      The Team.

      Reply
      • Replies to The Team>

        Comment by Simon Ward posted on

        Thank you for taking the time to reply. It is really appreciated. In practice economies of scale, security and capital requirement are important barriers to new entrants from outside industry. New ideas and methods find it hard to compete.

        Perhaps the active recognition and promotion of farm mangers (from outside the industry) and the training provided by the corporate farming businesses should be part of the policy framework. Otherwise it is a matter of training to actively encourage existing farmers to study say electronic circuit design (and a raft of other skills).

        Existing schemes offer only small steps towards the diversity aimed for and largely benefit those embedded in the industry already. This is not necessarily undesirable but not good value.

        Reply
    • Replies to Simon Ward>

      Comment by David posted on

      Completely disagree, as there is a trend toward larger scale farming the smallholder business model is being priced out, which is of great detriment to any newcomer to the industry as it pushes the price of equipment and land up at a far higher rate than inflation. Also, cultures usually on larger farms are not about maintaining a business and a socially responsible farm but about smashing the work out. Large scale farms are a poor way to support entrants into the market and do not offer the progression and support required for entrepreneurship in this business.

      Reply
      • Replies to David>

        Comment by Simon Ward posted on

        Thanks David. A great reply and contribution. This was my point: the smaller farmer is priced out - two small farms operated together tend to be more efficient than either in isolation and the advantage is unlikely to be toppled by ability or innovation. I am not making a value judgement.

        Land prices are not in the reach of even the average aspirant (they tend to be driven by profitability, population density and average wealth with tax thrown in). A farm manager is freed from the capital consideration to contribute and it is a means of getting those with different skills and a different culture learned from outside the industry to contribute. I leave others to decide whether this is desirable or undesirable.

        In support of your case I have argued, not necessarily successfully, that the legitimate inheritance tax benefit for a business to protect income generation, is excessive in farming relative to the capital protected. Thus I have suggested that tax relief on inheritance of land should be limited to the NPV of a generous rent. There may be other better solutions.

        The biggest threat to farmers is the deskilling associated with environmental management and tree planting particularly where payments are based on the gross margin but adoption on the entire business allows the conversion of the gross margin to something akin to the net margin. More than anything this reduces opportunity for use of skills and entrepreneurship alongside the need for labour. There are a few situations where this is not true but rare. However, reinvention to supply new value from our skills is what we try to do.

        I would also argue that it is at least questionable whether there is a business if the value is no greater than the sum of its parts (stock, machinery, land, etc) and no value is assigned to the expertise provided. But this is a whole new discussion.

        We should of course condemn a businesses that destroys the asset but I am not sure this is related to business size but maybe I should get out more!

        Reply
  2. Comment by James Hedger posted on

    I found the old Agricultural Training Board a marvellous organisation with excellent hands on training at a very low cost. Non residential courses at agricultural college were also an important part of CPD. Of course guidance from neighbours was indispensable too. I hope your new Institution will be as practical as the ATB was.(I came from a non agricultural background)

    Reply
    • Replies to James Hedger>

      Comment by Kate Mason posted on

      James totally agree but many of the groups no longer exist in there old format, but there are some excellent independent training providers out there. You just need to find them and let them know what you need. Funding for these providers would be invaluable an allow us all to deliver great practical as well as managerial training.

      Reply
    • Replies to James Hedger>

      Comment by The Team posted on

      Hi James,

      Thanks for visiting the blog and for your comment. The Agriculture Training Board played an important role in providing people with the hands-on training they needed to get on in the industry. As we’ve mentioned in the post, learning and skills support, such as mentoring, peer group learning and applied business skills training, is essential. New entrants have told us they can't be certain that they'll have access to suitable support locally, so this is an area we’re looking at.

      Best wishes,

      The Team

      Reply
  3. Comment by John Metcalfe posted on

    There must be changes to Farm Business Tenancies which offer more security to young entrants. Security of Tenancy for 3 generations is not the answer but there has to be an incentive for a tenant to invest in a farm business for the longer term.
    Likewise the owner must be rewarded in some way for supporting a new starter. Some form of tax break for a new entrant tenancy and for any shared investment in farm infrastructure is an option.

    Reply
    • Replies to John Metcalfe>

      Comment by The Team posted on

      Hi John,

      Thank you for taking the time to provide your views on this. We recognise that many tenant farmers need greater security of tenure to encourage and incentivise investment in productivity and environmental improvements, and we are keen to explore ways to encourage more landlords and tenants to consider longer-term tenancy agreements whilst still retaining the flexibility that Farm Business Tenancies currently provide.

      As we transition to new future farming schemes there will be more certainty and encouragement for both landlords and tenants to enter into longer term tenancy agreements and we are designing our new schemes to be accessible to as many farmers and land managers as possible including tenant farmers. For example, we have designed our Sustainable Farming Incentive (SFI) scheme to be accessible to those tenants that have shorter term agreements as well as those who have longer term agreements, and we are continuing to co-design our other environmental land management schemes in consultation with tenant farming representatives.

      We also recognise that the fiscal framework plays an important part in a landowner’s decision making about owning and renting land and we have regular discussions with HM Treasury about such matters to share information and feedback views from farming stakeholders. Tax reform decisions are ultimately for HM Treasury to lead.

      Best wishes,
      The Team

      Reply
  4. Comment by Tim Luker posted on

    As much as training and experience is an import aspect, the greatest blockade by far, for new entrants (as I am trying to be) is finance. As a home owner and purchased with a sizeable deposit as well as improving the value, I cannot use the property as collateral! The reason; we cannot be made homeless if the enterprise goes ‘belly up’! A complete startup on 400 acres (the size holding we applied for) required £380k for asset purchases as well as operating capital! That was with a ‘realistic’ rental proposal too! To that end, how can anyone make a start? Working a second job in the proposal proved little value too! A government backed loan scheme would help those trying to get their first hold of the ladder, as no other organisation is willing or prepared to help! If there is help available, I’d really be grateful to know as I’m about to be sidelined for the second year because of it!

    Reply
    • Replies to Tim Luker>

      Comment by The Team posted on

      Hi Tim,

      Thanks for visiting the blog and taking the time to share your experience. Through the pilot we want to establish a clear picture of how various funding options might work, including government support to new entrants. We'll share what we learn as we go, so do subscribe to the blog.

      Best wishes,
      The Team

      Reply
  5. Comment by Sarah posted on

    There is no financial help for people to get into farming, it appears it is all self funded which is almost impossible these days.

    Reply
    • Replies to Sarah>

      Comment by The Team posted on

      Hi Sarah,

      Thanks for visiting the blog. We recognise that it's difficult to get started in farming and we're working hard to make it easier. Through the pilot, and by working with financial institutions (and other organisations mentioned in the post), we're exploring possible solutions - we'll blog about our progress.

      Best wishes,
      The Team

      Reply
  6. Comment by Amanda Rockey posted on

    If I wanted to change my career from IT into farming. What is the first thing I would need to do?
    I manage 5 acres of land I rent for my retired horse and cut the grass by hand to make hay each year. I may be on the older side of 50, but I am very fit and hard working. I currently live in Somerset.
    Thank you

    Reply
    • Replies to Amanda Rockey>

      Comment by The Team posted on

      Hi Amanda,

      It’s great to hear that you’re interested in a career change into farming. We are going to introduce a scheme to support new entrants (that is, newcomers to the industry – not necessarily young people).

      We'll share more information on this scheme soon, but this page might be a useful place to start. It lists all of the new schemes (by ongoing payments and one-off payments) https://www.gov.uk/guidance/funding-for-farmers

      Best wishes,
      The Team

      Reply
  7. Comment by David Warren posted on

    Hi, recently through a bereavement I have had the opportunity to help manage and look after daily a small flock of mixed breed sheep. I have a son who has ADHD and he helped me through this time and we still do what we can now to support the family. This got me thinking of a couple of things...

    1 how much I actually enjoyed the day to day tasks of farming and would very much like to have a small holding / land to start out on my own.

    2 I'm currently an Educational mental health practitioner and trained councillor. I saw first hand the difference this made to my son, it gave him structure, he became more engaging in a way I have never experienced before as a parent. This led me to think how I could combine the two aspects of farming and therapy.

    Can you possible give me any guidance around how I could possibly look at making this happen. Grants that maybe available to help start up, I have the finances to get around 20 ewes and the use of a tup for tupping the ews but not the funding for land or small holding.

    Reply
    • Replies to David Warren>

      Comment by Sarah Stewart posted on

      Hi David,

      Thank you for getting in touch. I'm very sorry for your loss.

      It was wonderful to read about the effect that managing and caring for a flock is having on both you and your son.

      The new entrant scheme we talk about in this post is still in development, but we are very close to piloting it. We're rolling out all of our schemes gradually and testing them as we go to make sure they work well in practice.

      So, the first thing I'd suggest is subscribing to the blog to get the latest on the scheme: https://defrafarming.blog.gov.uk/subscribe/

      As for grants, the government is a great supporter of the health and wellbeing benefits that access to the countryside can bring. As we set out in the 25 Year Environment Plan, public access to the countryside provides a huge range of benefits, including improving physical and mental health and supporting local communities and economies.

      In terms of what is currently available, you might want to explore the grants offered through Countryside Stewardship.

      CS is one of the ways through which government supports educational activities that aim to provide access onto farms for the wider public and school children. This includes paying farmers to host school pupils and care farming clients to engage with farming and the environment, as well as funding for training to enable an agreement holder to carry out enhanced educational experiences.

      Countryside Stewardship is currently open to new applications to start in January 2023. Our final round of applications will open in 2023, for agreements beginning in 2024.   

      Here's an overview of Countryside Stewardship: https://www.gov.uk/government/publications/countryside-stewardship-an-overview

      Here is a list of grants: https://www.gov.uk/countryside-stewardship-grants

      You can also contact colleagues at Defra's Rural Service who will be able to help with all things Countryside Stewardship: https://www.gov.uk/guidance/contact-defra#farming-and-food

      I hope this helps.

      Best wishes,
      Sarah

      Reply
      • Replies to Sarah Stewart>

        Comment by David posted on

        Thank you Sarah, I will take a look at all this information you have sent. 👍

        Reply

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