A shiny new tractor is pulling a huge orange trailer, while a commentator explains how best to manoeuvre it to tip grain, watched by a group of farmers wrapped up warmly in wellies, coats and bobble hats, some holding spaniels on leads.
Others are checking out the latest models of combine harvesters and crop sprayers, parked on snowy ground at the Midlands Machinery Show, but few seem to be buying, and the changes to inheritance tax for agricultural properties announced in Rachel Reeves’s October budget are never far from anyone’s lips.
On a crisp and sunny November day, the mood at one of the UK’s largest agricultural machinery shows was anything but bright.
A frosty chill has also descended on the network of companies dependent on farm businesses purveying their wares in Newark. Machinery manufacturers and dealers, as well as building companies and suppliers, have a similar refrain: customers stopped calling straight after the chancellor set out the budget measures affecting the agricultural sector.
“The phone got a lot quieter from the second she [Reeves] announced it,” says Jonathan Richardson, sales manager at Browns of Wem, a Shropshire-based company which designs, makes and constructs steel-framed and timber-sectioned buildings. “It’s had the quickest impact we have ever seen.”
Previously, farming businesses qualified for 100% relief on inheritance tax on agricultural and business property. However, budget changes will see the tax imposed on farms worth over £1m, with an effective rate of 20% on assets above that threshold, rather than the normal 40% rate for inheritance tax. Labour has said farms worth £3m could end up being exempt, as married couples can each claim £1m tax-free, in addition to a family home worth up to £1m.
“People tend to ring us in the first instance when they start thinking about [a new building]: those calls have stopped,” Richardson says, on the company’s stand at the Newark show, flanked by photos of farm buildings erected by the firm.
Any belt-tightening and deferral of purchases by farmers would have a big effect on Browns of Wem, which depends on agricultural businesses for at least 90% of its trade. It would also send shockwaves through the network of companies – selling everything from tractors to tyres and farm gates to fertiliser – which make up the rural economy.
“We are OK, we have a decent order book, but it is a lot quieter than it was,” says Richardson. “We are hoping this is just a blip and confidence will recover.”
Taking place a day after thousands of farmers and landowners protested against the budget measures on the streets of London, signs propped on one display tractor warn “Don’t bite the hand that feeds you” and “Save a farmer, remove Starmer”, underlining the strength of feeling in the farming community.
The Treasury is understood to be assessing the impact of inheritance tax changes, including amending gifting rules for over-80s, which could allow them to pass on their farm to their heirs tax-free without having to live for seven years after making the gift. Officials are also understood to be assessing the impact of budget measures on active small and medium-sized farms compared with smallholdings.
Some of the largest machines on display, such as massive tractors and combine harvesters, are manufactured abroad and shipped to the UK to be sold by networks of dealers.
“We are a dying breed, UK manufacturers,” says Graham Cherry, sitting inside a warm show stand, looking at the agricultural material handling equipment made by his company, Cherry Products, displayed outside in the snow.
Their machinery attachments – including pallet forks, grain lifters and snowploughs – sell for between £2,000 and £8,000. “That’s why we are selling, and those selling £100,000 tractors are struggling,” he says, pointing at a nearby stand.
“To survive, we need profitable farmers in the UK who will invest,” he says. “It has been terrible since the budget: they are all sitting with their head in their hands.”
The company is dependent on British agriculture since exports dried up after Britain left the EU. “Brexit killed it: people don’t want the hassle,” Cherry says.
He adds: “Everyone you speak to is down: worst harvests, wettest harvests, wettest drilling time and now this, another nail in the coffin.”
The son of a farm worker, Cherry founded his business almost 45 years ago near Chipping Norton in the Cotswolds. “Next to Jeremy Clarkson’s farm, before you ask,” he says.
Amid such a difficult outlook, Cherry worries that a prolonged downturn will force him to “make difficult decisions”, which could involve redundancies among his 30 staff.
“For lots of people who make a living off farms and selling machinery to farm businesses, this [the budget] has a direct impact for us and them,” says Michael Grey, a regional sales manager at Farol, a family-owned dealership selling large equipment including tractors made by the US heavy machinery maker John Deere and telehandlers from German manufacturer Kramer.
Farol, based in Oxfordshire, has some of the biggest pieces of kit on display, with correspondingly big prices. One of the newest models of self-propelled crop sprayers would set a farmer back over £370,000, while a mid-size tractor on the stand costs about £170,000.
“Purchase-wise, farmers are trying to work it out,” says Grey’s colleague Tom Hinchley, an area sales manager. “One or two have talked to us about different types of ownership – that could be leasing, so it doesn’t go down as an asset.”
Despite the huge cost involved, some farmers have traditionally upgraded their machinery every three to five years, to take advantage of new technology. Some in the sector feel that could be about to change.
“Less footfall and closed wallets,” says Matthew Derby, describing the mood at the show while discussing the budget measures over a quick lunch with two other Lincolnshire farmers. “The effect on cash flow is obvious.”
For the third-generation food producer, uncertainty over future tax liabilities means his family is evaluating its spending. “With ongoing replacement policy, we would change something every year, but we will now look to push that back until we have more clarity,” he says, in between bites of a burger. “At the point where investment in capital items is adding value and is taxable, that is a big concern.”
One of the few companies to be deluged with requests is Brown and Co, a property and business consultancy. “The phone has not stopped ringing,” says land agent and partner Charlie Bryant. “No one should underestimate the angst that the whole budget has caused in the farming community.”
The government has insisted that most farms will not be affected by the changes, although this has been rejected by the National Farmers Union (NFU). Farming representatives have said the changes will force some family farms to sell up in order to pay their inheritance tax bills. Bryant, who is based in Lincolnshire, carries out 200 stock-taking valuations on farms of differing sizes each year, visiting them to calculate the value of land, machinery and other assets for their annual accounts.
“I have been through my list and I haven’t found one yet who will be under £1m. That is 100% of my annual stock-taking valuation, before you start adding in crops in ground, crops in store, machinery,” he says.
“If the government are trying to aim for a certain section of society, very wealthy people who have bought land for inheritance tax, I think they are wildly off the mark. The knife is going a lot deeper than I’d like to think they envisaged.”
Bryant is worried that inheritance tax changes could be the final straw for some farmers. “Farm economics being particularly poor, it is pretty brutal out there,” he says. “The word distraught has come up an enormous number of times, and we need to be careful of that.”
EMEA Tribune is not involved in this news article, it is taken from our partners and or from the News Agencies. Copyright and Credit go to the News Agencies, email news@emeatribune.com Follow our WhatsApp verified Channel
