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Biomass offering farmers shot at post-Brexit growth

Biomass offering farmers shot at post-Brexit growth
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One of the economic sectors likely to feel the biggest impact when the UK leaves the EU is agriculture.

Brexit will mark the end of the Common Agricultural Policy (CAP) in Britain, the flagship funding and support mechanism for farmers and agri-businesses across the EU. Worth around £4 billion a year to UK farmers at current levels, just over a third of that money takes the form of direct financial subsidies.

With little indication of what the UK’s future agricultural policy will look like, rural industry is facing a period of uncertainty. The UK government has always opposed the system of direct subsidies, so it is unlikely that element of the CAP will be replaced. Instead, the government has tended to favour so-called ‘second pillar’ financial support for rural development – business diversification, environmental projects, forestry and land management.

With uncertainty on the horizon, diversifying makes sense for farmers. Additional income streams will provide extra financial security, while new ventures also help to maximise available assets.

Biomass offering farmers shot at post-Brexit growth
Crops like miscanthus are hardy and can be used to bring unused land back into production
Biomass represents a strong option. Growing crops for biomass is an ideal way for farmers to bring unused land back into production. Crops like miscanthus, reed canary grass and switchgrass are hardy crops which can grow on land which has otherwise failed to yield.

Establishment grants for miscanthus, as well as for Short Rotation Coppice (SRC) plantations of the likes of willow and poplar for wood chippings, are already available under the Energy Crops Scheme. Longer terms Short Rotation Forestry (SRF) plantations are also eligible for funding under existing forestry subsidies.

Given the post-Brexit uncertainty in mainstream agricultural markets, biomass production can provide a stable income stream as well as bring fallow land back into use. In addition, it is possible that future UK agricultural policy will favour subsidising these markets while mainstream agriculture is liberalised.

Peregrine Finance is the UK’s largest provider of asset finance to rural businesses. With more than 25 years’ expertise in the field, Peregrine specialises in providing bespoke financial services to land based industries. To read more about the company’s services, please visit www.peregrinefinance.co.uk.