PRODUCERS SHOULD set the single farm payment aside from trading accounts to generate capital income rather than subsidising day-to-day production, farm business consultants Andersons has warned.
Francis Mordaunt said there was a real danger producers would sink the SFP into a farm‘s trading bank account, falsely underpinning a notion of profit, instead of ensuring the farm business was viable when exposed to true market forces.
“I strongly advise SFP is put into a separate account or invested off-farm to generate income. It could also be used to reduce borrowings helping further reduce costs,” he said.
Andersons calculates that most dairy businesses will see support payments rise by 2006 as the SFP is introduced and before modulation takes effect.
“This should not be seen as extra income. Remember, it may have to compensate for a lower milk price and/or extra costs such as complying with cross-compliance,” he added.