New Entrants and Young Farmers Start-Up Grant Schemes: evaluation

Executive Summary

What are we trying to achieve?

Scottish Government are concerned about an ageing farming population and a lack of new farmers entering the industry. According to the June 2021 Agricultural Census, 60% of female and 64% of male farmers in Scotland are over 55 years old.^[1] The Scottish Government set up The Young Farmers Start-Up Grant Scheme and the New Entrants Start-Up Grant Scheme as part of the Scottish Rural Development Programme 2014-2020. This is an evaluation of these schemes to consider if they contributed to achieving their intended aim to attract a new generation of farmers in agriculture.^[2]

What are the schemes?

The Young Farmers Start-Up Grant Scheme and the New Entrants Start-Up Grant Scheme provided eligible applicants with grants of up to €70,000 and €15,000 respectively.^[3] The intention has been to support new entrants into the industry. The Young Farmers Start-Up Grant Scheme had a budget of £10.8 million, or €13.0 million and has delivered 205 grants. The New Entrants Start-Up Grant had a budget of £0.8 million, or €0.9 million, and delivered 49 grants. The fourth and final round of applications closed in September 2017, followed by the confirmed closure of the schemes in 2018.

Were the Schemes Successful?

The schemes successfully supported 254 entrants into agriculture, which fulfils the New Entrants Start-Up Grant scheme goal of increasing the number of entrepreneurs who farm. However, it is less clear whether or not the schemes were successful in achieving the Young Farmers Start-Up Grant Scheme's goal of encouraging a new younger generation of farmers. While 205 of the 254 grants awarded were Young Farmer's Start Up Grants, and so it can be said that the scheme was successful in encouraging younger people to begin farming, the extent to which this constitutes a new generation of farmers and therefore a shift in the age composition of the industry is limited. This is simply a matter of scale. While 254 grants were awarded, there are 50,231 holdings in Scotland and approximately 20,000 farm businesses.It is therefore difficult to argue that the overall age profile of farmers has shifted as a result of these schemes. It is important to note, however, that the schemes closed early due to the exhaustion of funds. The schemes were therefore popular amongst those interested in entering the farming sector and had further potential to encourage more new entrants had the funds not been exhausted.

In addition, these findings offer moderate evidence that prospective farmers struggle to obtain land and strong evidence that, when they do, tend to struggle to make a profit (see Chapter 4 for further discussion). The schemes were therefore unsuccessful in their shared goals of encouraging entrepreneurs who farm to develop profitable, innovative businesses which can respond to the industry's changing economic environment. It seems that the systematic challenges of land availability and profitability will make it unlikely that start-up schemes will be successful in their goals of encouraging new, younger entrepreneurs to build profitable and innovative farming businesses. However, given that the schemes closed in 2018, it may be too soon to accurately determine whether these new farm businesses supported by the grants will be profitable.

Why is it Challenging to start a new farm?

Research has consistently observed that alongside gaining access to capital, the most pressing barrier facing new entrants to farming in Europe is a lack of available farmland with which to develop a business. This also appears to be the case in Scotland, where agricultural land for both purchase and rent are relatively scarce, and demand continues to outstrip supply.^[4] UK estate agency Strutt and Parker identified that in 2019, the number of farms marketed was the lowest it had been in 5 years, although still in line with the 5-year rolling average of 102 farms.^[5] Relative to the 50,231 agricultural holdings in Scotland, this indicates that a 1% change in the ownership of these farms would take approximately five years. Demand has remained consistent over the past 5 years and continues to outweigh supply. This imbalance of supply and demand means that land values and rent rates remain out of line with potential agricultural returns. Indeed, Strutt and Parker identified that arable land prices in the UK have increased by 268% over the last 20 years, and that in their experience, approximately 90% of farms sold for around or above asking price, with only two bidders required to drive prices. Outside money and existing established farm businesses are therefore able to outbid new entrants for available land opportunities.

Research indicates that there are limited incentives for large landowners to sell their land, alongside considerable competition for the limited available land from investors, other farmers and non-farmers seeking alternative lifestyles. At the same time, the availability of tenancies has declined.

What did the Survey indicate about the schemes?

To learn more about the experiences of new entrants and young farmers, a short online survey of grant recipients was carried out. This had a final sample of 67, equal to 26% of the total population that received grants. The survey sample did not include those who were unsuccessful in their grant application, or the wider farming community. Of those who responded to the survey, 51% received the New Entrants Start-Up Grant (n = 34) and 49% received the Young Farmers Start-Up Grant (n = 33). The survey identified two clear findings. The first was that the availability of land remains a challenge for some entrants, although a requirement of the New Entrants Start-Up Grant was that applicants must already have land. Over 65% of the respondents rented all or some of their land, and 39% farmed land that had previously been owned by a member of their family.

The second was that, irrespective of land access, the enterprises in question faced considerable challenges related to productivity. Livestock was part of the primary enterprises of 69% (sheep) and 62% (cattle) of the sample. Profitability was a challenge for 52% of the respondents, with 88% citing improving profitability as a high priority. Over half – 51% of the farms made an annual average income under £10,000. Including subsidies, 36% did not make a profit, while this was the case for 75% when subsides are removed. It is important to note, however, that farms in general are rarely profitable without additional support from government payments and subsidies. While the respondents of this survey did indicate that profitability was a considerable challenge, this challenge is not unique to either new entrants to farming or young farmers who received grants^[6].

What is Current Policy?

Current policy activity proceeds via the Government's Farming Opportunities for New Entrants (FONE) working group, which oversees work to develop new opportunities for tenant farmers. In the period since 2016, FONE has facilitated 107 land opportunities over almost 7,000 hectares to 70 new entrants and was also instrumental in identifying the potential for a Land Matching Service to develop opportunities for new entrants and expanding farming businesses, while simultaneously developing options for established farmers and crofters to reduce their input whilst retaining an active business interest. FONE activities are ongoing.^[7]