The news that farmers will continue to receive direct support until 2022 is welcome, but structural changes are needed to put the industry on a profitable footing.

Farmers are remarkably resilient: you only need to look at the list of names in the parish register, going back 100 years, to see how they can tough out lean times, however the assurance of payment until the end of the parliament must be used to build a sector focused on producing food and maintaining the environment. We cannot carry any passengers who are not working towards either of these goals.

While the area-based system has done considerable damage by breaking the link between having to farm and getting paid, it does pump cash into businesses that would struggle without it. These businesses represent the bulk of our food producers, and making them unprofitable will affect the whole industry.

Pulling subsidies will not make businesses go bust overnight, but it will put them into wind-down mode. Farmers will throw the chequebook into the fire and run down their assets in the hope that conditions may change or – with average age of farmers into their 50s – simply get ready for retirement, killing the chance for the next generation.

Politicians need to know how vital these support payments are. It might be tempting to cut payments, hoping it will jolt businesses into fresh thinking, but this couldn’t be further from the truth.

There is no typical Scottish farm and every single business is unique, with different assets and challenges.

Take a typical beef and sheep farm in Scotland, which is made up of 150ha of region-one ground stocked with 80 cows and 300 ewes. This farm would take in around £60,000 from selling nine-month store cattle at £850/head. Finishing half and storing the other half of the lambs would bring in around £26,000 from the lambs, plus £3,000 from cast ewes.

On top of this, there would be a BPS payment of around £28,000, plus £10,000 in LFA and £8,800 beef-calf scheme, bringing a rough total farm income to £135,800. This indicative figure has to pay for feed, vet, bedding, breeding stock, farm machinery, rent, building upkeep, contractors’ bills, fencing, ground improvements, and fuel – let alone a wage.

QMS enterprise costings show that upland LFA farms are losing £86 a cow and making £2 a ewe. This leaves little room for investment or market fluctuations.

Income

Income from the Government accounts for 34% of the farm income in this example. This integration of subsidy into the turnover of a farm is typical in Scottish farming. It will be a massive challenge to wean businesses off support in the future.

UK and Scottish government talk of moving away from direct support towards grants for on-farm measures such as liming, fencing and drainage is unrealistic. While such schemes do play their part, they cannot make up for the level of support directly going into farm businesses.

This window of opportunity until 2022 needs to be used to gear the industry to produce food for the market and sort the supply chain so just rewards are passed down the chain.

Current price buoyancy has had a remarkable impact on farmer positivity and doesn’t seem to have caused a catastrophe in the shopping aisles. Put simply: the public can stand a small increase in the cost of food.

Post-Brexit economy

Furthermore, underpinning agriculture will allow farmers to play their part in building the post-Brexit economy. Leaving the EU will put additional pressure on the UK trade balance. In simple terms, to be able to increase our wealth we will need to export goods to get cash in so we can buy things we can’t make.

To this end it is vital that farmers keep producing so that we firstly prevent having to be dependent on spending our money on imported food that we can produce at home. Secondly, we can build the opportunity to export produce to foreign markets, getting cash into the UK economy.

This can all be realised if we make the most of the window of opportunity until 2022.