With Basic Payment on the way out, every British farmer is being nudged towards a question our counterparts elsewhere have faced for years: how do you stay profitable when there’s no guaranteed cheque in the post?
Three of the most instructive case studies span two continents. Post‑Soviet Ukraine built an export engine on minimal public support; post‑communist Romania, now inside the EU, has learned to thrive on subsidy that arrives late – if at all – under tighter environmental rules; and Brazil scaled a commodity super‑power on cheap credit rather than hand‑outs.
Their climates, soils and politics are poles apart, yet between them they offer a crash course in subsidy‑free farming that UK growers can use right now.
Ukraine – big fields, thin cushion
When the USSR collapsed, Kyiv scrapped most of the centralised support that once propped up collective farms. What emerged is a mosaic: tiny household plots, mid sized family businesses and “mega farms” that stretch well past the horizon. Direct aid today is limited to targeted grants and the odd tax break; there’s no area based payment to soften a bad year.
Instead, farmers lean on international finance. The World Bank’s ARISE facility, European lenders and global grain traders provide working capital, kit leasing and storage investment. That money flows because Ukraine’s black soils and low land rents generate competitive yields of wheat, maize and sunflower oil – and because 70 percent of the crop is sold overseas. Export orientation also creates vulnerability: ports, railheads and insurance matter as much as rainfall, as the current conflict tragically shows. Producers hedge that risk with forward contracts, dollar denominated loans and, increasingly, satellite verified crop insurance.
The headline lesson? Margins beat subsidies. Ukrainian growers obsess over cost per tonne, not support per hectare, and they build cash flow buffers through finance, not hand outs.
Romania – crisis to cash flow in 17,000 ha
Move west and you meet a different challenge: similar black soils, a continental climate and ex communist legacy, but EU rules and partial subsidy that arrives late. Siggs & Co were asked to turn round a 17,000 ha cereal and oilseed farm near the Danube that was barely covering expenses. Within two years the Siggs process – identifying low hanging fruit, backing internal winners, installing tight management systems and relentless follow up – lifted output by 45 percent, added over €5.5 million to the bottom line and left a motivated management team in place.
Key to the turnaround was liquidity: lining up credit early so seed, fertiliser and spare parts were on farm when the optimum sowing window opened. In farming, the difference between success and failure is often 15 days; by 14 September seed still wasn’t ordered and key tractors had been down for six weeks. Seven days later drilling started on time, and two harvests later the farm set new wheat (6.6 t/ha) and OSR (3.2 t/ha) records.
The Romanian take away? Even where some subsidy exists, it cannot replace working capital, timeliness and disciplined people management.
Brazil – scale powered by credit
Cross the Atlantic and you land in a different universe: tropical sun, two or even three harvests a year, and tractors pulling 15 metre drills through red Cerrado soil. Yet Brazil’s farm support budget is surprisingly lean. Direct input subsidies account for little more than 10 percent of farm receipts; the real carrot is credit.
Each June, Brasília unveils its Crop Plan: this year a record R$475 billion (about £75 billion) in low interest loans and subsidised insurance. Producers tap these lines to prepay fertiliser, contract rail freight to distant ports and invest in precision sprayers or carbon smart pasture. Our own Brazilian experience – managing 10,000 ha for the parent company of the Romanian operation via a local contractor – showed that cheap capital, not hand‑outs, is what unlocks multi‑crop systems and rapid tech adoption.
The quid pro quo is compliance with strict forest‑protection rules and, increasingly, proof of good soil management. In effect, Brazil has swapped blanket payments for conditional finance. Cheap capital doesn’t erase challenges – haulage to port can top 1,000 km – but where policy links loan rates to environmental metrics, uptake of no‑till and methane‑reducing feed is rapid. Credit turns ambition into action.
What do the two models tell us?
• Scale is relative. Ukraine’s corporates rely on vast machinery fleets; Brazil’s 2,000 ha family firms double‑crop; Romania lifted output by focusing on the timing gap, not more land.
• Finance trumps hand outs. Whether it’s a World Bank loan in Kyiv or a state backed note in Mato Grosso, ready cash replaces reliance on subsidy cheques.
• Risk is managed, not avoided. Ukrainian growers insure against wartime port closures; Brazilians hedge currency and rainfall; Romanians build spare capacity into drill fleets and labour schedules.
• Environment is commercial. Coupling finance to carbon benchmarks pulls conservation into day to day decision making more effectively than compliance inspections ever did.
Four practical take aways for UK farms
1. Court capital early. Talk to banks, merchants and peer to peer lenders about revolving credit, equipment leasing and crop backed loans. When BPS ends, liquidity will matter more than ever.
2. Package risk cover. Build weather insurance, price hedges and, where possible, foreign exchange protection into budgets. Treat them as essential inputs alongside seed and fuel.
3. Intensify wisely. Brazil’s double cropping and Ukraine’s low till drills show that more output needn’t mean more acres. Look at cover crop based successions, relay sowing and targeted nutrient placement to lift £ per hectare without battering soils.
4. Swap compliance for performance. Future public money will flow through Sustainable Farming Incentive and carbon markets. Evidence from abroad suggests that clear, measurable targets tied to finance drive faster change than cross compliance ever did.
A brief word on scale
“But I’m farming 200 acres, not 20,000 – does any of this apply?” Absolutely. The principle is the same whether you run a Cotswold estate or a Welsh upland tenancy: the market rewards tonnes, quality and verifiable stewardship, not entitlement references.
Think like a Ukrainian CFO when locking in forward grain sales; think like a Romanian turnaround team when chasing drilling windows; think like a Brazilian agronomist when asking whether a cover‑crop‑soybean rotation could trump second wheat.
Farming for the future
Subsidy free farming isn’t a distant academic concept – it’s how millions of hectares are managed right now from Kharkiv to Curitiba. Those producers stay in business through finance, focus and flexibility. As direct payments taper here at home, borrowing the best of their playbooks could make the difference between drifting with the tide and charting your own course.
The comfort blanket is going. Time to sharpen the pencil and farm for the future.
