Harvest, yields, field fires, drought, markets, winter drilling campaigns, input prices, and so on. Farmers’ minds are currently occupied with major events, processes and decision-making synonymous with this time of and the current climate. Speaking with others within the industry and reading through farming press, it appears as though these issues are at the forefront of concerns of British farming. But what are farmers really concerned about, and what are their opinions of the future of UK farming?
DEFRA released an update for the ‘Farmer Opinion Tracker‘ towards the end of last month to highlight the issues that farmers are concerned about, and the results are clear.
According to DEFRA:
- nearly one-fifth of all farmers do not have the information they need to plan ahead and do not know where to find it
- Farmers on 68% of holdings indicated that they will need to make changes to their farm business in the next 3 to 5 years
- 80% of holdings report that the environmental impact will be highly important to the running of their business.
A quarter of UK farmers are unsure of what they must do to secure their businesses for the future.
So where to begin. Let’s start with the what then the how.
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What are the problems facing farmers currently?
Labour Issues
All UK farms require varying degrees of labour, and seasonal employees are required at the busiest times of the year. Historically, UK agriculture has actively collaborated with European labourers, which has helped both groups by facilitating timely harvesting and fostering a vibrant job market for job seekers. However, Brexit and Covid-19 amongst other issues have facilitated the UK agricultural industry’s struggle to meet the labour demands, adversely affecting farming businesses.
Crop yield and crop failure
Statistically, 2022 UK crop yields are looking to be average to slightly below average. Volatile, more extreme growing conditions has presented an increasing trend of lower-than-average yields for the last 3 years. Perhaps initially most relatable with oilseed rape growing, farmers are finding decisions on crop selection and rotation becoming more difficult and impactful with regards to financial security. This issue is amplified by revocations and price increases of active ingredients as well as a highly bullish fertiliser market.
High cost of technology
The UK is suffering with higher dependances on imported technologies. Therefore, access to agricultural technology in many cases has become more expensive and limited, due to a multitude of factors from Brexit and Covid-19 to wars. The impact of this is that British farmer’s access to technology is slowed in comparison to EU and US farmers, preventing them from maintaining the highest achievable efficiencies.
Despite all of this, 57% of UK farmers replied positively about the future of agriculture, citing cost of living and BPS cuts as their top concerns for the future of the industry. It is evident from this that farming communities’ top concern is the financial health of their business. The most popular strategy for easing this financial strain is farm diversification, with over 31% of farmers surveyed already establishing plans for camping and glamping sites on their land.
How can these issues be overcome?
From benchmarking and increasing on farm productivity to integrating farming systems with new Enivronmental Land Management schemes (such as Sustainable Farming Incentive), there are many opportunities for UK farmers to increase the resilience of their business in preparation for loss of the Basic Payment Scheme, and an abundance of places and people to turn to for advice and support.
However, we believe that farm diversification goes a long way to help mitigate these issues, particularly when integrated and run in tandem with the above.
Diversified income streams
By developing secure diverse income streams, farmers can be protected from the strains of volatile and uncertain seasons and markets. Ensuring that your farming business has as much fixed income as possible, whilst reducing reliance on inputs and being in a “price-taking” situation helps to mitigate financial risk. For example, domestic getaways have become more popular as a result of the pandemic and flight issues; therefore, tourist accommodation (glamping) has become the most popular farm diversification to date, offering consistent cashflow and income independent of agricultural commodity markets. However, care should be taken in introducing the enterprise so that it can run self-sufficiently with minimal labour or managerial input required from the farmer, to prevent a significant increase in work load in situations where this is undesired.
Increases employment opportunities
When you diversify your farm, you may be facilitating employment opportunities for the surrounding population. Following on from the glamping site example, they create hospitality jobs which may be flexible both to the landowner and staff member. Additionally, farm shops create retail and culinary jobs. Your farm can become an ideal working location for many in the local area, driving further footfall and awareness. This creates a familiar brand for your farm and secures a positive relationship with your local area. Employing staff or seeking joint venture opportunities can enable you to diversify, despite having little to no time to invest in the operation of the enterprise yourself. It can also assist in the increase of utilisation of existing staff.
Mitigate the impact and risk of rising cost
Farming has seen an unprecedented increase in cost of production in recent years. Most notably, fertiliser and diesel prices have had a massive effect on farm margins in the UK, forcing farmers to closely scrutinize the cost benefit in many situations. The tiered loss of BPS as we head towards 2028 only exacerbates concerns with high input costs, rendering some businesses questioning their solvency thereafter. The solution is to reduce reliance and vulnerability towards volatile markets and to embrace the potential benefits of income diversification from other potentially more reliable sources. These could be property or enterprise investments, from farm building conversions or biodiversity net gain schemes, to farm shops and events for example. 75% of farmers responded claiming they were actively looking to gain diverse assets.
The opportunities are out there, although seizing the available opportunities is becoming increasingly time critical. Guidance is frequently helpful in maximizing the opportunities your land has to offer. We work with landowners and farmers to develop tailored advice and strategies to help diversify their estate, increase resilience and income, whilst realising their visions and aspirations through property and enterprise investments.
If you want to talk about the potential developments your land has to offer, you can contact us for a no obligations initial consultation.
Search our other blogs for more information on farm diversification.
In our articles we collect data from various sources you can find some additional links below:
DEFRA – Farm Performance and Productivity: Analysis of Farm Business Survey.
Propel Finance – National UK Farm Finance Report
Forbes – The importance of revenue diversification in business
UK Gov – Farmer opinion tracker