6 business areas to focus on for Transition farming success

Successful farming businesses will need to be streamlined, efficient and diversified for the significant challenges that lie ahead, while having built-in resilience and being financially astute.

Those that survive will adapt the fastest and meet the objectives that the industry has been set by the government, leaving a better environment for the next generation, maintaining food production and reducing carbon emissions.

See also: Biodiversity net gain detail includes ‘stacking payments’ option 

There are six key areas on which to concentrate when it comes to future management success, believes Grace O’Dwyer, deputy head of agriculture at HSBC Bank, who urges every farming business to look carefully at how it is doing.

“The question we often ask is, when the chips are down what are businesses doing to help themselves,” she says.

“We know there will be good and bad years in farming, which is why we take a long-term view with our clients, but the flip side of that is nothing stays the same. So what’s being done about the emerging risks?”

Success will come where the following areas are being addressed, she advises.

1. Climate change

Climate change adaptation is on-going at the farm level, as hotter summers and warmer winters prompt changes in management practices.

The predicted 10% increase in winter rainfall in the next 30 years means water management and water use efficiency measures are high on the “to do” list, with factors such as drilling date and crop type already being used to help.

As rainfall intensifies, keeping soils in good condition will help improve water infiltration rates and reduce soil erosion and run-off.

Water efficiency measures – from building a new reservoir or installing rainwater harvesting – will limit drought risk.

Trees and hedges will have a role in providing shade and shelter for livestock, while flood mitigation measures should be considered for rainfall extremes.

“We know that what are currently one-in-five-year events will become every-other-year events, so there are things that can be done to prepare for that eventuality,” says Brendan Freeman of the UK Climate Change Committee.

Of course, climate change is not all about threats – there are opportunities too. These range from longer grazing periods and extended production seasons, to earlier maturity and new crops.

Not surprisingly, the fastest growing crop sector in England is vines. By 2032, it is predicted that 7,600ha will be under vines, up from present levels of 4,300ha.   

2. Supply chain consolidation

Consolidation is taking place and net zero is driving that process, while changing market demands also play a role, say commentators.

The food industry is intent on making significant changes to ensure supply chains are fit for the future and farmers who engage with their partners are the most likely to unlock synergies, reduce price volatility and help increase the security of supply.

“This is about working together,” says Grace O’Dwyer.

“On your own, you can be in a more vulnerable position and as a country, we need food security.”

There are some good examples – just one of those is the relationship between Baird’s Malt, Fettercairn Distillery and a group of 200 local malting barley growers in the north of Scotland – which guarantees a sustainable and local supply of the most important raw ingredient required for their whisky.

The growers must be within a 50-mile radius of the distillery and have to commit up to 122t of malting barley – and a minimum of four loads/year – to be part of the initiative.

A total of 22,000t of malting barley is supplied each year by the group, with the emphasis being put on supporting the local community.

On a national level, ADM Agriculture is rewarding growers for implementing regenerative agricultural practices across milling wheat and oilseed rape, as it takes steps to ensure the resilience of supply chains.

Payments will be received on a per hectare basis, using a scorecard concept, with incentives received on top of the market price.

3. Farm policy changes

Production subsidies have been replaced with payments for delivering environmental services and public goods, with farms being encouraged to do what’s right for both the business and the environment.

At an individual farm level, the Sustainable Farming Incentive (SFI) is open for applications, while larger Landscape Recovery projects are also being funded for farmer groups to deliver nature recovery at scale.

Capital grants are also on offer – many of which provide much-needed funding for improvements that are required for future success.

The SFI – which is suitable for tenants and landowners – can be used to de-risk the business and complement food production, while delivering for the environment.

Making it work requires planning and forethought so that it fits around the farm. In one example, a 980ha mixed arable and livestock farm with no existing Countryside Stewardship agreement, will be implementing the following actions:-

Potential SFI actions for a 980ha mixed farm

Code Action Payment (£/yr)
IPM1 Assess IPM and produce a plan 1,129
NUM1 Assess nutrient management and produce report 652
LIG1 Manage grassland with very low inputs 18,373
SAM3 Herbal leys 115,503
NUM3 Legume fallow 57,463
SAM1 Assess and test soil, produce a plan 5,757
MPA1 Management payment 2,000
TOTAL 200,877

That equates to £205/ha but involves extending the rotation to eight years – with five years of cropping and three years of herbal leys.

With sheep already on the farm and a grassweed problem, some arable land is coming out of production to put the business on a different footing.

4. Farming system

Sustainable, resilient farming systems are increasingly being specified by the end market, as well as being preferred and adopted by farmers.

While premiums for more sustainable practices have been slow to trickle down the supply chain, there are financial rewards for farms from better soil heath, improved water retention and nutrient cycling.

The uptake of lower input use, reduced cultivations, better animal welfare and greater diversity is helping, as are options involving land use change such as tree planting, rewetting and flood management.

Often described as future-proofing, making a business more resilient gives it a buffer against shocks and the ability to recover.

Food giant Nestlé, for example, sees regenerative agriculture as a farming system that aims to conserve and restore farmland and its ecosystem.

The company has committed to net zero by 2050, with a 20% reduction in emissions by 2025 and a 50% drop by 2030.

As a result, it is looking to co-fund a holistic farm approach – which is why it is involved with Landscape Enterprise Networks (Lens).

Lens is a network of those seeking outcomes from the farmed environment, with farmers who can provide those outcomes being paid for the implementation of certain practices.

Measurement, reporting and verification is important with Lens.

“If you don’t want to share your data, it may not be right for you,” notes Richard Jenner of Openfield.

5. Data and automation

Uptake of automation, digitisation and data is another area that farm businesses will need to engage with.

For that to happen, seamless integration is essential, say farmers, having spent far too much time grappling with technology that exists in isolation and restricts choice and the potential for integration.

“Plug and play” technology with open standards and full integration is the ideal, believes Kevin Gooding of Diometer, who is developing the Open Digital Farm concept with 25 industry partners.

It combines hardware, software and data functions in an open integration strategy, bringing benefits for farmers and technology providers in what he describes as a win-win. “It will be designed for everyone,” he says.

“We are working together on a partnership approach that will remove these islands of technology that exist.” In-built data security is a must, he acknowledges.

“Our premise is that if you create data on your farm, it belongs to you.” AI is a massive opportunity and a project within Open Digital Farm will address that, he confirms.

“The idea is that it will enable step change in AI use on farms. The obvious way of using it is in precision farming, but there are also specific tasks that could be achieved through the use of AI.”

6. Labour and skills

Access to labour and skills is essential to the future of any business – it’s the people that make a business a success.

To attract and retain staff, there are several considerations, says Liz Tree, project manager for Morrisons sustainable farm network, who specifies staff facilities, investment in training, shared values and work/life balance.

“There’s more diversity in agriculture now,” she points out. “If we want to inspire the next generation, we need to recognise that some flexibility is required.

“Over one-third of those working in agriculture leave their employment each year.”

Transition farmer Karen Halton 

Karen Halton employs 11 staff on her diversified dairy farm and is clear about what works when it comes to recruitment.

“We give them opportunities and we believe in them,” she says.

“They can see a progression route as we pay them well and invest in training and development. We celebrate achievement and provide social occasions, too.”

She adds that the farm business will only survive if the staff are thriving.

“They are all asked what they want from us when they start working here – it is much more than just meeting their basic human needs.”

Karen confirms that they also deal with issues. “Sometimes people have to leave. Good teams don’t tolerate poor performance and it becomes clear if it is damaging the business for them to stay.”  

Explore more / Transition

This article forms part of Farmers Weekly’s Transition series, which looks at how farmers can make their businesses more financially and environmentally sustainable.

During the series we follow our group of 16 Transition Farmers through the challenges and opportunities as they seek to improve their farm businesses.

Transition is an independent editorial initiative supported by our UK-wide network of partners, who have made it possible to bring you this series.

Visit the Transition content hub to find out more.