Tenant farmers are being urged to seek additional income streams as they prepare their businesses for an uncertain future.
Diversified farm businesses – including those that collaborate with other farmers – are among those most likely to thrive as the UK leaves the European Union, delegates at the NFU Tenants Conference were told on Thursday (9 November).
Brexit will accelerate the rate of change within the sector quite dramatically, said Jeremy Moody, secretary of the Central Association of Agricultural Valuers. He added that farmers will face a more commercial business environment.
“Your businesses are what you control,” Mr Moody told conference delegates at the Macdonald Kilhey Court Hotel, Wigan, Lancashire. Future policy is likely to focus on productivity, innovation and the environment. Farmers should focus on their competitiveness.
“The critical question when we are looking at our farm business is: ‘Do you want to be and can you be a commodity producer?’ If you can, all the traditional roads are there. If you can’t or you don’t want to be, it is the other ends you are looking at.”
These farmers should “seek a shelter from the bleak winds of commodity production”, said Mr Moody. Rather than subjecting themselves to the pressures of low-cost production, they should consider specialising, locking into high-value supply chains or branding their products.
“We are going to see much more differentiation in agricultural outputs.”
This means a more flexible approach will be needed by both landlords and tenants. Rather than picking an “off-the-peg” agreement, both sides should spend a bit more time and money to ensure that any tenancy agreement meets their needs.
NFU president Meurig Raymond said farmers could increase their productivity and efficiency after Brexit, provided the sector receives much-needed investment. This is best achieved by landlords and tenants working together.
Brexit is an opportunity to provide new funding to carry out improvements that help boost farm productivity. “It is vital for landlords to realise the importance of continued investment on their tenanted holdings to enable their tenants to farm efficiently,” said Mr Raymond.
“The best way of achieving these standards is through modern buildings and equipment with the latest technologies. Such investments not only give better welfare standards but in turn result in more efficient farming and enhanced productivity.”
Over 35% of farmland in England and Wales is farmed by tenants, said Mr Raymond. He added: “It is crucial that we get a new domestic agricultural policy right to deliver these elements for productive, profitable and progressive farming.”
The conference was also addressed by Patrick Begg, of the National Trust, which has a let farm estate extending to 180,000ha. It includes 700 equipped whole farm tenancies and about 1,000 bare land and grazing agreements.
Mr Begg said the trust was trialling a number of initiatives that could see farmers earn more money from undertaking environmental measures, while delivering high-quality niche products, rather than low-value commodities.
Trust tenants such as Neil Heseltine, who farms at Malham, in the Yorkshire Dales, improved returns by reducing sheep numbers by 70% and moving towards a less extensive livestock system based on extensive beef cattle.
Farmers should think hard about what would best deliver business success, said Mr Begg. “Neil realised that flogging himself to death producing volume livestock in a really harsh environment where he was at the margin of being able to pay the bills didn’t feel particularly persuasive.”
Instead, Mr Heseltine re-introduced Belted Galloway cattle as part of a conservation grazing scheme. This helped to support the upland ecosystem by keeping down scrub, while making space for native species to thrive, including moor grass and wild thyme.
“This is not a model for everyone but it is an example of how we can do this,” said Mr Begg.
“Neil has won time back, he has diversified his income and his margins on those cattle are significantly up. He is managing to make them pay and he is in a premium market, while dropping his cost base way down.”