OFF FARM INVESTMENTS
FARMERS MUST be prepared to invest more off-farm if they are to take a bigger share of Britain’s burgeoning food market, according to the English Farming and Food Partnerships.
The agricultural industry’s balance sheet is strong enough, despite falling income, said EFFP chief executive Sin Roberts.
He urged farmers to invest for the long-term and capture more of Britain’s 100bn a year food market. This figure has almost doubled since the early 1990s, while farm output has declined from £18bn to £15.5bn over the same period.
“Crucially, it may involve a radical change in investment policy – a move away from on-farm investment and a shift to greater off-farm investment and into agricultural supply chains,” said Mr Roberts.
He cited the example of New Zealand dairy co-op Fonterra, whose 12,000 farmer-owners have invested £4.2bn in the business, compared to £10.2bn in land and herds. Their payout in 2003/04 was £1.61/kg of milk solids, and an estimated £218m was generated from the added value of the dairy processing and marketing.
But UK farmers increasingly under price pressure need not be dismayed at the prospect of finding cash to fund investments, said Stuart Thomson, EFFP’s associate director for food chain.
“The first thing that springs to mind is reaching into your pocket, but there are other sorts of investment. Farmers can commit to a certain level of service, or delivering a certain amount of crop or stock to a farmer-controlled business.”
He warned that collaboration carried a risk, and would not boost income unless it was profit driven. Important first steps had already been taken in the dairy sector and arable and horticultural producers were also making efforts to collaborate. But only a fraction of beef and sheep producers worked with an FCB.