Oxford Farming Conference: Disaster scenarios offer opportunities for farmers

Doom-and-gloom scenarios of the population explosion, climate change and diminishing resources offer opportunities for farmers who are prepared to seize them, according to an Oxford Farming Conference (OFC) report.
Carried out by Bidwells on behalf of the OFC, the study identified key factors which it recommends UK farmers need to consider if the industry is to be sustainable and competitive in the coming decade.
Interviewing 100 farmers and almost 50 industry experts such as grain traders, lawyers and food processors, the report identified how the industry viewed itself and where it sees its future up to 2024.
A panel of expert witnesses, including academics and senior consultants, were then asked to consider how likely those views were to come to fruition, and what alternative ideas and policy changes were needed to help agriculture achieve its full potential.
While the report’s conclusions make for some tough reading, producers should see them as a series of opportunities – provided they are willing to change their attitudes towards farming operations and investment, says Bidwells consultant Ian Ashbridge, the report’s lead author.
Political stability, largely reliable weather, consistent yields, large and growing markets and a global reputation for research mean UK farmers are competitively well placed.
“But if we want to take advantage of those opportunities we must look at where we need to make changes and be willing to adapt and innovate,” he says.
“There are challenges ahead in terms of the number of people to feed and pressure on water, but if we start looking at ways to tackle them now, we have more chance of creating a sustainable and competitive industry.”
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By 2024, there will be a growing change in the structure of farm businesses, with an increased decoupling between those who own land and those who farm it, the report says.
Attracted by the increasing value of land and the potential to build capital growth thanks to returns from farm business, more and more “external” investors, who have no experience of farming, will enter the industry.
But rather than being bad news for agriculture, this new wave of investors could in fact bring new opportunities, Mr Ashbridge says.
“While farmers may be wary of investors with no farming background, there’s actually a bigger opportunity for the most organised, flexible and professional farmers to operate for – or more interestingly, with – those committing the capital.”
Investors will need commercially astute business managers who can maximise returns, the report adds, providing opportunities for talented new entrants and making it necessary to provide excellent opportunities, challenges and benefits in order to retain the best talent in the UK.
These opportunities do not necessarily have to be as a farm tenancy or contract farming arrangement, although both of those could bring significant opportunities for existing farmers and new entrants.
Instead the UK could see a growth in share farming – something which has been popular in New Zealand but has been scarcely tried in the UK, it says.
“Our research indicates that many UK farmers understand share farming as farmers putting together money to buy expensive machinery,” says Mr Ashbridge. “But if we follow the New Zealand structure, share farming partners are often rewarded with more than just a share in trading profits, so the growth of the value of the business is shared.
“If owner occupation is an ambition the share farming model in New Zealand offers real structures for new entrants to achieve that.
“As an example, in New Zealand it is possible to go to college, start working on a farm with another farmer, buy a few cows and steadily invest and build up an equity share in the business. As the business and your equity grows, you could get to the point where you may acquire land yourself.
“In New Zealand, being an owner-occupier is an achievable career aim within 25-30 years, but in the UK it is often something which is inherited.
“If UK agriculture is to be more competitive, it has to consider more inventive ways of aligning interests.”
But despite the expected structural changes, family farms will still have a place in UK agriculture.
“There is no reason why family farms or family farming businesses should not be at the heart of the industry in ten year’s time,” adds Mr Ashbridge. “But it is likely they will share that landscape with a greater number of agribusinesses and they may take on that complexion themselves.”
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The research revealed that farmers were wary of new sources of investment, but it is something that has to change if farmers are to find ways to become more efficient and productive, says the report.
Capital has traditionally been raised through bank borrowings, which is easier for owner-occupiers. But this not only prevents some potentially good farmers from developing their business ideas, it also fails to prepare for the long-term future of the industry.
“Agriculture is increasing its borrowings, but the risk is that it is increasing its debt just to increase working capital,” Mr Ashbridge says. “Indefinitely increasing overdrafts because capital requirements are increasing does not allow for investment for the long-term future of a business.
“We are going to need to generate levels of science and technological improvement that will inevitably require greater investment, which in many cases could be more than a single farm can afford. But this needn’t be a bad thing,” Mr Ashbridge adds.
Significant funding could come from outside investors or through farmers collaborating to fund schemes such as major reservoirs or irrigation systems.
“We are seeing changes already in more people using central grain storage, but it still represents a small percentage of crop output.
“Some farmers have reached a point where their farm infrastructure is so poor they can’t justify replacing like-for-like, so central storage makes more sense.
“This report suggests a further increase in scale of farms and farm output is likely to make collaboration the only option for a new generation of infrastructure investment.”
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Consumer interest in local and home-grown food has already handed more power to producers as retailers work more closely with farmers to secure supplies, and this trend look set to continue, the report says.
Further opportunities will be developed for farmers through online retail and this could represent the next generation of farm shops and food hubs.
European farm policy is set to remain key to UK agriculture, but direct subsidies are set to reduce thanks to pressure on funding and increased focus on using support for environmental gain, the report adds.
While the UK remains a key player in Europe and one of the EU’s top producers of wheat and milk, the concern is that policy risks inhibiting UK agriculture’s ability to be competitive, Mr Ashbridge says.
“The continued reluctance to embrace GM technology and the approach to certain pesticides creates an environment where UK and other European farmers are put at a disadvantage compared with the rest of the world.
“There are new technologies becoming available and they must be available to food producers.
“The other risk is that big chemical and research companies will look elsewhere to invest, taking the best knowledge and people with them.”
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