Farming Advice Service – Stakeholder Workshop
Farming Advice Service – Stakeholder Meeting 27th January 2012
Stakeholder Briefing and priorities
This meeting marks the start of a continuing process of interaction and communication relating to the Farming Advice Service. The objective of this activity is to get guidance, views and opinions from Industry representatives and stakeholders on how we optimise the benefits of the Farming Advice Service. We aim to have a clear view of how we interact with the farming community and where our resources should be allocated to maximise impact.
This document provides information on priorities that have been provided to us by Defra and will form the basis of discussion for part of our stakeholder meeting. Please review these in advance as there will be an exercise relating to this during the workshop.
Cross Compliance
Cross compliance is a core element of the Farming Advice Service. We must maintain activity in this area to meet the European requirements of the Farm Advisory System and also to meet the continuing demands of farmers throughout England. Our intention is to continue to address elements of Cross Compliance that cause difficulty to farmers as demonstrated in the annual inspection statistics and also any new elements introduced to cross compliance.
We liaise regularly with the RPA to determine what issues should be addressed. Currently we are concentrating on record keeping elements with specific attention on:
· SMR 7 & 8 – Livestock Record Keeping and Movement recording
· GAEC 1 – Soil Protection Review
· SMR4 - Nitrate Vulnerable Zones
· GAEC 19 – No Spread Zones
Competitiveness
Background
A competitive farming and food industry is one in which farmers and food producers use the resources available to them in the most effective way to meet the demands of consumers, both domestic and international, at a price and quality that matches the best available.
To address these issues, we should encourage farmers to think about:
Ø Their own ‘relative performance’ and how they could raise it – benchmarking against their peers;
Ø The risks facing their business and how they can manage them;
Ø Working with others and the potential benefits of collaboration.
Working to develop farmers’ competitiveness
Defra sees four factors that contribute to improving competitiveness: productivity, entrepreneurship, market pull, and structural change. With that in mind, the actions that government and industry could take to promote increased competitiveness will fall under one of four groups:
1. Help farmers and producers optimise their productive efficiency
Increase the ratio of output value to input costs through R&D, skills development, investment in physical capital, and reform to the market environment.
2. Encourage entrepreneurship in the decisions famers make
The UK needs even more enterprising producers: ones that respond more quickly to the demands of consumers, and make decisions on what to produce armed with an awareness of their own strengths and an insight into current market trends.
3. Ensure that consumers can create the strongest market pull possible
The better informed consumers are, the more easily they can demand higher-quality, more sustainable, healthy food. UK farmers have a comparative advantage in the production of this type of high-quality food.
4. Encourage structural changes to facilitate business turnover
Traditional farm ownership structures and financial incentives hinder development in agriculture. Structural changes to free up land markets would promote more frequent entry and exit of farmers and businesses within the sector.
Practical actions
Of these four groups, only the first two contain actions that we can encourage farmers to do right now to start increasing their competitiveness. A number of the activities on which we can give farmers advice are discussed below:
1. Benchmarking
Ø Around 30% of all farmers do benchmark their performance;
Ø Approximately 40% of high-performing farmers benchmark, less than 20% of low performers do so;
Benchmarking performance is straightforward and painless – it requires only basic accounting records;
Ø Many benchmarking possibilities exist, including the Farm Business Benchmarking Online program developed from the Farm Business Survey.
Ø The site is maintained by Rural Business Unit, University of Cambridge and not Defra.
Ø Farm Business Benchmarking On Line program allows quick comparison of results for businesses with similar farms in the Farm Business Survey;
Can compare profit and loss account, gross margins, balance sheet and performance measures, with farms with average or above average performance;
Comparisons will show how revenue, costs and profit for your business compare with others and indicate where there may be room for improvement, through reducing costs, increasing output or both.
2. Business skills
Farm Business Survey Management Practices module helps identify how specific business skills are associated with economic performance. The skills associated most with high performing farms (the top 25%) were:
· Risk Management;
· IT Skills;
· Business Planning;
· Marketing and;
· Management Accounting.
Nearly three-quarters of high performing farm businesses demonstrate at least 4 of these key skills.
There are a wide variety of skills and training packages available to farmers, including through their Levy Boards/AHDB, private sector suppliers and local training providers. Defra provide funding for skills development in the farming, food and forestry sectors through the Rural Development Programme for England.
3. Risk Management
Farm businesses operate in a complicated and changing risk environment and risk management is identified as a key skill for high performing businesses.
Over 80% of high performing farms have a risk management strategy;
Fewer than 60% of low performers have a risk management strategy.
Types of Risk
· Market risks – e.g. could your business be better prepared for lower beef and lamb prices? Or swings in diesel and nitrogen fertiliser prices?
· Finance – eg getting close to an overdraft limit?
· Institutional risks – eg changes to regulations
· Production risks – are you satisfied with your herd’s health? Is water shortage ever a problem on your farm?
· Other risks – includes health related risks and liabilities for production.
Managing Risks
The use of financial instruments - insurance, futures and options markets;
The use of forward contracts, credit markets and storage;
Diversification of agricultural activities;
Diversification into non-agricultural activities on farm, and;
Collaborative and co-operative ventures, including joint venture farming.
4. Collaborating with others
Offers the potential for improving business performance and spreading risks, for example by:
Reduced transaction costs;
More efficient use of resources and;
Greater opportunities for specialisation and expanding scale of operations.
But only a minority of farmers currently engage in such arrangements.
How might farmers work better with others? (not just other farmers)
There are many businesses which could share farmers’ goals – e.g. other farms, livestock buyers, vets, banks, consultants, accountants, contractors, input suppliers.
Collaborating with others can lower costs, raise output prices and reduce risks.
Further sources of information
. Further information and advice is available from a number of sources.
Ø Business Link is the national business support advice and information service, providing practical advice to all businesses and offering access to a wide network of business support organisations.
Ø Defra's guidance material can assist with management accounting, including making more use of financial accounts, farm planning and budgeting. This is aimed at all farmers, including those not previously involved with business management, planning and budgeting.
Ø There are examples of outreach articles in major farming newspapers which helped farmers find out about i.e. benchmarking: http://www.fwi.co.uk/Articles/2010/12/31/124859/How-Farm-Business-Survey-data-can-help-you.htm
Ø Advice on skills can be obtained from Lantra, the Sector Skills Council for the land based industries: http://www.lantra.co.uk/
Ø The industry led Agri-Skills Forum is working to increase skills development in the farming industry: http://www.agriskillsforum.co.uk/
The document below contains a compendium of information for farmers on the topic of benchmarking. It comes from BIS’s Business Link site; however please be aware that parts of it are now out of date, for instance the RDAs are no longer the locus of RDPE delivery, which has moved to core Defra.
Climate Change Mitigation
Background
Agriculture accounts for around 9% of total UK GHG emissions[1], and it is the single largest emitter of methane (CH4) and nitrous oxide (N2O). Nitrous oxide is about 300 times more potent than carbon dioxide and methane is about 20 times more powerful than carbon dioxide CO2. These gases are emitted as part of natural processes, for example, ruminant digestion is the major source of methane emissions from agriculture, nitrous oxide is produced by soil bacteria when nitrogen fertilisers are or manures are added to the soil as fertilisers or deposited by grazing livestock. Farming also contributes to emissions of carbon dioxide through the tillage of soils and through use of fossil fuels - both directly through electricity and fuel consumption by farm machinery, and indirectly through the manufacture of fertilisers and agrochemical products. Farmers can also contribute by protecting carbon stored in peat soils and permanent pastures and by planting trees and hedges.
Practical Action
Farming industry organisations are taking a leading role in helping farmers to reduce their GHG emissions and published the Greenhouse Gas Action Plan’s Phase 1 Delivery Plan on 4 April 2011. The plan sets out the on-farm actions that can be adopted to address GHG emissions through more resource-efficient farm and land management techniques. These actions fit into the following broad categories:
· Improved management of crop nutrients and soils
· Improved animal health, nutrition and breeding
· Improved manure and slurry storage practices
· Protecting and enhancing carbon stores
· Improved fuel and energy management and use of renewable energy
Many of these actions provide benefits to air and water quality as well as reducing greenhouse gas emissions, and almost all will be of economic benefit to farm businesses in the long term.
Local targeting
While greenhouse gas emissions cause a global problem, local factors such as land management, soil type and rainfall directly affect emissions (e.g. fertilising wet or compacted soils leads to higher nitrous oxide emissions). Peat soils and soils beneath permanent pastures are important stores and also provide valuable wildlife habitats. Drainage and cultivation of peatlands can cause major carbon losses. Cultivation of permanent pasture also results in long-term losses of carbon which can take several decades to recover so should be avoided.
Further Information
The Greenhouse Gas Action Plan (GHGAP)- Phase 1 Delivery Plan (http://www.nfuonline.com/ghgap/ )
The Farming Futures website http://www.farmingfutures.org.uk/ provides further information on reducing greenhouse gas emissions[2]
The dairy, beef and sheep, and pig meat sector levy bodies manage the delivery of the programmes for sustainability set out in their milk and meat roadmaps. These roadmaps contain targets for greenhouse gas emission reductions and other environmental benefits, and are key delivery vehicles for sectoral compliance with GHGAP obligations.
The recently published Dairy Roadmap can be found at http://www.dairyco.net/library/research-development/environment/dairy-roadmap.aspx
The two parts of the product roadmap for beef and sheep published in November 2009 and December 2010 respectively can be found at
The English pig meat roadmap published this Spring can be found at http://www.bpex.org.uk/Article.aspx?ID=301329
Sources of Advice and Funding for making improvements
Farmers can access advice and training on reducing GHG emissions from a variety of sources, most of which are related to improving farm profitability and improving crop nutrient management. Helpful sources of advice, guidance and information include;
DairyCo. (http://www.dairyco.net) holds advice and events to improve on-farm performance and conducts an annual carbon foot printing study and collects information on the use of energy from renewable sources by farmers.
EBLEX (http://www.eblex.org.uk/) has;
· developed initiatives to disseminate best practice to beef and sheep farmers under its Better Returns Programme. Training has focussed on breeding, feeding and management, with events at both farms and abattoirs. Twenty themed manuals for producers have been produced as part of the programme, focussing on improving breeding, fertility, grassland management, carcase quality, and more than 50 ‘topical issue’ briefing documents published.
· produced an internet-based library of resource materials called the Action for Profit (A4P) Initiative to help farmers increase returns and reduce costs. Materials consist of 62 single page topic sheets summarising efficiency gains possible in different areas of production.
BPEX (http://www.bpex.org.uk/), through its Knowledge Transfer team will help the industry to improve the sustainability of the sector through activities focused on breeding, finishing, health, nutrition, buildings, and training.
Membership bodies such as the NFU, CLA, and LEAF provide information, guidance and advice on improving efficiency, environmental performance and production of renewable energy. For example the CLA has produced the “carbon footprinting” tool “CALM” (http://www.calm.cla.org.uk/) which will also provides an estimate of the carbon savings provided from using Environmental Stewardship options.
The national non-food crops centre provides information and guidance through its website and offers a technical consultancy service to those considering growing bioenergy crops or installing AD; http://www.nnfcc.co.uk/crops-wood-waste/our-services
The Farm Energy Centre http://www.fecservices.co.uk/ provides advice to farmers on energy efficiency and energy management.
Funding; Most website information is free to access but all on-farm events and training provision indicated above are paid for by farmers with the exception of those that are free for members.
Financial Incentives
Opportunities for RDPE funding
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Farming Advice Service – Stakeholder Workshop
Climate Change Adaptation
Background
As the farming sector is among the first to feel the direct effects of a changing climate, there is therefore a clear need for the agriculture sector to take early and sustained action to maintain (or create) healthy and resilient ecosystems on farms, which will help manage the effects of climate change on the natural environment, biodiversity and society as a whole. It is in farmers’ own interests to adapt in order to strengthen resilience and maintain a competitive and sustainable industry.
Practical Action
Climate change presents a range of opportunities and threats to the agriculture sector.