2014-12-02  

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National Farm Management Conference Highlights

Farming for the Future - delivering sustainable intensification, was the theme of this year's National Farm Management (IAgrM) Conference staged in London on Wednesday 26 November 2014.

Agri-gender balance finally makes U turn
The gender balance is finally changing within the agri-sector and more women are stepping in to leading roles, according to NFU deputy president, Minette Batters, “Take the last five years, the number of female student entrants to Harper Adams University has doubled; women are out there and in future they will be encouraged to take on an equi-role,” she told delegates at the Institute of Agricultural Management’s (IAgrM) annual conference in London.

Some of the most significant jobs in British agriculture were currently held by women - Secretary of State for Defra, Liz Truss; GCA Christine Tacon; CLA director general, Helen Woolley; LEAF chief executive, Caroline Drummond and GWCT chief executive, Teresa Dent.

“We must lead by example. The industry needs the right people with the right skill set. Agriculture still has an image problem – it’s perceived as low paid, low skilled, unsociable hours. The complexities of 21st century farm businesses, supply chains and technologies demand different and higher level skills, regardless of gender.”

Ploughing

photo: Farm Images

Farmland – a safe investment
Why invest in farmland? Why not? It’s very investable, very attractive, according to Nick Tapp, of Craigmore Farming, a specialist manager of New Zealand farms. “Average farmland total returns had increased by 200% in the last decade compared with a mere 60% for US treasuries, whilst over a 40 year period US land had demonstrated an average 11.58% annual return increase, in comparison to a CPI of just 4.14%,” he told delegates.

“Compared with other asset classes, land never comes bottom of the league table; it provides the opportunity to diversify, spread the risk and achieve a good return. Whilst the capital markets do not know how to assess land, simply because it is very different from any other asset class, it is steadily gaining interest.

“Cash flow and growth in net farm income capitalised into land value over time are among the drivers behind farmland values. Innovation leading to improved productivity and operational efficiencies are proving to be attractive, along with commodity price inflation. However there is naturally an enormous amount of variation in returns due to inputs outwith farmer control,” he said.

“The market for land is liquid and transparent market – it offers low political risk and it must demonstrate climate resilience since most institutions do not like huge swings in income.”

Where the landlord tenant model was safe, then a coherent operational strategy was necessary, he said. “The UK system is positively medieval with interests embedded by legislation together with subsidy payments resulting in poor outcomes and vested interests. In comparison, NZ takes a more innovative approach to relationships, it gives a better alignment to those taking part and has abandoned payments. Take the NZ dairy industry, the national milk output has overtaken the UK’s by 6m tonnes in the last 10 years, despite its average yield per cow just over 50% lower than that of the UK. Stopping subsidy halved the NZ ewe flock to 30 million but didn't reduce lamb output due to implementation of low cost innovation.”

Mr Tapp reaffirmed that since the majority of farmers were commodity producers and volatility was the norm then demonstrating a low input strategy to land management was essential.

Commodity prices to remain stable short term

HSBC’s UK commercial banking’s head of economics Mark Berrisford-Smith argued that global wheat stocks have recovered since the dip 10 years ago and the price spike in agricultural commodities between 2008 and 2012 was part of a long term shift up a gear, however unlike other sectors, for example metal, they are not quite so ‘super cycle’.

“Whilst wheat prices are certainly not historically high, global demand and supply is fairly good, In fact we are perfectly able to feed the world with current production levels. For the foreseeable future, I do not expect a price dip comparable with the 1990s, nor do I expect them to go galloping on from current trading levels. Average world GDP growth is likely to be marginal apart from China which is forecast to remain at just under the 8% mark.”

Future cereal trends will however be influenced not only by the rising population, but also by its growing wealth, he said. “In the run up to 2050, almost two billion people are forecast to join the middle and upper-income classes in the emerging countries – namely China and India, together with Indonesia, Egypt, Brazil and the Philippines where GDP is forecast to increase by 900%.” This population shift combined with rising prosperity is driving food spending which will change as we move through the spectrum. The trend towards further growth in GDP per head is likely to be associated with fewer cereals consumed and more dairy, sugar and alcohol.”

Plans for a large scale units? Watch out for the EA
Planning systems for intensive farming or ‘sui generis’ applications are acceptable, however the Environment Agency’s demands require revision, according James Leavesley whose application made in 2010 for Midland Pig Producers’ 2,500 sow unit at Foston, Derbyshire has yet to achieve the green light. The plans he said include exceptional animal welfare and environmental ideology, yet had generated worldwide attention and become a target for extreme negativity with 38,500 objections on board.

“Whilst I believe the planning system is not inherently flawed, the biggest issue is having the Environment Agency (EA) permit application running simultaneously with the planning application. The two are distinct and should be kept that way.

“The EA needs to introduce time limits upon their decision making process, a dedicated personnel who have been on a farm before and will hold meetings with applicants. They should not request reports that conflict with the EA guidelines nor should they run personal agendas. Permitting managers should be able to make decisions, whilst permitting teams should have similar decision making processes and standards of work.”

In addition to harnessing a team of professionals, he recommended before implementing any plans to have informed discussions and gain support from a wide range of stakeholders, from the relevant to those likely to object. “It is also sadly necessary to consider security advice for you, your staff and your family. Addressing media is also a priority. Don’t get caught up in it, stick to the facts, independently verified wherever possible. Protect your reputation; be open, honest and transparent.”

Getting to grips with social science........
The farming sector must adopt a greater understanding of social science if they’re to influence consumer behaviour, according to FSA chairman, Tim Bennett. “Supplying consumers with information is relatively easy, getting them to act is the challenge,” he said citing washing chicken to prevent campylobacter infection as a classic example.

“We need to get to grips with the work already done around social science, and encourage farmers to use all the tools to convey the messages. It’s relatively simple understanding consumer needs - they want to know where their food comes from and Red Tractor is farmers’ entrance to the market place.”

IAGRM

Related Links
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link Farming is a Powerhouse of the UK Economy
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link Hexham Mart’s New Consultant Carol Makes Sure the CAP Fits!


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