The future for food, farming and the environment Contents

3Increasing farm competitiveness

Productivity

39.UK farm productivity is not growing as quickly as that of some of our major competitors. We heard from Tom Hind at the Agriculture and Horticulture Development Board (AHDB) that increasing productivity is “absolutely critical” to delivering a profitable sector and the sustainability ambitions of the Government.72 He added it “is not necessarily about producing more […] but just doing it more efficiently”.73 He went on to explain that “the average rate of productivity growth in the UK agriculture and horticulture sectors, over the course of the last 10 to 15 years, is about 0.9% a year, whereas in the Netherlands it is around 3.9% a year”.74

40.Our witnesses had mixed views on whether the proposals within the Government’s consultation paper would help agriculture to become more productive. The economists told us they considered the proposals would help productivity as Direct Payments had stifled entrepreneurship in the farming sector. Michael Taylor, from Policy Exchange told us: “Without […] direct payments, there is an opportunity for the farming sector to increase its innovation, to improve productivity and efficiency”75 and Angela Francis from Green Alliance said: “if we get this right, payments for public goods should improve farming productivity”.76 However, the NFU was less confident. In its written evidence it noted that the consultation does not introduce new measures but merely suggests those that are already available to farmers such as five-year tax averaging, diversification, tax efficient savings and improved business management (e.g. benchmarking and skills improvement).77 Dairy UK is also critical of the consultation paper stating that: “the Government’s approach to helping farmers improve their profitability is not adequate and that, no mention is made of the need for grant aid or tax breaks to farmers to assist them to invest in technology, equipment and buildings”.78

41.When we asked the Minister if he was concerned that some farmers may not be able to secure the investment to adapt to the new scheme, he replied that he was in principle keen on new financial packages to support productivity:

We could also look at capital grant support for investment in particular machinery or infrastructure. For instance, I have always envisaged, in the West Country, where you have a particular challenge with slurry management and the impact of ammonia on air quality, support to help farmers invest in direct injection equipment. That might be something that would deliver a lot by way of public goods. You might even support smaller groups of farmers to come together in machinery-owning syndicates; they could share machinery, and support through grants could encourage them to be able to do that.79

Diversification

42.The consultation paper states that it wants to help farmers and land managers in remote areas, suggesting diversification into energy generation, tourism and commercial forestry.80 During our inquiry, we heard that more than half the farms in the country are diversified, yet the average income from diversification is relatively small on most of those farms and there are only a few for which it is significantly bigger than their farm income.81

43.Witnesses described some of the barriers to diversification:

Not every farm can diversify, particularly those that are tenanted, as they may find it difficult to borrow the money needed for investment;82
most sheep farmers would have already invested in things that bring in income from other sources;83
farms “copy-cat” each other creating over-capacity;84
the market is already quite competitive for tourist holiday lets;85
diversifying to farm shops, cafes and restaurants is location dependent;86
the lack of good broadband coverage in rural areas is a real obstacle to new business options and limits tourism;87 and
mobile phone coverage can be poor “particularly in the uplands, and certain black spots”.88

44.Having a diversified farm business does not necessarily mean it will be successful. Professor Dwyer explained that the best strategy to diversification is where two, or more, businesses can support each other such as an increase in tourism creating a market for farm products.89 Her work on the evaluation of the last rural development programme for England showed that “successful diversification strategies were when they were done in larger-scale partnerships of different organisations working together and planning at a strategic level”.90 This means businesses develop where there is real market need rather than copying each other and saturating the market.

Technology and innovation

45.The consultation paper states that Defra “will encourage farmers and growers to invest in new technologies and processes to increase their profitability, tackle plant and animal diseases and improve animal health”,91 yet provides few details on how this will be achieved.

46.Witnesses explained that to improve productivity in UK farming there is more scope to reduce the inputs (i.e. resources expended) rather than increase the outputs (yield), for example, precision farming does not increase yields, but significantly reduces the cost of production by reducing the amount of fertiliser needed. Professor Blackmore told us that “we have now reached the end of the economies of scale, because the machines cannot be made any bigger”.92 He noted that small and medium sized farms have the potential to benefit the most from precision farming technology.93 He also highlighted there are huge benefits to be gained from reducing the damage to soil made by large machinery: “very rarely do you get economics and environment pulling in the same direction, but in this case they do”.94 Professor Blackmore went on to tell us about his research at Harper Adams University:

We have the world’s first commercial crop produced in the UK under the Hands-Free Hectare, where one hectare of barley has now been produced with nobody going in. That was only a demonstration. The actual cost of it is ridiculous. It is the most expensive barley in the world, but we have proved the point.95

47.Given the cost of these new technologies, we asked experts from the agri-tech industries how long it would be before they are a commercial reality and begin to impact UK farming productivity. Fraser Black of CHAP told us that “the adoption of any technology, particularly disruptive technology, is difficult […] it will take a generation to get this through”.96 He explained why it would take so long:

You have to start with the coalition of the willing: those who really want to buy it and do it. You have to be able to set them up, even if you are putting it into a trial farm, on a trial basis, for 10 years or however long it takes. You have to be able to show that it works. Without showing that it works, no one else will pick it up.97

48.Tom Hind from AHDB explained to us that the difficulty of transferring technology onto farms was that it relies on farmers seeing demonstration projects. AHDB has established a series of 46 strategic and monitor farms to demonstrate some of these ideas, but he considers that “it is not enough”.98 He highlighted that one of the reasons that farmers find it so difficult to access advice and information is that there are so many different sources of advice: “There are 14 different types of advisory service in the industry and 90 different actors”.99 Instead, he suggested that the industry must come together in one place: “We have to bring it into one place to make the private sector and the public sector organisations like us work much more closely together”.100 AHDB consider there is a role for Government to supply free independent advice through a ‘what-works’ centre to create a “one-stop shop for evidence, advice and knowledge that is independently and objectively verified”.101 Tom Hind suggested that this would “not necessarily require a big investment”.102

49.Helen Browning from the Soil Association told us that innovation need not be high tech: “A lot of eco-innovation is required”.103 She described the success of the Innovative Farmers programme which tries to use resources already available on farms, using nature and sustainable materials.104 Professor Lang agreed: “Low tech is just as important as the high tech”.105 Peter Stevenson from Compassion in World Farming noted that there is too much emphasis on technology in the consultation paper:

There is a huge emphasis on technology but it never mentions agroecology. It barely mentioned rotations or integrated crop livestock systems. It is not giving farmers enough of a vision of what things we want in the future. There are a lot of good things but a lot needs detailing.106

50.The Government’s 2013 Agri-Tech Strategy committed £160 million to create four world class Centres for Agricultural Innovation through the Department for Business, Innovation and Skills. We asked two of the leaders of these centres if they considered that funding for their centres was secure. Fraser Black told us: “No, [CHAP’s] funding is not secure, but we are hoping it will be secure as we go forward”.107 Tim Bennett on behalf of the Centre for Innovation Excellence in Livestock (CIEL) made a plea that:

… having now moved back into applied research, as most countries in the world do, including those that do not subsidise their famers, we need that continuity. If you build the capacity, do not follow through with the research and then do not transfer that to the industry, you have wasted some money.108

51.We asked the Minister how the Government intends to support innovation in food production. He told us:

When it comes to food production, we are doing some work with the industrial strategy. The NFU is represented around the Food and Drink Sector Council. We are doing a lot of other work in that space, on food, opening new markets and supporting innovation. We will have a successor to the agri-tech fund. We float the idea of R&D syndicates to help support R&D in food production, and in agriculture in particular. There is that sort of work.109

Skills and training

52.Better performing farmers are more likely to have qualifications, participate in professional development schemes and undertake risk management practices.110 “In 2013, only 18% of farm managers in England had full agricultural training, with 61% having only practical experience”.111 AHDB believes that this may explain the wide variation in farm business performance and profitability in the UK. It told us that “new technology is [not] the only route to productivity growth […] skills are really important”.112

53.The consultation paper states that:

The industry itself has an essential role in inspiring people to consider careers in food and farming and helping them to develop the diverse skills and qualifications needed to succeed.113 We want to encourage more farmers to benchmark themselves against the best and commit to Continuing Professional Development.114

54.The Soil Association supports the role of benchmarking: “The development of benchmarking initiatives has been shown to be a powerful way to drive farm performance”.115 Peter Dawson from Dairy UK agreed with the importance of benchmarking, but noted that access to data can be difficult where rural broadband is limited.116

55.Professor Dwyer told us that training by farmers in business skills and business development can get overlooked by a focus on technical skills.117 She described the positive approach taken elsewhere in Europe where farmers work together on particular issues that interest them and told us: “the key thing […] is that they are in a network of like-minded people who are interested in learning and continuous improvement; that is the dynamic you have to engender. The training can then be really valuable”.118 Phil Stocker agreed:

We have some really good models where farmers are coming together and setting their own agenda. It is them that are discussing what they want to talk about. It is them that are learning from each other and learning from people they respect. They still need facilitation. They do not necessarily need experts.119

56.The Soil Association considers these types of schemes should be supported through the allocation of at least ten per cent of the current research and development budget for innovative agriculture projects led by farmers themselves, who are best placed to know what they need to solve the problems that they face. It suggested that “on current figures, this would amount to a minimum £45 million per year going into farmer-led research and innovation. This would translate into 1,000 projects a year led by groups of farmers”.120

57.Productivity in agriculture is falling behind many of the UK’s competitors and improving this will be vital to deliver on the Government’s ambitions. As drafted, the consultation fails to address this and the other barriers limiting farm productivity.

58.We recommend that the Government produces a farm productivity plan by May 2019 at the latest. This could include, but should not be limited to:

A review of the requirement for the rationalisation of existing advice centres for the dissemination of independent evidence, advice and knowledge to improve on farm uptake of new technologies;
a thorough investigation of new tax breaks to assist farmers to invest in technology in conjunction with the measures already announced;
further details on what measures could be funded under capital grant support;
funded facilitation for farmers working together and leading projects;
closer work between Defra and DCMS to improve mobile and digital infrastructure which will be critical to the success and development of the rural economy; and
clarify the form and funding of the successor to the agri-tech fund.