Chapter 6: Research, innovation and skills
230.The ability of agriculture to cope with price volatility and periods of sustained low prices reflects the state of scientific knowledge and the proficiency with which this is transferred to farmers and applied in practice. This chapter examines the debate surrounding the dissemination of knowledge and the latest scientific developments to farm level and it also presents the case for farmers to be more proficient in modern business practices, which would include access to knowledge and the use of financial instruments as mentioned in the previous chapter.
Public investment
231.Historically, scientific advances have repeatedly led to improvements in agricultural productivity, which in turn help to improve resilience. The Minister presented a positive picture of current UK science and research in agriculture:
“One of the great resources we have in this country is world-beating science. We have some excellent science going on at places like John Innes and universities like Harper Adams, and places like Rothamsted as well. We obviously have the agritech strategy, and through that we are supporting a number of centres of excellence.”181
232.The NFU, in contrast, expressed disappointment with both the levels of domestic research funding in the UK and the precautionary approach of the EU to new technologies:
“We are still feeling the effects of the well documented underinvestment in agricultural science over recent decades, a shift in focus away from production, and the reduction of people and resources needed for translational research and commercialisation … It is deeply disappointing that EU policy and legislation appears sceptical at best, often opposed, to new technologies that offer farm businesses the ability to manage plant and animal disease, weeds and pests, so reducing the EU food system’s ability to manage volatility sustainably.”182
233.DG AGRI told us that the Commission was committed to public spending on research and innovation and that agricultural research was being prioritised in the current financial period:
“For the sake of comparison in 2011 the EU represented 15.4% of global public research spending, the USA 10.1% and China 23.6%. Research and innovation investments in agriculture are not just crucial for sustainability of agro-food systems in Europe but also for their competitiveness on global market … we have doubled the funds to agricultural research in the current financial period … We have included all the priorities that we have seen are extremely important, from animal and plant diseases that are spreading faster because of climate change to issues related to food security and land management.”183
Public-private partnership
234.In the US, agricultural research is funded from the public and private sectors, but, as the USDA told us, the funding tends to focus on different areas:
“Federal and State-level public spending on food and agricultural research totals approximately $5 billion annually; private sector entities invest an additional $5-6 billion … While private investment is most heavily concentrated in food manufacturing and crop development, public investment is more broadly distributed, with concentrations not only in crop and animal breeding, but also in environment and natural resources and human nutrition and food safety.”184
DG AGRI praised the US approach to research, extension and innovation systems, acknowledging that Europe had a lot to learn and apply.185
235.Public-private partnerships also have a role to play. The New Zealand High Commissioner explained how in New Zealand, agricultural research was a joint enterprise with the government and the private sector sharing costs 50:50.186
236.He cautioned against governments acting alone in research provision and funding:
“It is up to the farming sector and the agricultural industry itself to organise its distribution of information … They are all involved in the extension of the latest research information from around the country and around the world. Farmers naturally look towards that, because they know that they need the latest information to manage their businesses. So it is a sort of two-way process. The more that Governments get involved in providing these things free, the less valued they are.”187
237.The OECD extolled the benefits of co-funding research between the private and public sectors, arguing that research and development funding was directed towards the projects that the industry wants and needs:
“These co-funding arrangements and the more co-operative research structure have proved beneficial … It is about trying to exploit the best of both worlds—get the best out of the private sector contribution, where competitive funding models, and so forth, have been used, as well as then making the most of your government spend.”188
238.The funding of agricultural research should be recognised as a priority for both the UK Government and the European Commission. We recommend that they do much more to promote links between research projects and agribusinesses. Joint commitment between the European Commission, Member State governments and the private sector will ensure that research efforts are focused on the areas of greatest need.
239.Although industry and government can be positive drivers of scientific research, the NFU were clear that scientific research should come before policy decisions, rather than the other way around:
“Legislation and government decision-making must be based on robust scientific evidence if it is to have the desired effect, avoid unintended consequences and stand up to scrutiny.”189
240.There is an important role, however, for policy makers in identifying knowledge gaps and commissioning targeted research to inform decision making.This Committee voiced concern that the role of Chief Scientific Adviser (CSA) to the President of the European Commission was discontinued in 2014. This was disappointing at the time and remains a cause for concern.
241.The evidence based approach to policy making must be maintained. Agricultural research should inform policy direction at both EU and Member State level. Public-private partnerships can assist that research.
Dissemination of knowledge
242.David Gardner, of the Royal Agricultural Society of England, expressed concern that research was too fragmented, and that it was not applied where it was needed:
“My great criticism is that nobody pulls all that together and puts it into best practice for the farming community. If a really great piece of research is done in an institute somewhere, it might come up with one bullet point that is really useful for the farming industry and that could be applicable to every farming business in the country—but how does it get embedded in best practice? At the moment there is no formalised process to ensure that that happens. That is the role that, historically, the ADAS technical specialists used to fill when I started farming. In my view, we have never replaced that role. There is still a gap, and it is a big gap.”190
243.ADAS was the UK Ministry of Agriculture, Fisheries and Food’s (MAFF) agricultural advisory arm until it was privatised in 1997. Although the current Defra Farming Advice Service provides some help to farmers, it generally focuses on helping them to understand and meet the requirements of Cross Compliance, Greening (under the Basic Payments Scheme) and the European Directives on both water protection and sustainable pesticide use.191 Other arrangements are in place in other parts of the UK. In Wales the extension service known as Farming Connect (see below) maintains many of the functions that have been lost in England.
244.Levy bodies perform an important function in disseminating information and facilitating skills’ development, for example by providing support for benchmarking. The Minister, George Eustice MP, told us that the statutory levy board, the AHDB, was expected to fulfil some of this role. Its role was:
“to support farming, to commission research and development work and to encourage knowledge transfer. They have a very important role to play. They do regular statistics and benchmarking to try to help farmers recognise where they are and what they could do to improve their productivity. There is definitely a role for them there.”192
245.The AHDB agreed with the Minister’s assessment:
“We are well aware that we are not going to recreate the ADAS of the 1970s and early ’80s. The day of Government paying for extension services has gone [in England]. We have to look at doing it in a really smart way. The starting point is … benchmarking … We need to be of a mindset such that we know that the Danes, the Dutch, the Germans or the French are doing something better than we are, and we want to be as good as them.”193
246.Defra’s Agricultural technologies (Agritech) Strategy was developed in partnership with industry. It aims to ensure that the “knowledge and insight from the UK’s … science base are translated into benefits for society and the economy at home and abroad.”194 The Strategy was launched in July 2013, with £160 million of funding. The NFU said that they had:
“been encouraged by moves to strengthen the links between research and practice through the development of the Agri-tech Strategy; but the Strategy must deliver for the long term in all sectors. The UK Government has a duty to maintain world class expertise and facilities in this area, and crucially it must ensure that developments and breakthroughs are effectively translated into commercial practice on farms across the country—likewise, the end users of innovation need to have the right skills to be able to make the best use of the appropriate research and technology available to their business.”195
247.The Royal Agricultural Society of England told us that the Agritech Strategy was helping with the application of scientific research and they were hopeful that the AHDB may develop a more formal role in knowledge transfer:
“There is too much emphasis on basic research and very little on applied research … I see no formalised structure to make knowledge transfer/knowledge exchange happen in an organised way. That might be starting to change in terms of what the AHDB has aspirations to do, but it is still going through a period of change.”196
248.Lynsey Martin from the National Federation of Young Farmers’ Clubs also told us of the importance of policy being translated into practical tools: “I come back to business. BIS is just as useful to us as Defra, moving forward. It is about having access to all the tools that we can use to improve our business and make it more efficient.”197
249.Eirwen Williams, Director of Menter a Busnes, which delivers Farming Connect in Wales, agreed and spoke of the “disconnect between the blue-sky academic research” and what made a difference at farm level:
“One of the things the AHDB needs to deliver is making sure that the work that is being done is relevant to challenges on the farm and not something that looks good in an academic paper. It must address the needs of farmers today.”198
250.Professor Wilson, in contrast, argued that such knowledge transfer was already happening, and suggested that the ultimate application of research could act as an incentive:
“I am well aware that the drive now is around the impact of research. It is a great thing, from my point of view, that we do research and have to translate that to the sector where it is needed. From our perspective, getting those agricultural innovations that we do in a researchled university like Nottingham through to farming is a good thing. It incentivises us to do that and we are all up for it.”199
251.The USDA told us that in the US Federal and State-level spending on knowledge transfer programmes, including extension services and technical assistance totals around $5 billion annually. They also described their system of knowledge exchange:
“Farmers in the US have access to county, state, and national-level extension and education programs tailored to transferring new knowledge and providing training to working farmers across the full range of research topics pursued in USDA, including agricultural production practices and new technologies; business management and economics; natural resources management, climate change, and conservation; markets and trade; among others. Producers also have direct access to a wide range of publicly available reports, websites, web-based management tools, and advisory services both electronically and through local USDA offices”.200
252.It was clear that there were different levels of progress in this area across the United Kingdom. Menter a Busnes told us about the work that they were doing to facilitate knowledge exchange in Wales:
“Menter a Busnes and [the Institute of Biological, Environmental and Rural Sciences at the University of Aberystwyth] have recently established a Knowledge Exchange Hub to improve and facilitate the progression of new ideas and technologies to the agricultural and forestry sectors. The Knowledge Exchange Hub will provide a mechanism for assisting the flow of information from research projects into industry as well as keeping abreast of new research and developments in institutes and organisations other than IBERS. This will include research institutes across the UK and world, other knowledge exchange specialist e.g. levy boards, and industrial companies undertaking their own research. In addition the Knowledge Exchange Hub will be the point of contact for farmers and foresters wishing to access funding through the European Innovation Partnerships.”201
253.We were impressed by the breadth and depth of the services provided by Menter a Busnes. In Scotland, Scotland’s Rural College (SRUC) also offers knowledge-exchange services, specifically skills, education and business support, for Scotland’s land-based industries.202
254.Several witnesses highlighted the problems arising from poor broadband coverage in rural areas. Menter a Busnes told us:
“It is a problem. It is not fast enough to download videos. On our website we have videos and little podcasts of different things that farmers are able to download, but because the internet connection is not fast enough they cannot download them, so it is definitely an issue in rural Wales.”203
We are concerned that the Government’s broadband Universal Service Obligation (USO) may not include a commitment to rolling out broadband services in hard-to-reach rural areas in the light of recent reports that the forthcoming USO may require individuals to formally request broadband provision from providers.204
255.The provision of knowledge exchange and training differs across the UK. The UK Government should identify examples of best practice of knowledge exchange and dissemination wherever it is to be found and actively support them. It should also increase its efforts to deliver broadband to ensure that farmers in rural areas can access the necessary information online.
Modern business skills
256.A lack of adequate awareness and business skills can impede farmers’ ability to cope with risk appropriately. The NFU told us:
“Successful modern farming is a skilled operation that requires technical proficiency, business acumen and environmental awareness. The NFU believes that promotion of business management and entrepreneurial skills is crucial to achieving a professional and more productive, profitable and competitive farming sector.”205
257.Defra described their efforts to equip farmers with the tools they need:
“Defra has published a wide range of advice available to farmers, including how to write a business plan, manage accounts, undertake benchmarking and plan future activity. This includes information on specialist business and financial support to help farmers run their businesses as efficiently as possible. Advice is also available for farmers who are thinking of diversifying, by adding new business activities to traditional farming.”206
258.Benchmarking allows farmers to compare the financial performance of their businesses to the performance of average and top performing farms of the same farm type. It allows them to compare their profit and loss account, gross margins, balance sheet and performance measures. Professor Wilson suggested that benchmarking could give farmers a stronger understanding of both the cost of production and cost competitiveness and of ways to manage them.207 The NFU stressed that benchmarking was of paramount importance in improving the performance of agriculture in recent years. It noted that the 2011/12 Farm Business Survey showed that 15% of farmers who frequently benchmark at whole farm level achieved an average Farm Business Income of £128,900 in contrast with £63,000 for the 85% of farmers that did not benchmark.208
259.The Farm Business Survey is an annual survey commissioned by the UK Government, under which a range of management accounting information on all aspects of farmer’s and grower’s businesses is collected. The survey uses a representative sample of farms in terms of farm type, farm size and regional location, and is carried out by a consortium of seven academic institutions. Professor Wilson, who leads the consortium, told us:
“A key determining factor of farm performance is the management ability of those individual farm businesses. Anything that allows farmers to access greater information—for example, benchmarking, which we do within the Farm Business Survey—or allows them to look at their costs and revenue moving forward, which again we do with our work on our Projection Calculator tool, or which allows people to go in and test different price scenarios for their production: all those things need to marry together with the innovative practices at production level to achieve a successful business.”209
260.Menter a Busnes helps Welsh farmers offers programmes for farmers to develop business and management skills. It also organises surgeries with a business consultant; business meetings to provide information on employment laws, farm accounts, and record keeping; and venture programmes on joint opportunities, such as share or contract farming, or succession surgeries with a lawyer.210
261.Benchmarking in agriculture should be promoted among the farming community and encouraged by the UK Government. There is a long term business case for equipping farmers in all parts of the UK with the knowledge and expertise to calculate and manage their costs of production and overheads. Farmers should share their data with their peers to facilitate this benchmarking.
262.The least supported farming sectors appear to possess better business skills. Sectors that have enjoyed historic support now face greater exposure to market forces and should, as a priority, be equipped with the skills to improve business knowledge.
191 HM Government, ‘Farming Advice Service’: https://www.gov.uk/government/groups/farming-advice-service [accessed 5 May 2016]
194 HM Government, UK Agricultural Technologies Strategy (24 December 2013): https://www.gov.uk/government/publications/uk-agricultural-technologies-strategy [Accessed 5 May 2016]
202 SRUC, ‘Scotland’s Rural College’: http://www.sruc.ac.uk/ [accessed 5 May 2016]
204 Department for Culture, Media and Sport, A New Broadband Universal Service Obligation Consultation (March 2016): https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/5101
48/Broadband_Universal_Service_Obligation.pdf, p 10 and BBC, ‘Rural broadband only on request, says Government’ (6 May 2016): http://www.bbc.co.uk/news/technology-36225971 [accessed 11 May 2016]