Friday, 6 November 2020
In the second of our blog series, our market intelligence director and Warwickshire farmer Phil Bicknell shares his thoughts on the inevitable changes on the horizon and how he is equipping his own business to weather the challenges.
Our industry faces a decade of change, much of it driven by significant policy shifts. Some sectors will face the challenge of reducing dependency on direct payments as they are phased out. We know there will be an increased focus on the environment. The UK’s new trading relationship with the EU and the rest of the world will impact our industry. And this change, of course, comes on the back of a year that has seen many farm businesses face some very practical challenges, with weather impacting production, costs and profitability.
At the time of writing, uncertainty remains, not least when it comes to the detail of our future trading relationship with Europe. Making change in uncertain times is a challenge. It’s natural to take a ‘wait and see approach’ – particularly when we’re in an industry that has long production cycles. That’s understandable – when a storm approaches, battening down the hatches and waiting for things to return to normal seems like a sensible strategy. But the changes that are coming aren’t a blip, they won’t just pass over. Riding out the storm doesn’t feel like the best approach, it’s more about how we adapt to a new normal.
But when much is still to be decided, approaching the decisions we need to make in how we manage our land and assets, our stock or the farm workforce becomes a challenge. If anything, the long-term assumptions feel more concrete. We can all look at our bottom line without basic payments factored in. We can look at the long-term supply and demand prospects for our sectors, exploring the new market opportunities that will emerge. We can anticipate who those new competitors we will face at home and abroad will be and ask ourselves how we measure up – if you’re in need of a starting point, think USA, Australia and New Zealand, where trade talks are already happening.
If the longer term is about our ability to adapt, the shorter term feels more about resilience. I’m asking how well equipped my farm business is to deal with any market volatility that might result, given the increased risk for trade friction to create some short term blips in trade flows. I’m reassessing what farm inputs and supplies might be caught in the midst of this – what do I do if following day delivery for parts isn’t as seamless? Are any of my key inputs likely to be impacted by tariffs? Are any of the supply chains my farm is part of facing labour challenges that might constrain the smooth running of those chains? More importantly, if the negative aspects do materialise, what sort of shape are my farm finances in and how well placed am I to talk to lenders if I need to?
Ultimately, the transition period coming to an end in just a few weeks means that change is on the horizon. The uncertainty doesn’t make understanding the risks or planning for them any easier. But that’s not a reason not to think through how I manage the potential risk and plan for contingencies.
A webinar on 12 November will see Phil and guests discuss the changes ahead for farmers and growers and provide some key practical guidance on what this means for you and what you can do at farm level.
You can follow Phil on twitter @thevalleyfarmer
In next week’s blog, AHDB’s senior market specialist Vikki Campbell will take a look at the implications of EU Exit for crops markets.