Farming needs to up its game on efficiency levels

That was the good news story from independent economist, Sean Rickard, who was commissioned by KW Feeds, Trident and ABN, to do a report on his vision of the UK agricultural sector as it sits on the ‘cusp of far reaching change.’

Speaking at a live Zoom media briefing he said that within weeks, farm businesses will enter a new era of reassigned support and the open trading environment captured by the term ‘Global Britain’.

“This will require, in addition to continuing to supply consumers with the experience attributes of taste and convenience at affordable prices, a greater emphasis on meeting the increased demands for the credence attributes embodied in ethical production systems,” said Mr Rickard.

He added that future successes will be dependent on farm businesses and their food manufacturing customers rising to three specific challenges relating to higher standards of animal welfare, food quality and hygiene; increased productivity and sustainability whilst also capitalising on expanding global opportunities.

At present agri-food is the UK’s largest industrial sector, contributing £121bn, or 9.4% to national Gross Value Added in 2018. It directly supports the livelihoods of some 4m people, including self-employed farmers and at the heart of the food chain is agriculture.

In addition to supplying a wide variety of high quality commodities accounting for some 70% of food manufacturing raw materials, agriculture provides the social benefits of a a visually attractive and safe countryside with farming occupying 71% of the UK’s surface area.

Mr Rickard said UK food consumption was growing at 0.7% per year and while some foods, for example, red meat and sugar are under pressure from healthy eating campaigns, demand for food productions from middle class consumers in emerging nations is growing rapidly.

“The number of middle class consumers in emerging nations is currently estimated at 2.5bn but that is expected to grow to around 4bn by 2030. The growth in the purchasing power of these middle classes is estimated to result in demand for these food products rising at a rate of 5% per year so there are enormous export opportunities to meet the demands of the world’s rapidly growing number of affluent consumers.”

With the global food economy characterised by intense competition in all sectors, Mr Rickard pointed out that the UK had to develop higher quality, distinctive foods boasting taste, provenance, safety and ethical production.

“The message is clear: The UK’s agri-food industry can improve its international competitiveness by emphasising credence attributes as the basis for differentiation. These are largely delivered at the farming stage of the food chain, which in turn will necessitate greater transparency and traceability in the production of agricultural commodities.”

But, in contrast to the UK’s traditional transactional relationships, Mr Rickard said vertical relationships would have to be established to increase international sales.

“Studies show that the more complex and strategically important the attributes of the intermediate product, eg and ethically produced agricultural commodity, the greater the advantage of a close, trusting, vertical relationship. When it comes to credence attributes, not only does the production of agricultural products involve greater complexity, but also for the manufacturer, they are increasingly strategically important as a source of value.

“Faced with the complexity of and strategic importance of credence attributes, vertical relationships between farmers and their food manufacturing customers are particularly effective for leveraging distinctive credence capabilities through the share of information, joint learning and relationship specific investments. In short, closer vertical relationships are crucial to achieving traceability and competitive advantage,” said Mr Rickard.

Add to that the latest modern technology, precision farming, and agri-biotechnology, and he said the industry not only has the ability to increase production and compete on the global stage but also to reduce its greenhouse gas emissions.

Simon Heath, managing director of KW Alternative Feeds, Trident and ABN, added: “UK farming is standing at the threshold of a one-off opportunity to trade on our strengths in welfare standards, traceability, sustainability and credence attributes. To do this, we need to become more internationally competitive, and that means getting more productive.

“We believe there has never been a better time to address these global challenges and position the UK at the forefront of our industry worldwide. Together, we can help drive this exciting new future for the UK’s dynamic food and farm businesses.”