Farming feature: Managing the market ‘key’ to profitable food production
- Credit: Archant
‘Going to market’ has become more complex for farmers over recent years and the margins squeezed. The future prosperity of UK agriculture lies in better utilisation of its resources to manage and meet market needs profitably. Dr Belinda Clarke, director of Agri-Tech East, looks at current trends to predict the near future for agri-tech
Over recent years we have seen a trend towards closer integration within the agri-food value chain, with retailers working closely with their suppliers and niche farmers selling direct to consumers. To support this, a sophisticated logistics sector is developing that uses forecasting models to predict, monitor and manage production. Whether it is iceberg lettuces, artisan cheese or organic chicken, on-farm packing plants and associated haulage are now an essential part of 24/7, all-year-round food production.
With grain crops, many of the deals are made well before harvest, so farmers need an awareness of world commodity prices and increasingly work with analysts on futures markets.
The impact of technology on UK farming over the last 40 years has been significant.
Mechanisation has created huge efficiencies, with half the number of people producing the same amount of output. But there has been a cost. Limited rotations have meant the land is depleted of organic matter that is essential to maintain soil structure and also, as a result of microbial action, make nutrients available to plants. There is also evidence that suggests a fertile soil improves the nutritional value and even the taste of the food it produces. It is widely accepted that an emphasis on yield at all cost must end.
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Over the last three years, we have also seen considerable change in the equipment used in the fields.
Many of technology changes are driven by the increasing power of computing and the falling cost of data collection and analysis. Most tractors are now supplied with GPS as standard and combine harvesters have the ability to monitor grain quality and weight as it is collected. By bringing these factors together and overlaying information about soil and weather you then have the beginnings of smart farming – the ability to closely relate inputs to outputs over each square metre of land.
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Looking forward to the next 20 years, I see these trends – better market prediction, emphasis on soil fertility and smart farming – coming together to improve the productivity and vibrancy of the agri-food industry.
Land is a finite asset and needs to be used wisely. This is being recognised in a move towards valuing land for its potential use, not just the yield it produces of a single crop. Natural capital includes the use of land for amenity, improving water quality or as a source of insect pollinators. Putting a value on these functions makes it possible to create a different type of reward system for farmers that recognises their role in managing water, protecting natural landscapes and improving future soil fertility.
Recognising value will also bring closer alignment between customer and producer, thereby reducing waste in the system.
Currently much land is tied up in producing food that is wasted, often before it even leaves the field. Further improvements to managing supply will free this land for other purposes.
For example, there is increasing interest in bringing highly perishable products such as salads and fruit indoors, into clean environments that require no pesticides and where exactly the right nutrients are supplied in the water. Developments in LED lighting technology means that mass production of cheap ‘natural’ lighting is now available, creating the opportunity for growing herbs, salads and ‘seasonal’ vegetables all year round in industrial units or underground in cities.
Bringing production closer to centres of population will reduce waste, cut imports, reduce food miles and free open ground for other uses. Also, a ‘factory environment’ means automation is easier as batches can be harvested without manual intervention.
In open ground, economies of scale will not be achieved by even bigger equipment. Instead we will see the current trend of farmers sharing resources continue, collaborating to reduce purchasing costs and negotiate better market prices, and sharing the cost of faster harvesting technology. These are all ways that the model of farming has changed to become more cooperative.
The next step will be farming as a service. The ability to use smart farming technology to manage resources remotely is enabling a new breed of contractor to enter the market. The Internet Of Things allows low cost sensors on equipment, drones and monitoring stations to provide feedback to the farm management service. The cost-effectiveness of different agronomy strategies will be clearly defined so that the intervention is appropriate, ensuring the minimal use of inputs (fertiliser/pesticide/water/labour) for the optimal output.
An emphasis on prevention rather than control will mean that rotations, ground cover, more resilient crops and use of mechanical weed control will reduce our reliance on chemicals.
The DEFRA Agriculture 2016 report revealed that farming is profitable for less than a quarter of UK farmers, and the majority are over the age of 55. The decisions that these farmers will be making over the coming years is not about investment in technology but whether it is more profitable for them to contract out their land.
Already we are seeing significant areas of land growing maize for anaerobic digesters and animal feed where once there would have been vegetables. This will become increasingly attractive with the introduction of the smart-grid, which will make it easier to sell energy. These contracts have less risk and offer much greater profit for aging landowners on less progressive farms.
In the east of England, we are also seeing the rise of a new generation of farmers who are ‘digital natives’, brought up on computers, who assume the answer will be available online.
This generation, now up to their forties in age, are often the major decision-makers or influencers on the integrated farm/production units.
In addition, it is no longer necessary to have a family farm in order to enter agri-tech. The uncertainty, risk and complex environment of primary production creates a computing and engineering challenge equivalent to Formula One with a more tangible outcome. This workforce does not need to be out in the field as it is becoming possible to manage production across vast tracts of land from an office in the city.
Although robotics capture headlines, the revolution in agri-tech is already well advanced. Brexit and the uncertainty it creates has been another driver for a faster rate of change. The only thing that is certain is that change will happen.
This is why at Agri-Tech East we create an environment for farmers, producers, technologist, researchers and investors to get together to help shape the direction of change to enhance the productivity, profitability and sustainability of the sector.