This sector is integral to all our lives and one which must focus upon balancing an increase in productivity, while continuing to deliver top quality goods to a domestic and worldwide marketplace.
Success is never a guarantee, however any business – big or small – will benefit from putting well prepared structures and plans into place. This is especially true within the agricultural, rural and food processing sectors where change is a given.
Be it a family run farming business, a medium or large scale livestock/arable farm or a food processing factory, success depends on employees.
The agriculture and food sector is as diverse as it is complex, every aspect requires a combination of specialist knowledge and manual labour. People working across the sector can be drawn from family members managing a traditional farm or a diversified business, seasonal workers, operatives or subcontractors and consultants.
In the UK, it is estimated that up to 60 per cent of family-run farms do not have adequate succession plans and with changes on the horizon, a structured way forward is vital.
There are also added pressures of changing family circumstances by way of marriage, divorce or the death of a business partner. Therefore, family-run farms must pay close attention to the content of Wills, Partnership Agreements and Lasting Powers of Attorney, ensuring they are up to date and relevant.
Other considerations including tax and the availability of agricultural and business property reliefs, should form part of the decision-making process. Do not let a lack of clarity or planning be the downfall of a business now or in the future.
There has never been a more popular time to consider diversification and, for many, it is successful. In fact, a recent NFU Mutual study quizzed 200 farmers who had diversified their businesses and 90 per cent cited success.
The key to any such plan is to prepare and this is especially relevant when it comes to the people who you will be relying upon. Personnel structures, non-farming family members who run diversified businesses and part-time and casual labour must be considered.
Retraining, working different hours, new partnerships or hiring contractors and the adoption of new skills may be required, with new contracts and specialist companies alongside. The end consumer must be considered too and dealing with the paying public may be unfamiliar territory.
There is no room for short-measures when it comes to sound policy here with all manner of workers: professional, skilled and manual engaged in the food processing sector.
The UK has witnessed an exodus of migrant workers and those within food processing and agriculture have felt the impact. To successfully plug that gap and align a business to the plethora of changing domestic employment policies, there should be professional understanding and advice.
For example, shifting sands surrounding such things as the gig economy, employment tribunal fees and the impact of GDPR, all require attention.
In our fields, there is a need to ensure that specific problems faced by land workers are identified, with health & safety being extremely important. Isolation, working with machinery and having access to potential lethal items, such as firearms and chemicals, can give rural workers both the reason to and the means by which to cause harm. With these factors in mind, owners would be advised to review their HR policies, for the protection of themselves and others.
Later in this document, we touch on the need for regulation to ensure workers in the food processing sector are not exposed to hazardous practices and conditions. Governance must be adhered too, it is that simple. However, is there more a factory operator can do to ensure the further wellbeing of individuals? In doing so, they will be regarded as an ‘employer-of-choice’ during a time when the retention of good quality staff is paramount.
A growing number of innovative landowners are already exploring possibilities for investment, funding and diversification and many have already succeeded with projects including renewable energy, property letting, tourism (holiday lets, camping and caravanning sites) and farm shops.
Horticulture is emerging in greater abundance too, with the cultivation, processing, and sale of fruits, nuts, vegetables, ornamental plants and flowers. An increasing amount of land is also being looked at for development, which is proving an attractive option - buoyed by government measures to encourage residential building.
Technology is important to innovation. The use of drones is increasing and robotics will transform farming - in our region, the largest new fruit-picking robot project of its kind in the EU is being pioneered at the University of Lincoln. Such advances will continue as the sector matches the need for greater efficiency with retaining the UK’s reputation as a producer of some of the finest and highest quality food in the world.
Larger food processing businesses are also expected to embrace these advances in technology, however a more pressing issue for our SMEs is the availability of new premises within which they can grow and innovate. The Humber region is a prime example of this, with experts citing a lack of available high-quality cold store premises.
Correct advice is essential when looking to innovate and diversify. Planning permissions, funding arrangements, machinery contracts, intellectual property rights, HR and people management, dealing with customers and long-term financial planning are all essential considerations before an agricultural or food processing business commits large sums of money to a project.
The level of payments made to farmers for environmental benefits will continue to decrease, but by innovating and diversifying, businesses can become more robust by creating new income streams and provide opportunities for the next generation.
Grants may also be available to help with the costs of new ventures.
Farming and food processing is becoming increasingly vulnerable to factors including the growing global marketplace, shifts in consumer choice, the highly competitive nature of the retail market, fluctuations in demand, pressures to diversify income and cope with and prevent further environmental change.
Operating with a business structure that can respond quickly to these factors is key to ensuring success in a changing industry.
Many farming and food businesses and brands have evolved from a traditional family run enterprise and they now face new challenges to adapt and progress without losing the values that are at the heart of producing high quality goods. A business must evaluate its history, where it sits in the marketplace today, where it is going and what it wants to achieve - identifying the challenges and opportunities ahead. The answers will allow a business to move forward and create a resilient farming and food structure.
Once in place, the correct structure can then be used to determine the future ownership of a business, decision-making, future investment, entry and exit of generations, the ability to attract grants and funding, and tax consequences when operating.
Growing labour shortages and the advancement of hi-tech machinery and plant are also driving the farming and food sector to be more innovative and invest in efficient production methods.
Without the appropriate structure in place, a business may find it cannot secure lending from the banking sector or, it may inadvertently be prevented from applying for funding schemes.
It is increasingly important to ensure a farming and food business can access cash to invest in advancement during a time when change in the sector continues apace.
Existing business structures should be reviewed to ensure they can deliver the changes demanded. For example:
Is the business operating under a historic partnership agreement that has little resemblance to the current decision-making process?
Does a company structure allow for the smooth succession of new entrants and workable exit plans?
Should a new business entity be considered to allow a new diversified venture?
Should the production side of a business be split from the processing?
Farming and food producers may also wish to consider innovative ways to maximise asset return…
Share farming could create income streams from under utilised resources that do not play a part in the landowners’ business activities but are an integral part of the holding.
Founding a co-operative with neighbouring landowners could share declining resources such as water.
Entering into rotational seasonal agreements could reduce capital outlay for the supply of new land.
It is widely recognised that agriculture and food processing is one of the most regulated sectors in modern day society, but what is the regulation reality?
Criminal: If you contravene a regulation with regards to the environment or health and safety, you may face criminal action that could result in a hefty fine, or even a custodial sentence.
Repayment: If you have received a subsidy/grant payment and are found to have breached the regulations that were dependant on that award, you may have to repay some, or all, of the monies received.
Fines and penalties: If you do not comply with the guidance surrounding the regulation of your business, then fines and penalties may be imposed.
An estimated 150,000 farm inspections are carried out in the UK each year by multiple agencies and as we move into the next decade there are definite areas of focus.
Environmental, renewables development, water extraction and drainage, health & safety, pesticides, planning and licensing (particularly with regards to diversification and tourism), animal welfare, traceability, cropping licences, insurance, assurance schemes, disposal (especially regarding food waste) and distribution are of main concern.
Then of course, you have the regulations tied into firearms’ licensing, drone usage, subsidy payments and establishing and managing co-operatives.
With 30 different food and drink manufacturing sectors in the UK (human and animal), regulations governing factory floor health & safety of both product and employee are some of the most stringent. Hygiene, noise levels, equipment safety (refrigeration, cold/frozen food stores) and dust control are just a few.
On a practical level, the supply of produce to the processing factories is vital and any regulations that affect supply will impact heavily on the sector overall.
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