A time for contemplation and collaboration – Food for thought
So here we are at the start of the Gregorian calendar year, the end of a fiscal year, the middle(?) of a global pandemic, the dawn of Brexit and the advent of the path to sustainable farming…
There is much to contemplate and consider regarding the future and with so many variables at play and numerous suggestions being marketed and banded around, it can be difficult to identify the fundamental issues in point or where to start.
Let us go back around 10,000 years to the commencement of the Agricultural Revolution, when our ancestors appear to have become tired of their nomadic lifestyle of chasing calories around the countryside, and instead set about collaborating and creating systems and processes to make the collection of calories more efficient.
We began to work the soil, cultivate crops and rear livestock. As we became better at this and perfected our techniques, we were able to harvest more and more calories from a set area of land, feeding and supporting larger and larger communities. We even found ways to utilise animals, and subsequently machines, to do most of the manual work for us, giving us increasingly more time to spend thinking and developing other ideas and interests.
Collaboration and improving the efficiency of harvesting calories has been the agricultural paradigm the world over ever since. In fact, we have become so proficient at producing digestible calories across the globalised world that there are currently more people suffering from the ill effects of obesity than from malnutrition. This is despite the exponential growth of our species from around 600 million people in 1700 to almost 8 billion people today. That is not to say that there are no issues with food supply across the world and it should be noted that the systems are not perfectly balanced between wealthy states and developing nations.
The vast majority of research and development in agriculture has long been focused on maximising the production of calories from sunlight, be that growing plants to eat ourselves or to feed the animals that we consume further down the chain. The rails of progress that we have journeyed along have increased yields and brought down the cost of production, but at what broader cost? Have these rails guiding our advancement also been an inverted rut that we have been unable to dismount, encouraging us to constantly produce more in the quest to sustain profitability?
There is an increasing global focus on the environment and climate change. We are starting to properly recognise and understand the effects of soil erosion, reducing biodiversity and greenhouse gas emissions, and more importantly, we are starting to want to address these issues.
We are seeing an increasing amount of land taken out of production of digestible calories and used instead to produce indigestible calories from sunlight, in the form of solar panels to produce “clean” electricity.
We are also seeing more research and development into the merits of alternative land uses or “ecosystem services” and their implementation. There are an increasing number of initiatives based around the storage of water to attenuate flooding and create biodiverse habitats, nitrate and phosphate sinks to protect and improve drinking water quality and the sequestration of carbon back into the land to try to rebalance the carbon cycle we all learnt about during our primary education – we seem to have finally realised that the cycle is more balanced if we replenish more of the carbon we extract from the land in the form of organic matter, oil, coal and gas rather than allow it to drift off into the atmosphere.
The changes in global dietary trends and focus on climate change, together with the change in national agricultural policy and the ageing demographic of the farming sector are forming a perfect storm, with the seas of change once again starting to swell.
It seems as though we will see an increase in adoption of alternative land uses as subsidy is redirected from food production to other “public goods” and other “ecosystem services” are better understood and properly valued. We may see Government backed initiatives to establish new markets for carbon, nitrate and phosphate credit trading and engaging the public with the countryside, be that in the form of leisure, tourism, or education. These things seem likely but are not certain.
One thing is certain, however, the need for collaboration will remain. Pooling thoughts, ideas, energy, enthusiasm, capital, and appetite for risk is what will seek out and harness the opportunities that present themselves over the coming decade as the landscape changes.
It is perhaps, therefore, a time for deep contemplation regarding the long-term positioning of the family business. It may be worth reflecting on what assets are at your disposal and to which of the broader collection of “ecosystem services” they lend themselves? What are your passions and, possibly more importantly, what are the passions of your successors? Should unsubsidised food production remain the primary activity, or is there greater value to be created by alternative means? Where food production is to remain at the forefront, will this be based on the model of perpetual need for improved efficiency for the commodity markets, or repositioning production to deliver to value focused niche markets? With whom will you collaborate and through which structures or arrangements? Will you be able to offer environmental offset to other farming or non-farming businesses, or will you be required to “buy in” offset from elsewhere?
There are, very deliberately, no suggestions given to the questions noted above, as it is my belief that what is required will be bespoke to each family and business. The intention of this article is not to try to explain what one should do, but what one should think about. I encourage you to follow up your initial thoughts with conversation with those whom you trust, to collaborate and explore collectively, to be curious of what emerges.
Dan Knight FCA CTA
Dan joined the practice in 2019 having previously worked for a regional firm culminating as Head of Rural Tax.
Having grown up on a dairy farm on the Dorset/Somerset border, Dan spent a number of years working in agriculture before becoming a Chartered Accountant and a Chartered Tax Adviser. Harnessing both his practical and professional experience, Dan has spent the last decade advising farming businesses across the region on a wide range of issues.
Passionate about his work, Dan specialises in succession planning and restructuring, helping farming families to implement change, accomplish their ambition and enhance the legacy for future generations.
Dan is a keen shot in the field or facing the trap and thoroughly
enjoys supporting his young son on the football field.