Farming is rarely considered an exact science due to the quantity of external factors that influence the outcome from the hard work that farmers put into their businesses. Whether it is from the extreme price volatility the industry has experienced over the last 18 months, or the unpredictable nature of the ‘delightful’ British weather, there are many factors out of the control of producers but can have wide ranging consequences for farming businesses. ‘Lady Luck’, good or bad, often plays a key role in whether you can successfully navigate such things as the wet weather during harvest or secure a good price for what you produce. Of course, it can be sometimes easier to dwell on the factors out of your control rather than focusing on those that you can change.
As I’ve said in a previous article ‘Farming Marginal Gains’, making several small changes to your farming business can have an enormous positive impact on your bottom line. Fundamentally, focusing on those factors in your control will help mitigate against those outside of your reach and will help to reduce risk. As important as it is to concentrate on the detail by making those important marginal gains, it is equally vital that you take a step back and look at what direction you want your business to go in and how to get it there.
Having a strong business plan is vital. Not least to prepare for the eventual removal of direct support payments but also because being able to achieve your objectives can only be possible from careful planning and carrying out detailed business analysis.
It’s important to ask questions like:
- What are my short, medium, and long-term business objectives?
- What opportunities are there to secure long-term business growth including diversification opportunities?
- What will the impact be from Government policy and how can I benefit from it?
- What grant funding is currently available to help my business?
- How do I make environmental schemes such as the Countryside Stewardship and the Sustainable Farming Incentive work for my farm?
- How can I benefit from emerging opportunities like carbon offsetting, Biodiversity Net Gain, Nutrient Neutrality, and on-farm energy generation?
- How do I better utilise my available assets to generate greater financial returns?
There will always be opportunities for farmers who are well prepared, can react quickly and have a business that is strong and able to withstand the unpredictable nature of farming and its risks. However, you will always need a little bit of luck on your side too!
For advice contact Elliot Taylor, Partner and Rural Business Consultant at George F. White, on 07590 445301