A fundamental change in the UK retail environment could provide farmers with fresh opportunities to diversify within their own sectors, adding value and creating new markets.
This is the message from Andrew Naylor, Head of Agriculture for Lloyds Bank, who said it was clear to him at this year’s Oxford Farming Conference that a strong shift in the way goods are reaching consumers is underway – and this is positive for producers.
“There is no doubt that awareness of food provenance is growing among the public, and with this comes the potential to shorten the supply chain,” says Mr Naylor.
“Whereas diversification previously meant creating new opportunities outside the core business of the farm, now we see openings to diversify within existing farming operations by trying out new supply chains. This could move farmers away from commodity production and ‘price-taking’, to local routes to market and a greater say in the price received.”
He cites the example of a Lloyds customer in Warwickshire who switched a portion of his herd to the Bavarian Fleckvieh breed to take advantage of a market opportunity with an Asian food manufacturer. The milk is converted to curd on-farm then transported to Birmingham where it is used in a number of products including curd-based pistachio desserts. The breed produces the best milk solids for the end product, and converting to curd adds further value and reduces transport costs.
Mr Naylor says: “Local food hubs are also growing as consumers demand greater traceability; these can represent an opportunity for the producer not only to supply directly to the consumer, but to be involved in establishing the hub – possibly using existing on-farm assets.
“Many farmers focus investment on tangibles such as new buildings or machinery, which can be important to capture efficiency, but investing in developing new long term and profitable routes to market is just as important to the resilience of the business.”