Last July, I followed a two-week summer school about agri-business at the University of Nottingham. I spent the first 10 years of my life in rural England and knew a few people with a farming background, but the ins and outs of farming weren’t exactly on my mind back then. It was great to have visited some UK farms and research facilities to get a better understanding of the sector over there.
Great two weeks in Nottingham! Many thanks to everyone for making it so enjoyable and informative. https://t.co/pmfKZjAxVz
— Alex van Tuyll (@AlexVanTuyll) July 23, 2019
We didn’t visit any indoor agriculture like what I normally post about here, but there were still some very interesting companies. In general, I found Britain’s farms to be less high-tech than those in the Netherlands, but more holistic in their approach, with farmers more seeing themselves as stewards of the countryside. The two countries can definitely learn from each other.
Part of the course involved writing a blog post answering the question ‘what drives success in agri-business?’ using our own definition of success. Seeing as I have a blog, why not post it here?
Before I start, I would recommend checking out the Twitter thread above, which features some names not mentioned in the article below (Applied Poultry and the Hounsfield Facility; we also visited Bagshaws and the Centre for Dairy Science Innovation, not mentioned in the thread).
Now without further ado, the article:
A mantra that has been repeated ad nauseam, at least in Wageningen, is sustainability in three areas: people, planet, and profit. It’s a good way of looking at sustainability, which explains its prevalence – and why I will be using it too. A great way to ensure success on all three of these aspects – people, planet, and profit – is diversification. In this article, I will explain why.
To shake things up, we won’t start with ‘people’, but with ‘profit’. After all, in agriculture, margins are low. Staying profitable is a priority for farmers up and down the country.
How does diversification improve profitability? To start with, it creates differentiated products. Take Howard Farms, who ended up dominating the market for Chantenay carrots by diversifying and becoming the first in Britain to master them. Or Farrington Oils, who placed a bet on cold-pressed rapeseed oil and created a new market. Farrington’s margins are now way above average for rapeseed oil. Similarly, Vine Farm Dairy‘s raw-milk vending machine has cut out the middle man whilst providing a superior product. The farm is now expanding into butter and cream production.
Diversification can be to do with products, but also processes. This is where it leads to better environmental sustainability (‘planet’).
Howard Farms is becoming more circular. This couldn’t have happened without diversification. Crop rotation improves soil quality. Combine that with cattle, and you start to have a more closed nutrient cycle. The cattle help replenish the soil’s nutrients. At the same time, they eat fodder beets grown on the farm, reducing the need for external feed. They also graze on unharvested carrots and carrot tops. In short, diversification leads to the principles of ecosystems being applied. This reduces the need for external inputs and absorbs unwanted outputs. This is more than differentiation alone could achieve. Though it requires coordination and trust, it can work.
Going back to profitability: despite the extra effort required to grow fodder beets, Howard Farms’ approach lowers feed costs – and by selling the fodder beets to the cattle division, they get a far better price than British Sugar could ever give.
The higher margins gained through diversification justify a lower production per acre. This allows for farmers to experiment with environmentally-friendly techniques. For example, the no-till system at Farrington Oils’ fields of wheat has improved soil carbon content, despite risking lower yields. This shows that the economic benefits of diversification can be harnessed to help improve environmental sustainability.
The economic and ecological benefits of diversification are synergistic. But what about ‘people’, the last part of our clichéd mantra?
For the aforementioned companies, diversification has led to an improved image. British consumers are increasingly demanding local produce, making many enthusiastic about initiatives like Vine Farm Dairy’s vending machine. Farming, especially for livestock, has been under fire recently by activist groups. Creating a connection with consumers helps establish trust.
Success in agri-business usually has to do with people, planet, or profit – and ideally, all three. Diversification works because it targets all three of these goals. It leads to differentiation, which means better profitability. This means more headroom to experiment with more sustainable methods. Diversification also means different organisms in a system, allowing for the principles of ecosystems to be applied synergistically. Put together, these benefits lead to a deeper connection with consumers, and a better reputation for farmers.