Navigating farming systems: Intensive vs extensive approaches

In modern agriculture, the choice between intensive and extensive farming systems is crucial to determining a farm business’ economic and environmental sustainability.

These two distinct methods for production represent different strategies for managing land, labour, and resources, each with its own advantages and challenges.

Defining intensive and extensive farming systems

Intensive farming aims to maximise output from a given land area, sometimes as small as 3-4 acres, especially in sectors like broiler or pig production.

This approach substantially increases the fixed cost element of production, but the goal is that the increase in output will be significantly higher than the increase in costs, thereby generating higher profitability overall.

Extensive systems seek to reduce fixed costs and optimise output from the resources.

This typically results in a reduced level of output, with the intention that the reduction in costs outweighs the decrease in output, thus enhancing profitability.

It is essential to recognise that all farming systems exist on a spectrum. While pig, poultry, and dairy production are often associated with intensive farming, and beef and sheep production with extensive systems, the reality is more nuanced.

For example, dairy producers practicing New Zealand-style or organic systems may be more extensive than some high-output beef finishing operations. The same applies to organic poultry and pig producers.

Pros and cons of intensive farming

Intensive farming systems offer several advantages. One significant benefit is the potential for higher returns in favourable years.

This was exemplified by those who diversified into free-range egg production in the late 2010s and experienced substantial margins until relatively recently.

Additionally, intensive systems can provide more direct employment opportunities for family members on smaller farms than extensive systems.

The structured nature of intensive farming typically results in a more regimented daily, weekly, and monthly work routine with less seasonality compared to beef, sheep, and arable production.

Furthermore, there are often more opportunities for career progression into management roles for the next generation or employed staff.

However, intensive systems also have notable drawbacks. They are highly dependent on commodity markets for both input and output prices, making them vulnerable to global events.

Recent years have shown how market volatility can lead to shortages and financial pressures, such as the reduction in the national farrowing pig herd. Intensive systems also require rigorous management, which can be stressful, especially with labour shortages, increasing the risk of significant costly mistakes.

Additionally, establishing and maintaining the necessary infrastructure requires substantial investment, often leading to high levels of debt and a profit requirement to service these repayments.

Pros and cons of extensive farming

Extensive farming systems offer a different set of advantages. They are less reliant on commodity markets for feed and energy, reducing exposure to volatility and risk.

These systems typically require less labour, allowing for diversification or off-farm employment opportunities, depending on the scale of the business.

Investment needs are also generally lower than in intensive systems, though careful investment in labour-saving equipment is still key to minimising fixed costs.

On the downside, extensive systems usually result in a reduction in overall yield and income, particularly in the short term, which requires careful management during the transition.

There is also the potential for reduced overall profitability if costs are not managed carefully enough, although, the lower investment requirements can lead to a greater cash surplus.

Moreover, the reduced labour input can limit opportunities for the next generation to become involved in the business when operating on a smaller scale.

Key characteristics for success in intensive and extensive Systems

Successful intensive enterprises often feature a mix of different operations to spread risk. For example, a feed-intensive enterprise might be paired with an arable enterprise, where gains in one sector can offset losses in another.

Attention to detail is crucial in these systems, and managers who can delegate physical tasks and focus on strategic planning tend to thrive.

In contrast, successful extensive enterprises focus on optimising natural resources, such as maximising milk or meat from forage and outwintering stock.

Attention to detail remains vital, and effective extensive systems often integrate multiple enterprises and explore diversification opportunities, like direct sales, marketing, and/or processing.

Considerations for changing farming systems

When considering a shift between farming systems, it is essential to understand your financial starting point. High existing repayment requirements may necessitate careful restructuring to allow for changes.

Personal objectives and attitudes towards diversification and new enterprises should also be considered, as well as the aspirations of the next generation.

Market analysis is crucial to ensure that you are producing what is in demand, whether locally, nationally, or internationally.

Additionally, exploring new income streams, such as Biodiversity Net Gain (BNG), Natural Capital, Carbon Offsetting, and Environmental Land Management Schemes (ELMS), can provide further opportunities.

By carefully evaluating these factors, farmers can make informed decisions about which system—intensive or extensive—best suits their goals and circumstances, paving the way for a sustainable and profitable future.