How to manage business change for agricultural transition

While farmers have always faced change, the agricultural transition period requires most of them to implement new practices and embrace new thinking to achieve successful business transformations, at a scale not seen before.

Payments for environmental goods and services, rather than area payments, are the new normal in England, with the ambition being that at least 70% of farmers will be participating in the Environmental Land Management scheme alongside food production by 2028.

See also: Animal Health and Welfare Pathway launched under SFI

The detail of what that looks like at farm level continues to emerge, with twists and turns along the way, as Defra monitors the uptake of new schemes and how they are being implemented.

The latest tweak is a cap on six Sustainable Farming Incentive (SFI) actions to 25% of an applicant’s land – with farming minister Sir Mark Spencer explaining that the limit is being introduced so food production remains the primary purpose of farming.

Preparing for change

Change is as much about the people in the business as it is the processes, points out Richard Wordsworth, senior adviser with the NFU.

Those who are open to change are in a good position, he believes, but there are many reasons why others aren’t engaging with the process or haven’t got a plan.

“Time, money and family issues are the main ones,” he says.

“This is a generational change, so it’s inevitable that people are being left behind. It’s not an easy task managing today’s challenges while planning for the future.

“For others, working out how they are going to succeed is a cause of anxiety and stress, which can hamper progress, he notes.

Financial help can come from both public and private sources of funding (see “What funding is out there to help with change?”) or a combination of the two.

For other support, there are business advisers and life coaches, as well as mediation services and professional support.

The Royal Countryside Fund has been very active in this area, running Ready for Change workshops and its Farm Resilience Programme.

From there, 55 farm support groups have been established, to share knowledge, practice and advice.

Defra has also recognised the scale of the challenge and set up its Future Farming Resilience Fund, putting £32m into the programme to help farmers prepare.

The advice is free to farmers and can be accessed on a one-to-one basis, up until March 2025.

How to change

Recognised change management expert Dr John P Kotter, of the Harvard Business School, has developed an eight-step change process that is accepted by those who need to achieve a successful business transformation.

It is relevant to farming businesses – the steps involve having the right people in place, communicating the vision clearly and empowering everyone involved to execute the plan, to an agreed timescale.

Where the farm team is comprised solely of family members, the eight steps still apply.

1. Establish a sense of urgency – for most farms, the starting gun was fired when Defra announced that the Basic Payment Scheme would be completely phased out by 2028, with other types of funding coming in. It gave farms seven years to change.
2. Create a working team – committed people are essential for developing a plan, leading the change and understanding how to operate in a new way. This may require recruitment, as well as provisions for training, marketing and new equipment.
3. Develop a vision and strategy – defining what success looks like and how the future will be different is key to getting change to occur. If this is difficult to do, make use of a free one-to-one consultation via the Future Farming Resilience Fund to help formulate a business plan.
4. Communicate the change – every team or family member must understand how the new vision is going to be executed and what their role is, so communication is key. It’s a journey they are all embarking on, so dialogue must happen between everyone.  
5. Empower employees for action – with a strategy or structure in place, find out what the barriers are and deal with them. They may be emotional barriers, such as nostalgia, or resistance to moving into the unknown, due to anxiety and stress.
6. Generate short-term wins – change takes time, so focusing on the little things – a drop in fuel use, a yield improvement, more earthworms – helps to keep everyone on track and maintain levels of enthusiasm. Celebrate them with the team.
7. Consolidate gains for more change – use the small wins to accelerate the team towards the next goal, such as rolling out direct-drilling or moving to mob grazing. This also helps to identify what went right and where improvements are required, so that victory isn’t declared too early.
8. Anchor new approaches in the business culture – a positive attitude among the team is important as the farm pushes forward with change. Recognise and reward the key players and instil a sense of pride in every accomplishment – it helps to cement why the change was made in the first place.  

What funding is out there to help with change?

There is public and private funding available to help implement the changes that are expected on farms. Not all of them are open to every business and some are competitive.

Public funding in England

These Defra schemes are either under way or awaiting the next round. Broadly, they fall into two main categories – help with managing land to benefit the environment or help for increasing productivity.

• The Sustainable Farming Incentive (SFI) – three-year, open-to-all agreements with quarterly payments, with farmers able to choose on a pick-and-mix basis from nine actions that reward sustainable farming practices. A further 50 actions are on their way later this year, as part of the combined SFI/Countryside Stewardship offer.
• Countryside Stewardship Capital Grants – three-year agreements to achieve specific environmental benefits related to trees/boundaries, water quality, air quality and flood management, with favourable payment rates for hedge planting, new tracks, concreting etc, some of which need Catchment Sensitive Farming approval.
• Farming Equipment and Technology Fund – grants of up to £50,000 for productivity/slurry items (current funding round closed) and up to £25,000 for animal health and welfare items (closing date 1 May). The latest list has 24 new items of productivity equipment, including 6m direct drills, grain stirrers and combine-mounted weed seed reduction system.
• Future Farming Resilience Fund – free, bespoke advice to farm businesses from local advisers trained to identify the changes necessary for future success. Some 17 providers are being funded by this Defra initiative, which is open until March 2025.
• Farming in Protected Landscapes – up to 100% of the costs of a project for farms in areas of outstanding natural beauty, national parks and The Broads, running until March 2025. Applications are judged on the outcomes for climate, nature, people and places and must support and improve at least one of these.
• England Woodland Creation Offer – for new woodland, the scheme gives about £8,500/ha towards planting costs, along with various additional contributions. In addition, there is a £400/ha annual maintenance payment for 15 years for a minimum size of 1ha (which can be split into blocks).
• Woodland Management Plan – for existing woodland, there’s a one-off payment of £1,500-£3,000 available to create a 10-year UK Forestry Standard management plan, with three years given to complete the works.
• Higher Tier Woodland Management – multi-year grants, most for five years, for specific capital works or items and management payments for woodland improvement.

Private funding

Private nature markets – some of which are still emerging – tend to require longer-term agreements in return for specific actions.

They include the following:

• Carbon – farmers improving carbon stocks and creating carbon credits can earn £15-£75/t of carbon through various providers – some require 30-100-year commitment, but soil carbon is for 10 years.
• Biodiversity net gain – farmers creating or restoring habitats and then managing them for biodiversity uplift could earn £20,000-£40,000 per biodiversity unit from property developers. Agreements are for a minimum of 30 years.
• Nutrient offsetting – payments for reducing nitrogen and phosphorus run-off in local waterways in long-term agreements covering 80-125 years, again from developers. Analysts suggest rates of between £1,800-£4,000/kg of nitrogen and £14,000-£100,000/kg of phosphate.
• Water quality – water companies pay farmers for practices that result in operational costs savings – payment rates vary and agreements last from one to 10 years.
• Natural flood management – payments for interventions that slow the flow of water and reduce flooding damage and disruption from organisations such as insurance companies, usually agreed for a period of more than 10 years.

Case study: Transition Farmer Philip Vickers, Raby Farms

A huge amount of change has taken place at Raby Farms since Philip Vickers became farm manager almost three years ago and the transition of the business got under way.

© Dave Charnley Photography

The farm looks very different now, he acknowledges, with a regenerative system in place across 1,250ha and soils being in much better shape than they were.

He credits the estate’s owner, Lord Barnard, with having the original vision and being the driving force behind the change.

Profitable food production remains the priority, but new income streams are being embraced where relevant and the farming business has put sustainability at the heart of everything it does.

That fits with the policy of the whole of the estate, Philip explains, as it realigns for the future, meets the various requirements being asked of rural businesses and sets it up for the next generation.

Direct-drilling is used wherever possible, with organic matter being added to soils to reduce reliance on artificial inputs and get nutrient cycling working well.

A much more diverse rotation, with both winter and spring cropping, is in place – with livestock also being integrated.

This year has been a stern test of the system, Philip says, as the atrocious weather has made field work done1 difficult and crops have been subjected to constant rainfall.

“We did get our autumn-drilled crops in, which must be partly due to our use of direct-drilling and the infiltration capability of the soils.

“It meant we were able to travel when others couldn’t and the whole drilling operation was quicker.”

Philip admits to using some conventional establishment techniques in autumn 2023, due to the wet conditions.

“Interestingly, by the end of March, it didn’t look any better than the direct-drilled areas.” As a result, he has just sold one of the farm’s ploughs.

Having a vision and a strategy from the outset helped to make the change happen, he explains.

“There isn’t an iron-fist approach here and there doesn’t need to be. I am lucky with the calibre of the team I work with and their willingness to make things happen.”

By communicating what he hopes to achieve, the staff have put things in place that work. “We all help each other out rather than tell each other what to do.”

With the whole team motivated – helped by input from a very experienced soil scientist – there have been considerable achievements.

Fuel use has come right down, nitrogen fertiliser applications are lower, some fungicides have been replaced with bio-alternatives and margins have been maintained.

While the basics are in place, there’s still a long way to go, admits Philip. “It is harder work as a system – you need to get out with a spade and have a look at the soil in every field.”

The timescales are longer too, he notes. While the soils are livening up and crops have rooted well this year, there have been some weather-related failures.

“We lost a chunk of our oilseed rape and we didn’t manage to get many of our cover crops in the ground, due to excessive rainfall.”  

After such a wet winter, he is aware of the septoria threat in crops and will be using an early fungicide to deal with the inoculum.

However, a biological Iodus-type product will be applied instead of traditional chemistry, in line with the estate’s ethos.

“Hopefully, it will strengthen the plants by triggering their natural defences and help them to withstand disease pressure.”