How to protect your business from a future crisis

From flooding and drought to fire and disease, climate change puts UK farms at greater risk from disruptive emergencies.

Farms that might previously have known once-in-a-generation flooding could now be under water with greater frequency as extreme weather events become more ­commonplace.

Emerging livestock and plant diseases resulting from a warming planet are an added threat. Some emergency situations – machinery breakdowns, staff absence and legislative breaches – are not new.

See also: Transition Live: Taking the risk out of farming

What they all have in common, though, is how they can hit a farm’s ability to function as normal, to meet its supply contracts and other obligations.

Transition is adding financial pressure to these situations, by removing the cushion of an area-based payment.

Ian Silcox-Crowe, sustainability lead at crop nutrition specialist Omex, says it has never been more important for farmers to have a robust business continuity plan (BCP), one that imagines several hypothetical events, that asks the “what ifs”, while putting actions in place to minimise their impact should these potential situations occur.

“Ask yourself what the probable emergencies are that could affect your business and what you would do to deal with each of those, work out how you would cope for various periods of time,” Ian advises.

“By considering these scenarios now, when everyone is calm, and by preparing a list of actions, important decisions can be made when people are not in a state of panic.”

Not only does it make good business sense, but new legislation is likely to force farmers in this direction too.

The government framework for climate-related financial disclosures directs large companies such as milk and meat processors and grain buyers to ensure their supply chains are robust.

To satisfy this, Ian says farmers will need to be able to demonstrate they have plans in place to cope with a range of eventualities, and this will also reassure lenders.

“The question farmers and growers need to ask themselves is, ‘could my farm survive if it was shut down for a period of time?’,” he says.

“Think about the responses for a shutdown of one day, one week, one month, one farming season – such as harvest and lambing – and one year.”

What to include

A good plan will imagine a variety of possible events, from natural disasters to human error, and puts in place actions that would be taken in the event that any one of these does happen.

The greater the likelihood or impact of a disaster or emergency, the greater the need for contingency planning.

An avian influenza outbreak, for example, could be defined as both a disaster and an emergency because of its financial impact and the need to prevent infection spreading.

List business-critical functions

As a starting point to formulating a plan, Ian recommends that farmers make a list of business-critical functions specific to them.

They should then consider how the business could maintain operations if it experienced staff absence, a critical machine breakdown, an extreme climate event and water and power failures, to name but a few.

“Would any of these prevent the business from fulfilling agreed contracts, and for what period of time – read contracts carefully to fully understand obligations and penalties,” says Ian.

Business-critical functions will be specific to different enterprises, and to different times of the year.

In the case of an arable farm, for example, having a combine that is working and has an operator is business-critical at harvest but having an operational sprayer is not – at different times of the year the enterprise will have different business-critical issues.

Cropping operations are often time-limited and labour-intensive, so farms should have a contingency plan should someone in the team be unable to work.

“For a dairy farm it is the functioning of the milking installation that is business-critical. Flooding on a few fields is not,” Ian explains.

“In the case of an intensive livestock unit where activists are blockading the access, preventing staff getting to work or the feed lorry getting in, that situation might only last for a day before the police intervene.

Therefore it is not business-critical.

“But if there was a fire that prevented the business from operating for a year, that’s catastrophic so that business would need to include in the plan how in that situation it would pay its staff and communicate with its customers if they can’t meet their supply obligations.”

The loss of an employee for a day is unlikely to be business-critical to any farm, but if it was for a period of time it could be – for example, a sheep farm losing its shepherd for the lambing season.

In all cases, the possible impact on animal welfare needs to be considered and planned for.

Disease and extreme weather

Disease and extreme weather risks make farms more exposed than ever before.

NFU senior adviser Richard Wordsworth says that in the past five years some have dealt with the repercussions of a crisis for the first time – crops failing and major flooding as a result of exceptional rain and heat – while others have yet to experience one.

While it is not uncommon in farming to take calculated risks, applying that approach to business-critical events is unwise, he cautions.

“When we leave the house we don’t put the canoe on the roof of the car in case of flooding; we don’t take a spare battery for our phone. We take a calculated risk.

“But when you have staff to pay, loans to repay, contracts to honour, you have to plan for events that might never occur.”

Water management

“Water supply is critical to a dairy farm – consider the consequences if the borehole fails, but also check when it was last serviced and consider how long the cows could be kept in drinking water before they run dry,” advises Ian.

“Do you have a water bowser, or can one be borrowed from a neighbour? Speak to that neighbour now. It might be that you need two bowsers to meet supply, so speak to two neighbours; build that mutual help network.”

Consider what can be done in advance to reduce risk – that could be harvesting and storing rainwater, investing in renewable energy, or planned machinery maintenance.

Richard says there are inexpensive actions that people can take to mitigate the fallout from an emergency.

“Be smart with how you manage your risk, as even if you haven’t got the money to do the big stuff, everyone can for example draw up a list of their suppliers; people they can call on.”

Supply risk can be reduced by having more than one supplier. “That may annoy suppliers, as everyone wants your business exclusively, but being on the books of two businesses is a derisking exercise in itself.”

Mitigating impact of unexpected events

Although not business-critical, high prices for energy, fertiliser and other inputs have provided lessons in low-level business continuity management, with farms buying these strategically.

Hamish Wardrop, a consultant at Agrovista, says when fuel prices peaked, one of his customers trebled their diesel storage capacity from 5,000 litres to 15,000 to allow purchasing at volume ahead of future price increases.

Think about cashflow – it may be possible to renegotiate the overdraft to allow more strategic purchasing, he advises.

“Even a smaller family farm can start to behave like a big business,” Hamish says. “I also always make sure that every farm I work with accesses every grant relevant to it.”

Diversified income

He sees diversification as a form of business continuity management, as diversified income can support the main farming business during an unexpected crisis.

“A farm is an asset which can grow crops and raise livestock, among other things.

“Farmers also need to look at that asset and what is around the periphery, because one of the most useful things they can do in terms of resilience is to maximise that asset.

“The successful businesses I see have lots of fingers in lots of pies. For me, a well-diversified business equals resilience against the ­unexpected.”

He cites as an example hot, dry summers when crop and grassland production have come under severe pressure, but for farms that have diversified into tourism, that weather has helped their tourism business flourish.

Insurance

Having the correct insurance in place is another important factor in business continuity management. In many other industries, insurers require a BCP to protect their risk.

Hamish says he has seen examples of farmers who have had the correct, and the incorrect, insurance when an unexpected event has occurred, and the outcomes for each has been very different.

Although it might seem an unlikely condition for securing a loan, he believes evidence of a BCP can provide a bank with additional reassurance.

“It is not necessarily something lenders will ask for, but if you are approaching them to borrow money, you can show them that, as well as being a sound business, this is you being prepared too,” he says.

Case study: Joe Adams, Felixstowe, Kent

Joe Adams © Joe Adams

Farming heavy soils on a natural floodplain in a region with lower-than-average summer rainfall mean that for dairy farmer Joe Adams the challenges waterlogging and drought present to his business are not unexpected.

But, with weather-related events now becoming more frequent, he is taking further steps to increase the farm’s resilience to those emergencies.

Joe farms 180ha at Gulpher Farm, near Felixstowe, where he and his father, Richard, produce milk from a high-yielding herd of 160 Holsteins.

The soil is heavy marsh land which is susceptible to drought and waterlogging.

But what he describes as the “worst-case scenario” of both occurring in a single year is now a reality.

Minimising their impact has therefore become a necessity to enable the business to continue operating through those pinch points.

For Joe, business continuity planning has meant incorporating deeper-rooting clover varieties into the grass leys, cultivating with minimal soil disturbance to build up structure, and creating drainage channels to draw moisture from lower down in the soil profile.

He has also secured an abstraction licence and installed irrigation infrastructure as a safety net for dry weather emergencies.

He first used this during the prolonged period of drought in 2020, to germinate his maize crop, and has also found himself using it after taking first- and second-cut grass silage to kick-start regrowth when there is no natural moisture.

Using grass varieties that are more resilient to drought is helping to protect growth.

Joe also has one eye on potential future labour challenges – one reason why he is currently in the process of replacing his conventional parlour with three milking robots.

“Although labour currently isn’t an issue, it might become so,” he says. “We know of farmers in this area who definitely struggle with getting staff.”

Robot milking will also satisfy the ambition he has to introduce three-times-a-day milking in his conventional system.

The new shed has been designed with the changing climate in mind, as ventilation fans have been installed to make conditions more comfortable for cows.

All these changes will help Joe and his father to continue to meet the requirements of their milk supply contract in challenging periods.

Joe is also keeping an open mind about introducing further changes, such as zero grazing. “There are always options out there that we will explore,” he says.

His strategy is to trial one change at a time, as he recognises that not all will be successful – growing clover, for example.

“My grandfather warned that we would struggle to grow clover on the marshes, but plant breeding is so much better now than when he was farming, and for us it has been successful.

“I like to introduce little changes in isolation, rather than rolling them all out at once, because whether something works or not, it means we haven’t put all our eggs in one basket.”

Joe sees farming as a risk-based industry but with this gradual approach, not “jumping in with both feet”, he says he has some control over the steps he is taking to protect his business against those risks.