An introduction to UK agriculture

WelcomeCompared to some key agricultural producers around the world, the UK is a small country. Yet, within the UK, you will discover a tremendous diversity of farming systems. This diversity reflects the differing climate and soil types that you experience when you travel north to south or east to west. It means that the UK boasts upland farms whose sheep farming traditions and heritage can be traced back centuries. At the same time, you will see farm businesses that are continually innovating, whether that’s the increased use of GPS technology in our cereals sector, the application of robotics in our dairy sector or the growing application of LED lighting in horticulture. You will find farm businesses that supply one of the most advanced food markets in the world, where 65 million consumers have ever-demanding expectations when it comes to their food and how it is produced.

AHDB’s role is to inspire our farmers, growers and industry to succeed in a rapidly changing world. You will find that ‘change’ will be top of mind for many in the UK farming sector, given the UK’s decision to leave the EU. I am optimistic about the long-term prospects for our industry. Our farmers have proven time after time that they are both resilient and adaptable. Our home market is large and relatively affluent, as well as being supportive of home-grown produce. Our business infrastructure and access to capital supports investment and growth. We have an industry that is well served by academia and science. AHDB’s vision is of a world-class food and farming industry. We must be inspired by the best but we must also compete with the best.

In the next few pages, you will find some essential information on UK agriculture. It gives a flavour of the scale and diversity of UK farming, a background to some of our policies and an introduction to some of our organisations. I hope you find it to be useful.

Jane King, CEO, AHDB

2

Contents

UK agriculture ................................................................................................................................. 4

Agricultural policy in the UK ................................................................................................. 10

About the Agriculture and Horticulture Development Board (AHDB) .......... 12

Brexit and agriculture ................................................................................................................ 13

Consumer and retail landscape in the UK .................................................................... 14

Research and development in UK agriculture ........................................................... 15

3

UK agricultureWhat is grown and farmed in the United Kingdom?Figures for the UK, from Defra – Agriculture in the UK, 2015

We have so much to be proud of within the UK’s agricultural sector. Home to the very best in farming, food and technology, the UK has an abundance of thriving agri-businesses to showcase on a global stage. You don’t have to travel far in the UK to experience the diversity of our landscape and our farms. And when you look at sectors like dairy and cereals, the average yields from UK agriculture are among the highest in the world. The data below gives you an overview of UK farming, its structure and what you will find in our fields and on farms across the UK.

Number of agricultural holdings: 214 thousand

Average holding area (holdings with >= 20 hectares): 142 hectares

Total agricultural workforce (including farmers and spouses): 476 thousand

Livestock numbers in the UK

4

167.6millionbirds

33.3millionsheep

4.7million

pigs9.9

millioncattle

Area of arable and cropping in the UK

Area of horticulture crops grown in the UK

5

1.8million

hectareswheat

129thousandhectarespotatoes

652thousandhectares

oilseed rape

1.1million

hectaresbarley

123thousand

hectares ofvegetables

13thousand

hectares of outdoor plants

and flowers

3thousand

hectares of glasshouse

crops

26 thousand

hectares oforchard

fruit10 thousand hectares

of soft fruit and wine grapes

UK livestock population breakdown

UK Livestock Population

(‘000 head) 2015 provisional

Total cattle and calves 9,919

Dairy cows 1,895

Beef cows 1,576

Total pigs 4,739

Sows in pig and other sows for breeding 352

Gilts in pig 56

Total sheep and lambs 33,337

Breeding flock one year old and over 16,024

Lambs under one year old 16,528

Total poultry 167,579

Table chickens 107,056

Laying and breeding fowl 49,509

Turkeys, ducks, geese and all other poultry 11,014

Source: Defra

Where in the UK are these produced?Sources: Defra, The Met Office, AHDB

The total utilised agriculture area in the UK is 17,147 thousand hectares, this accounts for approximately 70% of the total UK area.

The UK is positioned in the mid-latitude region of the northern hemisphere and experiences variable weather. The temperate oceanic climate of the UK results in slightly cooler, wetter and windier western regions, with milder, drier regions in the East. The 2015 mean temperature was 9.2℃, with total rainfall of 1272mm.

The UK is a relatively small country but it has varied topography. There are mountainous regions in north Wales, the Scottish Highlands and northern England (eg the Peak District and Lake District) and regions of very flat, low lying land such as in Norfolk and Somerset. Soil is an important asset; soil type, structure and health are essential considerations for agricultural production here.

These varying regions consequently specialise in different production systems; the flatter land of the eastern and southern areas focuses mainly on cereal production, with the hillier northern and smaller fields of the western areas tending towards livestock farming.

6

ENGLANDTotal area on holdings: 8,992 thousand hectaresNo. holdings: 102.5 thousand

SCOTLAND Total area on holdings: 5,576 thousand hectaresNo. holdings: 52.3 thousand

NORTHERN IRELANDTotal area on holdings: 998 thousand hectaresNo. holdings: 24.9 thousand

WALESTotal area on holdings:

1,663 thousand hectaresNo. holdings: 34.8 thousand

Grazing livestock

Cereals

Dairy

Horticulture

General cropping

Overview of predominant farm types by nation

Note: Map only highlights key types of farm by areaSources: Defra/DARD/Statistics for Wales/Scottish Government/AHDB

This map highlights key types of farm by area to demonstrate the broad difference between the East and West of the country, which is a reflection of the climatic differences.

Future climate changeSources: NERC, AHDB

The agricultural industry continually invests in the development of new technologies and practices to improve productivity and efficiency. This will be vital to ensure that UK farmers are able to effectively adapt to the challenges and opportunities that climate change may bring. The impacts of climate change will vary across the UK and could be positive or negative depending on type of agricultural production. Potential changes include warmer temperatures, changes to rainfall patterns and water availability, increased atmospheric CO2 concentration. Changes to climate may also affect the threats posed by pests and diseases by altering the geographical area that they are found in, this could be detrimental to productivity.

Warmer temperatures could increase the growing seasons of certain produce but decrease the yields of others. Water availability issues could create irrigation problems or exacerbate the difficulties of water management already faced in South and easterly regions of the UK.

7

Income from farming Sources: Defra, AHDB

Profitability in UK farming is measured using Total Income from Farming, in 2015 this reached £3,769 million with a less favourable euro/sterling exchange rate driving a decrease in income from the previous year. Currency is very important as it impacts levels of financial support received by UK farmers as well as affecting the competitiveness of imports and exports.

Trade of agricultural goodsSources: Defra, AHDB

The UK is a net importer of food. Defra calculates a UK Food Production to Supply Ratio, which was estimated to be 61% in 2015. This figure provides a broad indication of the ability of UK agriculture to meet consumer demand.

As a member of the EU, other member states have become important trading partners for the UK. Key countries that despatch products for UK import include the Netherlands (12%), the Irish Republic (10%), France (10%) and Germany (9.2%). Fresh fruit and vegetables are the highest value categories for imports at £5.2 billion, with food, feed and drink imports totalling £38.5 billion in 2015.

The UK exported £18.0 billion worth of food and drink in 2015, to over 200 overseas countries and territories. The UK’s biggest export markets are the Irish Republic (17%), France (11%), the USA (10%) and the Netherlands (7.1%). The top products for export are whisky, worth £4 billion per year, along with salmon, cheese and wine.

The UK has continually developed its export markets, and products exported play an important role in supporting particular agricultural sectors. An example of this is the export of offal products, these would be of limited value in the UK domestic market. Their export makes better use of all parts of the carcase, supporting the livestock industries and helping to better balance supply and demand.

Within the potato industry exports of seed potatoes comprise a significant proportion of total production. Part of AHDB’s role involves working to secure market access for UK exports such as these. The UK Government are placing increased importance on growing UK food exports.

Trade in key commodities - value terms

Top Imported Products

Fresh fruit and vegetables

Wine

Poultry meat

Beef and veal

8

Trade in key commodities - value terms

Source: Defra/AHDB

Top Exported Products

Wine

Whisky

Salmon

Cheese

9

Agricultural policy in the UKSources: AHDB, European Commission

The Common Agricultural Policy (CAP)The CAP was first introduced in 1962, its aim was to provide affordable food for EU citizens and a fair standard of living for farmers. Since its introduction, it has undergone several changes, the most recent reform occurred in 2013 and outlined the approach for 2014–2020, as a member of the EU the UK is part of this policy. The future of UK agricultural policy is uncertain following the decision to leave the EU.

The EU wants to ensure that agriculture continues to be sustainable and competitive. The CAP provides EU money to Member States to help achieve this in three ways:- Providing income support to farmers (Pillar 1) – direct payments to farmers- Implementing market measures – to balance impacts on vulnerable common agricultural markets resulting from

external factors such as weather conditions and high price volatility- Use of rural development programmes (Pillar 2) – response to the specific needs for rural development in each

of the EU countriesIncome support and market measures are funded by the EU budget only, whereas rural development measures are co-financed by Member States.

The EU provides a reasonable level of financial support to farmers compared to that provided by governments in other countries; wealthier countries tend to provide higher levels of support.

Agricultural support levels by country/region

70

60

50

40

30

20

10

0

%

Switz

erlan

d

Icelan

d

Korea

Japa

n

China

Turke

y

EU (2

8)

Israe

l

Unite

d Stat

es

Cana

da

Mexico

South

Afric

a

Chile

Braz

il

Austr

alia

New Z

ealan

d

Vietna

m

Norw

ay

Source: OECD

Producer Support Estimate by country in 2015

10

The Common Agricultural Policy in the UK

There is variation in the implementation of the CAP between the different countries within the UK, in terms of what proportion of the funding is given to each pillar of the policy and what schemes form the rural development programme. Direct payments levels vary by country as a result of historical payment patterns and flexibility in implementation guidelines.Source: OECD

Direct Payments (Pillar 1)- Basic Payment Scheme (BPS)

provides direct income support- Greening: meeting certain

practices for crop diversification and ecological focus areas makes up part of BPS payment

Market MeasuresControlled by the European Commission: - Public Intervention and Private

Storage Aid- Crisis Reserve fund- Producer organisations

Rural Development Programme (Pillar 2)- Improving competitiveness of the

agricultural sector- Preserving ecosystems and

efficient use of natural resources- Creating conditions for the

economic and social regeneration of rural areas

11

About the Agriculture and Horticulture Development Board (AHDB)The Agriculture and Horticulture Development Board (AHDB) is a statutory levy board, funded by farmers, growers and others in the supply chain and managed as an independent organisation (independent of both commercial industry and of Government).

Our purpose is to inspire our farmers, growers and industry to succeed in a rapidly changing world.

Our vision is for a world-class food and farming industry inspired by, and competing with the best.

Which sectors do we support?AHDB supports six sectors of the UK agriculture industry: beef and lamb, cereals and oilseeds, dairy, horticulture, pork and potatoes. By investing the funds raised we equip the industry with easy to use, practical know-how which can be applied to support decision making and improve performance.

What work does AHDB undertake?Research and Development – we deliver extensive programmes which are delivering scientifically robust and commercially useful outcomes to our levy payers.

Knowledge Transfer Programmes – we undertake efficient farm-level knowledge transfer programmes based on evidence from third-party science and our own research and development, aimed at improving efficiency, productivity and sustainability.

Market Intelligence – we provide unbiased, high-quality market information that helps business decision-making and improves supply chain transparency.

Market Development – export market development as well as domestic marketing activity to inspire and inform consumers in order to assist the economic viability of sectors which require this.

Education Programmes – raise awareness of food and where it comes from among school children; and help ensure the agriculture and horticulture industries are able to develop and attract workers with the skills needed to operate effectively.

Monitor government priorities for agriculture – ensure that proper account is taken of Government priorities for agriculture and the agri-food industry, where appropriate.

12

Brexit and agricultureAs a result of the EU referendum on 23 June 2016, Britain voted to leave the EU. The UK Government triggered Article 50 on 29 March 2017, which initiated the official start of the process for Britain’s exit from the European Union. A two-year period of negotiations is expected before the UK formally leaves the EU. You may have heard this referred to as ‘Brexit’ and what this means for agriculture is uncertainty.

The negotiations on exit arrangements and trade will be complex due to the requirement for unanimous agreement to be reached by Member States and the EU.

There are many aspects of agriculture that will be affected by the outcomes of the Brexit negotiations. AHDB has explored many of the possible outcomes through the publication of its Horizon report series.

The reports can be found online: www.ahdb.org.uk/brexit

It is important that the industry prepares for future changes to the functioning of the sector. Areas covered that are likely to experience significant change include:- Regulations and rules affecting agriculture- Funding support - Trade of agricultural products- Implications for the agricultural workforce

Brexit may, ultimately, offer opportunities to improve the functioning of the UK agriculture industry, however, it is not possible to know what improvements may be made at this early stage in the negotiation period.

13

The consumer landscapeThe consumer landscape in the UK is constantly changing. Innovation in food products and shopping channels is changing the ways that consumers can shop for, cook and eat food.

Consumer purchase decisions are mainly driven by price, however other considerations such as product quality and health benefits can play a part in the decision-making process.

The average time that consumers spend cooking and preparing a meal is decreasing year on year and is currently half an hour. This has been reflected in the types of products that consumers buy, with growing interest in ready prepared convenience products.

There is a growing elderly population in the UK, and this, along with an increasing number of young people choosing to delay starting a family until later in life, means that the number of one and two person households is likely to continue to grow, meaning smaller mealtimes.

2016

301990

451980

minutes60

minutes minutes

The retailer landscapeThe grocery retailer market in the UK has been dominated by four major retailers for many years. More recently, discount supermarkets have seen considerable growth in their market share, the low prices that they offer for good quality products have appealed to consumers. The pricing strategies have influenced the actions of the major retailers as there has been a decrease in short-term promotional activity in favour of ‘everyday low prices’.

Approximate total grocery market, retailer share of valueMajor RetailersTesco 25%Sainsbury’s 14%Asda 13%Morrisons 10%Hard DiscountersAldi 5%Lidl 4%

Consumer and retail landscape in the UK

Time taken to prepare and cook main meal

Source: Kantar Worldpanel Usage 52 w/e Dec 2016

Source: Kantar Worldpanel, data for 52 w/e 26 March 2017

14

Research and development in UK agricultureThe research funding landscape for agriculture and horticulture in the UK is never entirely static. However, over the last 20 years, the amount of money going into translational research in the UK (research which essentially moves science from ‘blue sky’ to practical application) has declined substantially. Traditionally, this area was largely funded by the Department for Environment, Food and Rural Affairs (Defra) and the devolved government agriculture departments. Successive Governments have withdrawn funds from this area. This accentuated the ‘valley of death’ between fundamental research and near-market applied research and has had significant impacts on the translational research skills base and infrastructure in the UK. In more recent times, this has been recognised as a gap and a number of programmes, mainly run by Innovate UK (the UK Government’s innovation agency sponsored by the Department for Business, Energy & Industrial Strategy, BEIS) have been introduced to try and bridge this gap. This has helped leverage commercial research funds from the industry.

The current situation is that the majority of money going into agricultural and food research is still being spent at the fundamental end of the research spectrum (c. £120 million a year), mainly through the Biotechnology and Biological Science Research Council (BBSRC). This includes time-limited schemes such as the HAPI (Horticulture and Potato Initiative) scheme and other crop and animal research clubs aimed at moving BBSRC-funded science more into line with industry needs. The Innovate UK effort is largely now encompassed within the funds allocated to the Government’s Agri-Tech Strategy, launched in July 2013 with £160 million of funding for covering innovative industry-led projects (‘Catalyst’ funding) and capital for the development of a number of Innovation Centres intended to act as hubs for innovative research.

AHDB levy-funded research (c. £12 million/year) is mainly directed towards translational research, responding explicitly and directly to industry needs. Other levy funds for specific sectors not covered by AHDB are managed by British Beet Research Organisation (BBRO), covering sugar beet, and the Processors & Growers Research Organisation (PGRO), covering pulse crops. Some charitable funds are also managed via the Agri-Food Charities Partnership (AFCP).

Source: Kantar Worldpanel, data for 52 w/e 26 March 2017

Important organisations related to UK agriculture Farming unions and member organisations:- National Farmers Union (NFU) - National Farmers Union Scotland (NFUS) - National Farmers Union Cymru- Farmers’ Union of Wales (FUW)- Ulster Farmers Union (UFU)- Tenant Farmers Association (TFA)- Country Land and Business Association (CLA)

Government departments: Agricultural responsibility is devolved in different areas of the UK, important government bodies include: - Defra - Department for Environment, Food and Rural Affairs (England)- DAERA - Department of Agriculture, Environment and Rural Affairs (Northern Ireland)- Agriculture departments in the Welsh and Scottish Governments

15

Contact us

Emily BeardshawConsumer Insight Analyst, AHDBEmily.Beardshaw@ahdb.org.uk024 7647 8756

While the Agriculture and Horticulture Development Board seeks to ensure that the information contained within this document is accurate at the time of printing, no warranty is given in respect thereof and, to the maximum extent permitted by law, the Agriculture and Horticulture Development Board accepts no liability for loss, damage or injury howsoever caused (including that caused by negligence) or suffered directly or indirectly in relation to information and opinions contained in or omitted from this document.

© Agriculture and Horticulture Development Board 2017. All rights reserved