lb landscape final.pdf

XXXX XXXXXXXXXX

1 • LANDSCAPE • Autumn 2014

CoNSumEr trENDS ChANgiNg thE foCuS

of AgriCuLturE

LANDSCAPE AUTUMN 2014

futurE of fooD • 06fArm fiNANCE • 08ADAm hENSoN • 13

IdeAs ANd INsIghT To sUpporT yoUr bUsINess

†Gross Rate. The contractual rate of interest payable before deduction of income tax at the rate specifi ed by law. #AER – The AER stands for Annual Equivalent Rate and is the notional rate which illustrates the gross or tax free rate as if paid and compounded on an annual basis. As every advert for a savings product will contain an AER you will be able to compare more easily what return you can expect from your savings over time. *All applications are subject to eligibility criteria and terms and conditions apply. Maturity date for Agriculture Special Fixed Term Deposit account is 19th March 2015. Applications and investment only available between 1st December 2014 and 19th December 2014. Minimum investment applies.

GROWWATCH YOUR MONEY

WITH OUR RANGE OF SAVINGS ACCOUNTS

ARTWORK PROOF

6

InDesign File Name

LB_AGRI2_184507AP_1014Artworker’s Name Richard Parkin

Artwork Number

Workfl ow Number184507AP 140703 1 2

Job Name Lloyds Bespoke Agricultural Advert 3

Brand Lloyds Bank (Commercial Banking) 4

Stock Code Version DateLB_AGRI2 5

× Page Count210

10

1pp

14

1pp297Finished

Page Size A4

ColoursPDF Proof

Date/TimeCMYK 18/11/14 – 11:3411

HEIGHT (mm)WIDTH (mm)

MONTH (MM)

EXPECTED

YEAR (YY)

ACTUALISO (i.e. A5 – Portrait)

8 9 7

6

10

PLEASE READ: Boxes that have a THICK outline will be automatically populated. DO NOT type anything into these boxes as this will break the automation.

SUPPORTING UKBUSINESS

From investing a large lump sum to instant access to your money, our range of savings accounts can help support your business’ goals. You can choose from fi xed or variable interest rates and save from as little as £1. Our savings accounts can be tailored to suit your business needs.

Available from 1 December – 19 December 2014, our new Agriculture Special Fixed Term Deposit account* o� ers a fi xed 0.75% gross interest† (0.8% AER#). It matures on 19 March 2015 and has a minimum investment of £10,000.

To fi nd out how we can support your business, contact your local Agriculture Relationship Manager (found on page 15) or visit lloydsbank.com/business

LB_AGRI2_184507AP_1014.indd 1 18/11/2014 11:34

CONTENTSLANDSCAPE – AutumN 2014

Autumn 2014 • LANDSCAPE • 3

†Gross Rate. The contractual rate of interest payable before deduction of income tax at the rate specifi ed by law. #AER – The AER stands for Annual Equivalent Rate and is the notional rate which illustrates the gross or tax free rate as if paid and compounded on an annual basis. As every advert for a savings product will contain an AER you will be able to compare more easily what return you can expect from your savings over time. *All applications are subject to eligibility criteria and terms and conditions apply. Maturity date for Agriculture Special Fixed Term Deposit account is 19th March 2015. Applications and investment only available between 1st December 2014 and 19th December 2014. Minimum investment applies.

GROWWATCH YOUR MONEY

WITH OUR RANGE OF SAVINGS ACCOUNTS

ARTWORK PROOF

6

InDesign File Name

LB_AGRI2_184507AP_1014Artworker’s Name Richard Parkin

Artwork Number

Workfl ow Number184507AP 140703 1 2

Job Name Lloyds Bespoke Agricultural Advert 3

Brand Lloyds Bank (Commercial Banking) 4

Stock Code Version DateLB_AGRI2 5

× Page Count210

10

1pp

14

1pp297Finished

Page Size A4

ColoursPDF Proof

Date/TimeCMYK 18/11/14 – 11:3411


MONTH (MM)

EXPECTED

YEAR (YY)


8 9 7

6

10

PLEASE READ: Boxes that have a THICK outline will be automatically populated. DO NOT type anything into these boxes as this will break the automation.


From investing a large lump sum to instant access to your money, our range of savings accounts can help support your business’ goals. You can choose from fi xed or variable interest rates and save from as little as £1. Our savings accounts can be tailored to suit your business needs.

Available from 1 December – 19 December 2014, our new Agriculture Special Fixed Term Deposit account* o� ers a fi xed 0.75% gross interest† (0.8% AER#). It matures on 19 March 2015 and has a minimum investment of £10,000.

To fi nd out how we can support your business, contact your local Agriculture Relationship Manager (found on page 15) or visit lloydsbank.com/business

LB_AGRI2_184507AP_1014.indd 1 18/11/2014 11:34

ANDREW NAYLORhEAD of AgriCuLturELloyds Bank

t Lloyds bank, we understand the unique challenges, workload and rewards you face in the farming sector. We have over 100 specialist agriculture managers who

enjoy getting their boots dirty on the farm, to really understand your ambitions and support you through all the challenges the agriculture sector throws at you.

Within this magazine, Landscape, we share some of their stories. You’ll also find news and views (p4-5) of what’s happening in areas such as CAP reform, business funding (p8) and diversification (p6). We hope Landscape will help you step back to take a fresh look at your business and its potential.

Lloyds Bank has a strong and proud heritage within the farming community and is part of one of the country’s biggest lenders* to the agricultural sector, through our specialist teams and managers. our understanding and support has allowed businesses such as Balmakewan farm (p7) and ireby green (p12) to consolidate and diversify in line with changing trends.

We’re fully committed to helping British farming prosper (p11) and support the Prince’s Countryside fund and charities such as rABi. We know that money isn’t everything, though, and that’s why we also support a farming mentoring scheme for newcomers to the sector to learn from those with more experience. it’s our way of ensuring the next generation of farmers face fewer of the challenges and enjoy more of the rewards of farming.

meanwhile, we hope you enjoy your first issue of Landscape. •

INDuSTRY REvIEW CAP reform, the rise of organic, milk protests and AimS conference review.

04

LANDSCAPE AutumN 2014

fEATuRE fuTuRE Of fOOD food futurologist Dr morgaine gaye discusses changing consumer needs; Balmakewan farm responds to changing consumer behaviour.

06

IN ThE fIELD Lloyds Bank Agriculture Ambassador Adam henson discusses diversification.

13

ECONOMIC OuTLOOk Lloyds Bank Chief Economist trevor Williams provides an outlook for 2015.

14

kEY AgRICuLTuRE CONTACTS Contact details for the Lloyds Bank Agriculture team.

15

INNOvATION & DIvERSIfICATION the importance of diversified revenue streams to ireby green.

12

INvESTINg IN PEOPLE how Lloyds Bank is supporting rural community empowerment.

11

fEATuRE fARM fINANCE Business opportunities of BPS implementation.

08

WELComE

A DYNAmiC LANDSCAPE

A

* the Lloyds Banking group includes companies using brands including Lloyds Bank, halifax and Bank of Scotland and their associated companies.

fINANCIAL SuPPORT the benefits of hire Purchase for asset purchase.

10

INDuSTRY REvIEWCAP rEform | orgANiC ProDuCE


‘grEENiNg’ ruLES EXPLAiNED

CAp reForM

Big PiCturE

New rules announced on permanent grassland, the ‘three-crop rule’ and ecological Focus Areas.

the uK government has announced an update on what last year’s Common Agricultural Policy reforms will mean to the uK’s farming industry. their release in August 2014 focussed on the ‘greening’ rules.

gREENINgthe Single farm Payment, through the current Single Payment Scheme, is changing to the Basic Payment Scheme in 2015, which includes three rules that must be followed to qualify for a ‘greening’ payment – around 30% of the total income.

Permanent grassland: the ruling is dependent upon grassland levels across England – if it falls below 5%, then any

Improvement in sales of organic products have been widely felt as the UK emerges from recession.

the popularity of organic products is again on the rise, according to figures recently released by the Soil Association1. the numbers show a growth in the organic grocery market of 2.8% in 2014, reversing a previous decline in organic food sales.

in the four weeks to 16 August, the organic grocery market grew by 3.2%, while the non-organic market fell by 0.9%. it marks a change in attitudes towards organic food since the recession, with 83% of the uK’s households now buying organic products of some description.

the growing popularity of organic products may be a consumer response to a Newcastle university report2 which found that some organic crops may be 60% higher in antioxidants.

Better for farmers?As well as consumers wanting to enjoy the benefits associated with organic farming, a recent Soil Association report3 found that organic farms sometimes outperform their non-organic counterparts by almost £80 per hectare, per year.

the study highlighted that ‘a small increase in organic yields of just 10%, through innovation and management, has the potential to increase net margins by as much as 20%’.

What is clear is that confidence in this sector is currently high, and as more shoppers look to be returning to organic, the sector could present a compelling proposition for farmers. •1 Soil Association news report, September 20142 Newcastle university press release, July 20143 Soil Association, organic farming: how it stacks up, march 2014

permanent grassland will need to be reinstated. other permanent grassland covered by the Wild Birds and/or habitats Directives (Natura 2000) must not be ploughed, and it is thought the majority of farmers already adhere to the ruling.

Crop diversification or ‘the three-crop rule’: there is a requirement to grow two or more diverse crops for farmers with 10-30 hectares of arable land, with the main crop not covering more than 75% of the land. for farmers with more than 30 hectares, three or more different crops must be grown, with the main crop again not covering more than 75% of the arable land.

Ecological focus Areas (EfAs): farmers with more than 15 hectares of arable land will be required to have at least 5% of this land dedicated as an area of ecological focus.

there will, naturally, be exceptions to the rules for greening. We strongly recommend that all farmers take the time to read the new rules online by visiting: www.gov.uk/government/collections/common-agricultural-policy-reform. •

DEmAND riSES

orgANIC prodUCe

INDuSTRY REvIEWmiLK ProtEStS | AimS CoNfErENCE


85%Amount of milk produced

by the country’s dairy sector which is used within the uK

Source: ffA figures quoted in farmers Weekly, october 2014

Estimated cost of production for 1 litre of milk

Source: BBC, october 2014

30p

Purchasing rate paid by Dairy Crest per litre of milk

in November 2014Source: Dairy Crest announcement,

September 2014

27.04p

Purchasing rate paid by muller Wiseman per litre of milk

in November 2014Source: farmers Weekly, october 2014

27.10p

groWiNg oPPortuNitiES

for mEAt iNDEPENDENtS

AIMs CoNFereNCe

growth in the catering industry is providing great opportunities for independent meat suppliers, said Norman bagley, Chief executive of the Association of Independent Meat suppliers (AIMs), at their annual conference.

Norman pointed out the flexibility of supply that independent providers can offer, explaining: “the catering sector is thriving and that has to be supplied by a part of the industry which is flexible. our part of the industry is in a strong place.”

Norman’s words followed further positive news for independent meat suppliers from Dominic morrey, a Director of trading at Booker group.

Dominic explained that: “there has been unprecedented change for food suppliers in the past five years and i see that continuing.” he pointed out the fading dominance of supermarkets, with an expected growth of just 8% over the coming five years, compared to smaller retailers and discounters who are set to grow their market share considerably.

he added that certain sectors were likely to see huge growth over the coming years, with eating out increasing by 18%, discount retailers growing by 65% and online food retail seeing a growth of 100%.

Dominic concluded by highlighting the growing popularity of farm shops and farmers markets. his words should prove positive news for farmers seeking additional sources of revenue, as these outlets give them greater control of pricing.

for more information about regulations affecting farmers markets and farm shops, visit www.gov.uk/farm-shops-and-farmers-markets. •

Wholesale milk prices continue to divide the sector, with protests across the country mirroring the sos dairy campaign of 2012.

many farmgate prices have fallen by 20-30% since January, and all four major uK dairy companies announced further price cuts in october. this has placed a large strain on profitability for the sector’s farmers.

Led by lobby group farmers for Action, protests were held in early october at the distribution centres of morrisons, Dairy Crest and the Co-operative in Somerset, Derbyshire and hampshire respectively. At the time of writing, further protests were planned for the latter part of the month.

“there is a serious issue here and we need to make people aware,” said farmers for Action Chairman David handley.

in reply, many farmers believe milk processors have no choice but to reduce prices, citing a fall in global commodity prices, a consumer demand which has provoked a supermarket milk price battle, and the banning of all Western exports, including dairy, into russia.

meurig raymond, President of the National farmers, union commented: “these are extremely turbulent times. that is why it is absolutely vital everyone in the dairy supply chain shows commitment at this time.

“milk processors, retailers and dairy farmers must work together to minimise the impact of the current price falls on dairy farmers and look to the future by opening up new markets for milk and creating new products.”

Despite this, many sector commentators expect a further two years of unpredictability to affect the industry, and farmers are advised to consider this when making business and forecast plans for the next couple of years.•

miLK ProtEStS rEfLECt PriCiNg uNCErtAiNtY

MILK proTesTs

fEATuREfuturE of fooD


Could consumers demand even more from their food retailers? According to food futurologist Dr morgaine gaye, there’s an emerging

trend focused on truth and transparency, which calls for simplicity rather than clever marketing.

‘SimPLiCitY’ thE fooD of thE futurE

Suddenly there is much more awareness that we

need to grow our own produce, whether as

individuals or a nation.

he rising consumption of local produce further highlights that consumers increasingly

understand the need to take ownership of their diet, says Dr gaye. “for too long, people have put their well-being in the hands of doctors and hoped they could be healed from everything. however, they now understand the need to take ownership of what they put on their skin and put inside of their bodies.”

Consumers have lost trust, adds Dr gaye. mad cow disease, the horsemeat scandal, health scares and even constant exposés unrelated to food have made consumers wary and suspicious. Brands, especially those in the retail food market, have to earn trust like never before, she says.

MOvINg TOWARDS ThE “AuThENTIC” “i see the move towards anti-packaging and quiet branding,” says Dr gaye. “People are wising up. marketing, social media sites and tV ads have done a great job in constructing a sense of provenance and ‘home-made’, but we’re moving beyond the power of that sepia photo of a supposed grandfather making whisky. it’s starting to feel over branded.”

the reaction to this, she predicts, is an ever-more discerning consumer looking for true authenticity and willing to be educated and informed.

“this is something farms and food producers need to embrace. it is time-consuming enough dealing with immediate supply issues, especially with the demands placed on them by the large supermarket chains, but responding to the consumer demand for authenticity is vital,” adds

T Dr gaye. “it may start small, with a few farmers, just as the move to organic did, but there are already some powerful changes happening through farm shops, which are gaining in popularity and are providing a self-sustaining outlet for farmers.”

fuTuRE DEMAND So won’t it take the big retailers to adapt to customer demands first? Dr gaye believes the current price wars between supermarkets are a temporary phenomenon. What she expects to see is a wider gap between cheapness and quality, but the two will not be mutually exclusive.

“there’s no shopping ‘experience’ in going to an austere Aldi or Lidl, so consumers will be just as inclined to buy cheaper bulk pantry items online and then pay more for quality where it matters, such as with the local butcher or farmers market, for example,” she says.

Some supermarkets are already reacting to this change by embedding the high street or market experience in their stores, with greengrocer ‘stalls’, and this will increase.

CONSuMER TRENDS one specific example of this drive for simplicity and authenticity is what she calls an ‘uprising against pasteurisation’.

“there are waiting lists for unpasteurised goat’s butter,” she says. “People are becoming more aware and they want dairy products from animals that are pastured or grass-fed, a diet natural to them. We’ll start to see more diversity in the grains used and, rather than highly-bred wheat, we’ll see Ethiopian teff,

fEATuREfuturE of fooD


ormerly dairy farmers, phil and his family moved to his balmakewan Farm in 1992,

growing oilseed rape, barley and wheat on its 350-acres.

“We saw that the size of our holding didn’t offer a long-term future for us and the opportunity arose to buy an old coach house on the property,” explains phil. “It needed a lot of work but it made sense to do something with the building, and we decided on a farm shop, a tea-room and two holiday cottages.”

phil carried out his own research, but also took advice from a firm of agricultural consultants with wide experience in diversification. They helped him with the feasibility study and his cashflow forecasting.

“That was back in 2005,” says phil. “people were just starting to be interested in eating local food and supporting local businesses and we wanted to tap into that change in the market.

“Three years later – when we were in the building stage – along came the crash. We were lucky that we had a buffer in that we’re in the catchment area for the Aberdeen oil industry. The fact that our bank stuck with us and didn’t dither about lending was invaluable.”

opened in 2012 after a lengthy planning and build process, the farm shop sells produce from other local, trusted suppliers and phil found that, as a farmer talking to other farmers, it was easier to

source top-quality products at the right price. The feedback from his customers has been fantastic and phil has gradually increased the range of balmakewan’s own products on sale in the shop.

“We’ve had great support from our bank. There’s always been a real human being at the end of the phone with a wealth of experience to share,” says phil.

“We are just in the process of adding a biomass boiler and solar panels and we have a lot of consolidation to do after so much capital expenditure,” concludes phil. “but we’re always looking for new things to add value to the farm, having already developed a nursery business selling rhododendrons and azaleas, while also using our grounds as a venue for marquee weddings.” •

LoVE of LoCAL mEANS BuSiNESS

for BALmAKEWANA beautiful setting and the hunger for local food have brought farmer Phil Swire success. having recognised his arable farm couldn’t sustain a future for his family, Phil noted the growing trend towards trusted, quality

farm shop produce as an opportunity to grow.

f

responding to the consumer demand for

authenticity is vital.

red wheat and winter wheat, because these are easier for us to digest and also because they create new consumer interest. And organic will no longer be enough as people will realise their organic seedless grapes or rainbow trout have been modified to be that way.”

for farmers, Dr gaye predicts new markets for niche and unusual products and an increased awareness and respect that farming will have “value and meaning” to consumers. there is also a need to reflect the consumers’ growing focus on sustainable food produce.

“Consumers previously knew that if they had the money, they could buy whatever product they wanted. however, incidents like the icelandic volcano eruption a few years ago showed how reliant we are on imports.

“Suddenly there is much more awareness that we need to grow our own produce, whether as individuals or a nation. We must be able to ‘survive’ without external reliance, and the farming community has the ideal opportunity to respond to that demand, and even lead the way.” •

Dr Morgaine gaye is a food futurologist who runs a consultancy and trend forecasting bureau. her work researches future global trends, ideas, products and media, with food as the main focus. her words and voice provide frequent insight through a range of media and public lectures, and she works on product development with a variety of major global clients.

CASE STuDY

fEATuREfArm fiNANCE


fundamental changes to farm support payments come into play next year. the imminent arrival of the new Basic Payment Scheme

(BPS) to replace the Single Payment Scheme is an opportunity to stand back and take stock of wider farm finances.

thE ShiftiNg LANDSCAPE of fArm fiNANCE

fEATuREfArm fiNANCE


MAkINg ThE MOST Of YOuR CAP PAYMENTS

SPECiAL offEr*

At Lloyds Bank, investment in our agricultural sector team has put more people on the ground to help with farming businesses’ propositions, planning and risk management. their access to specialists and products in the risk management sphere is providing farmers with a further level of control over certain key costs, helping support the Bank’s aim to help British farmers keep putting British food on British tables. •ALICk JONESAgriCuLturE rELAtioNShiP DirECtorLloyds Bank

hile some of the details of the BPS scheme are still to be finalised, key components around greening and

the three-crop rule, for example, are already being taken into account. Arable farmers in particular have been working with the new guidelines to plan their autumn drilling programmes. But while the headline news may be putting the focus on the BPS, there’s more to the story.

there’s no doubt the BPS is a fundamental change and should be a reason for farm businesses to stand back and take stock of their aims and objectives and how these fit with the new support structure.

the BPS is an important part of farm income, but let’s not forget that what the farmer actually produces is usually the largest element of farm income. the arrival of BPS could be the trigger for businesses to look at what they are producing, how they’re producing it and who it’s destined for. it’s critical for farmers to make sure that any decisions they take to maximise their BPS eligibility fit with their overall farming enterprise and the market as a whole.

Every farming business should keep a weather eye on costs as well as income streams. All farmers know that one of the biggest influences on the funding landscape is the volatility of commodity prices. this makes it far from easy to plan cashflow and budgets, which is vital information the farm business needs when looking to raise additional finance.

Whilst farming businesses can’t control all their income, it’s important to know production costs inside-out. And, when making a change to any systems or enterprises, it’s also wise to make sure these are in line with the medium- to long-term strategic plan for the business rather than simply reacting to short-term changes in market conditions.

that strategy also needs to take into account risk management and analysis of what costs can be controlled. forward markets, for example, can be used to purchase some inputs, while the current historic period of low interest rates means it is worth considering fixing interest costs on any loans or finance agreements. if dealing with foreign currency receipts or payments, it is also worth managing the exchange rate exposure effectively.

the support of a strong banking partner which understands the changing demands of the agricultural industry and responds with the right products and knowledge is key.

W

how do you make your CAp payments work harder for you? When you know you have a bill to pay at a certain date, investing the money in a high interest deposit account can be the answer.

often, farm businesses have specific plans for their single payment scheme or basic payment scheme income. These are often linked to a definite future date, such as a tax bill that’s due in six months or a deposit to be paid on new machinery. It makes sense to separate the money that will pay for these and earn interest on it until it’s needed without distorting everyday cashflow.

For a short period only, Lloyds bank is offering you the opportunity to invest your money into our new Special Fixed Term Deposit – specially designed for agriculture customers. If you have a minimum of £10,000 to invest, we are offering a competitive fixed rate of interest for a minimum of 90 days. This special Fixed Term deposit offer is open from 1 december 2014 and closes on 19 december 2014, and the deposit matures on 19 March 2015.

To make the most of your money, speak to your local Agriculture relationship Manager on how to take advantage of this special offer or to discuss any of our other savings products. •*Terms and conditions apply.

there’s no doubt the BPS is a

fundamental change and should

be a reason for farm businesses to

stand back and take stock of their aims

and objectives.

FINANCIAL SUPPORThIRE PuRChASE


fuNDiNg SuPPort: SAfEguArDiNg CAShfLoW

managing working capital is fundamental for most businesses, especially in the agricultural sector.

he price most farmers receive for their produce is set by wider commodity markets

– making it difficult to control income. This means keeping a sensible amount of working capital available is paramount to protect against unexpected events. Using that cash or a working capital facility to buy equipment or vehicles rarely makes financial sense.

A farm’s overdraft should cover day-to-day cashflow and working capital, but too often the facility is used to support the purchase of new assets. however, using an asset finance or hire purchase agreement can usually prove a better long-term decision as it matches the finance term to the life of the asset and supports increased productivity and growth, whilst safeguarding cashflow. These agreements also use the actual asset being financed as security, so keeping the farm’s core assets available to support day-to-day trading or longer term strategic projects.

A £60,000 second-hand combine purchased using an overdraft may seem like a saving, because loan interest rates are not being paid, but taking that much cash out of the working capital can put a business in a vulnerable position – especially given today’s volatile commodity prices. That cash may be needed further down the line, and it takes the flexibility for other capital expenses out of the business.

hIRE PuRChASE hire purchase spreads the cost of a major purchase over a set term, with a one-off payment at the end to transfer ownership to the business. At the end of the agreement title and ownership of the asset will transfer to your business. The initial deposit is often flexible, allowing for the negotiation of the best agreement for each farming business, while the costs of the asset can be spread over a suitable period. The asset itself acts as the security for the agreement, and the goods are reflected in accounts as a business asset, with normal tax and writing down allowances claimed.

At Lloyds bank, we work with farmers to make sure they get the most appropriate and cost-effective way of funding major asset purchases – whether through Lloyds bank directly, through our Commercial Finance business or through a hire purchase provider.

We understand the importance of cashflow to agricultural businesses. Farmers are price takers rather than price makers, meaning prices can’t just be put up to raise more cash. getting smart about using the most appropriate type of finance keeps vital working capital within the business; hire purchase is one way of achieving this while safeguarding cashflow. •SIMON ABDILLAAgrICULTUre bUsINess MANAgerLloyds bank

TASSET fINANCE

PRODuCTS AT A gLANCE

Assets funded include:Tractors, trailers and other farm

equipment including: combines, balers, peaviners, sprayers, robotic milking

machines, telehandlers.Cars

Commercial vehicles

Service features:hire purchase

borrow from £7,500Flexible initial deposit

Funding periods between one and five years

Flexible repayment profile

INvESTINg IN PEOPLESuPPortiNg EmPoWErmENt


the importance of the farming sector can only be maintained by investing in the skills of the next generation of farmers. Lloyds Banking group understands that need and is supporting two key initiatives which will empower farmers to grow their business

and respond to changing demands and business practices within the sector.

iNVEStiNg iN thE futurE gENErAtioN

The UK-wide get Mentoring in Farming initiative to support 300 small farming-related businesses has begun its mentor recruitment process. The scheme promotes the development of business and management skills amongst those employed in the farming sector by pairing them with mentors from across the farming and business community.

mentors receive some training, but it’s their ‘been there, done that’ experience which is set to prove a vital component of the scheme. they’ll be sharing their knowledge on topics including improving the core business, diversification, business growth and resilience, technology and planning to help farming businesses succeed.

the initiative was established following the future of farming review (2013) report which highlighted the need for mentors to help develop business and management skills among new entrants and smaller enterprises within the farming sector. it’s backed by government funding and the project is supported by organisations such as the Nfu and businesses in the sector such as Lloyds Banking group.

tim Sowerby, a Lloyds Bank Agriculture relationship manager, is among the first wave of mentors to volunteer their skills and experience. he will provide two days mentoring per month supported by Lloyds Bank.

“i feel it is important to help farmers help themselves as they often just need a bit of direction and a sounding board to help them get back on track,” says tim. “i chose to embark on the mentoring programme as

The latest round of funding for The princes Countryside Fund closed at the end of october, with news of the projects it will support being announced soon.

the fund was set up to support a sustainable future for British agriculture and the wider rural community, and seeks to tackle three key issues: maintaining and creating thriving rural communities, developing stronger rural livelihoods and improving the skills and opportunities for the next generation of farmers.

By supporting fledgling rural businesses, assisting farmers to improve business performance and encouraging the next generation to take up rural business, the fund is tackling issues such as isolation and the decline in rural communities.

Lloyds Banking group will continue to support the fund for at least another three years. Andrew Naylor, head of Agriculture, said: “We have a strong heritage with the farming community and are one of the country’s biggest lenders* to the agricultural sector. We recognise that for the farming sector to prosper, it needs to be supported by thriving rural communities.” •

i consider my long experience within the Bank’s agriculture team should enable me to offer the right level of skills and knowledge to support a farming business seeking help.”

if you would like to act as a farming mentor, or wish to use the get mentoring in farming programme to help support your business plans, please visit www.getmentoringinfarming.org.uk •

gEt mENtoriNg iN fArmiNg iNitiAtiVE

BEgiNS rECruitmENt

thE PriNCE’S CouNtrYSiDE fuND

children educated about food production and sustainable farming

Source: Princes Countryside fund, August 2014

18,000

farm businesses supported

3,400

local communities supported

140

grants given by the Prince’s Countryside fund since

its launch in 2010

£4.4M

young people have benefitted from the fund

4,380

* the Lloyds Banking group includes companies using brands including Lloyds Bank, halifax and Bank of Scotland and their associated companies.

INNOvATION & DIvERSIfICATIONhoW irEBY grEEN hAS EmBrACED DiVErSE fuNDiNg rEVENuES


reby green was outside the Welbanks’ original price range, but it offered a number of possibilities for

additional revenue streams. the farm already featured a small caravan site and a good range of buildings, including a large modern cattle shed, while its location on the main route between the Lake District and Yorkshire Dales National Park offered opportunities to provide for the tourism industry.

“it was clear that as a working farm it was uneconomic, but as a diversified farm business, it had potential,” says John.

After major repairs to buildings, the slurry system and water and electrics, the Welbank’s initial focus was bringing in livestock to provide critical guaranteed income. this included using their land as a “B&B” for a local organic dairy farm run by Sylvia’s father and brother.

With that in place, their priority shifted to developing a café and farm shop. With a DEfrA

grant, and after a seven-month battle for planning permission, the venture opened in September 2013 and was an instant hit. “We’re trying to meet a specific niche for really high quality home cooking and baking with a modern twist,” says Sylvia. “We intentionally restrict the menu and concentrate on daily specials based around local, seasonal produce.”

this year, the couple expanded the caravan site, making the most of demand for seasonal touring pitches. “guests rent a pitch for the full year and come and go as they please. this means we have a regular income stream and less management burden,” explains John. “We actually sold all the new pitches before we’d even completed the new site and we now have a waiting list.”

the Welbanks now have plans to develop a craft shop and will be testing the idea with a pop-up gift shop in the run-up to Christmas. New menus and one-off specials will expand

the café’s repertoire and they’ll be taking on more staff. Wild food foraging for children and baking courses are on the cards too.

throughout their diversification process, the couple have learned vital lessons. “fully cost everything,” says John. “regularly review the business plans to ensure you are where you are meant to be and try to have a contingency budget, because diversification costs can quickly escalate.”

he also recommends working with a banking partner which understands the sector. “Being able to sit down with our local Lloyds Bank agriculture relationship manager to go through our ideas, capital costs and detailed business plans meant they had confidence in our plans,” concludes John. “they could also think outside the box. Yes, it is a farm, but the main income sources lie outside the agricultural enterprise. the Bank could see this and supported us with the extra funding needed to develop our ideas.” •

DiVErSifiCAtioN PotENtiAL CouNtS for

fArmiNg BuSiNESSLooking for their first farm, John and Sylvia Welbank knew the potential

to diversify would be a deciding factor. following two years of hard work, they now own a 75-acre livestock farm with a café, shop and caravan park.

I

ADAM hENSON LLoYDS BANK AmBASSADor

Autumn 2014 • LANdsCApe • 13

recognised by millions across the uK for his work as a rural tV presenter, Adam henson is the

farming Ambassador for Lloyds Bank.

iN thE fiELDwith ADAm hENSoN

unning a 650-hectare arable, sheep and rare breed farm near Cheltenham, Adam is a champion

for traditional British farming. his farming business also includes the Cotswold farm Park which features a camping/caravan site, farm shop and café, and hosts a variety of seasonal activities. in this first column for Landscape, Adam discusses diversifying revenue streams.

“over the last ten years, the unyielding variance in commodity prices and the increase in labour, machinery and input costs has put severe pressure on how we, as farmers, can make a profit.

Every farmer has the opportunity to assess their business to see if additional revenue streams can be found, such as a bed and breakfast, DiY livery and farm shop. the old adage of not having all your eggs in one basket can often prove advantageous, especially if the chosen diversification is not related to traditional agricultural income. it is well worth seeing what other farms are doing then considering how this can fit within your own business. market research, planning and the effect on resources like water, power and labour all need careful consideration. You should also consider your own interests, especially if you plan to be personally involved. if you aim to welcome the public onto the farm then customer service, health and safety, toilets and parking all need to be considered.

RARE BREEDS rare breed conservation is very close to my heart. my father, Joe henson, founded the rare Breeds Survival trust in 1973 and the country has lost no further British breeds since then. Although not necessarily commercially viable, our rare breeds have a national reputation for quality and so command good prices for

farm, we rely on the entrance fee to help support their upkeep.

ADDINg vALuE Before taking the plunge with any new venture we find that taking professional advice and drawing up detailed business plans is essential.

there are a number of organisations like fArmA, National farm Attractions Network and the federation of Small Businesses, as well as land agents and farm consultants, such as Andersons, who are useful sources of information if you are considering some form of diversification. We are often investigating ways to add value to our products, but decisions aren’t made without careful planning, market research and business models. We also think carefully about how a potential product fits with our brand values and long term goals.

my business partner, Duncan Andrews, has worked with a number of suitable associates over the past three years, drawing up licensing agreements to expand our brand. We work with Butcombe Brewery who produce a real ale called “Adam henson’s rare Breed” using maris otter malting barley, a variety we grow on the farm. Another associate, DLf, have created wildflower pollinator, conservation and wild bird attraction seed mixes for people to grow in their gardens with the “Adam henson At home with Nature” range. this is an extension of what we do on a large scale on the farm to encourage bio-diversity.

Creating good quality working relationships with like-minded businesses can provide a useful revenue stream and help the business grow.”•

for more information about Adam’s commercial enterprises, visit: www.cotswoldfarmpark.co.ukTwitter @Adamhensonfacebook: Cotswold farm Park

Every farmer has the opportunity to

assess their business to see if additional revenue streams

can be found.

R

pedigree stock. there is also a growing demand from spinners and weavers for our rare breed wool, and customers will pay a premium for local rare breed beef, pork and lamb.

Carrying on my father’s legacy of rare breed conservation is an important part of our work at the Cotswold farm Park. Due to the number and diversity of breeds on the


ECONOmIC FORECAST TreVor WILLIAMs


there is some positivity in a volatile sector, says Professor trevor Williams, Chief Economist at Lloyds Bank Commercial Banking, as he reviews the

current economic situation for agriculture and provides an outlook for 2015.

ECoNomiC outLooK

verall gross domestic product (gdp) in the UK is currently 2.7% above its Q1 2008 peak,

but output in agriculture is 9.2% lower than its peak. This clearly demonstrates the volatility of the sector – it showed a decline in 2008 and 2009, saw modest recovery in 2011 before a further decline in 2012-13 (see Figure 1). In fact, the sector is only just now beginning to emerge from the downturn that began in 2012.

SECTOR ChALLENgESThere are many reasons behind this volatility. developed economies, such as the UK, have seen agriculture decline as a share of global output, as countries such as Argentina, brazil and even Ukraine are seeing a larger share as they are more competitive. What does this mean? They are able to produce more cheaply as they have more land, labour costs are cheaper and better global supply chains means they can get goods to market more rapidly. All of this result in them taking a greater share of the total global market in agriculture production.

A bumper harvest in the Us, meanwhile, has meant grain stores are bulging, driving down global grain prices. This is positive news for farmers whose inputs include livestock feed, as this will be cheaper. At the same time, other input prices, such as fuel and fertiliser, will also reduce as global oil and gas prices fall. but, overall, lower wheat prices will have a significant and damaging effect on the incomes of those farmers that are primary producers of wheat. This means revising profit forecasts lower within the sector.

PRESSuRE ON INCOMESother external pressures on agriculture are squeezing the incomes of those in the sector further. The supermarket ‘price wars’, for

O

Continued growth in global population levels

and a competitive currency provide opportunities for a competitive uK

agriculture sector.

08 09 10 11 12 13 14 UK: GVA at 2011 Prices: Total Production SA, Y/Y %Chg

UK: GVA at 2011 Prices: Agriculture, Forestry & Fishing SA, Y/Y %ChgSources: O�ce for National Statistics/Haver Analytics

Figure 1 – Price volatility in agriculture sector

0.0

-7.5

-15.0

15.0

7.5

22.5

example, are encouraging major buyers to put increasing pressure on their suppliers.

Additionally, on the demand side, eurozone economic weakness continues. Anticipated growth for the area is 0.5% next year compared with predictions of 2.5-3% for the UK. This means sterling is likely to further strengthen against the euro. This not only makes UK exports less attractive to the eurozone, but also has a negative impact on the exchange rate of euro-denominated subsidy payments into sterling. some protection against this can be found by discussing risk management solutions with a banking partner.

A POSITIvE OuTLOOkLooking ahead, we can see positive growth for the sector in the year as a whole. Quarter- on-quarter output volume growth in Q2 2014 is up 1.4% compared to the same period last year and, despite continued slow growth in europe, the UK economy has shown seven consecutive quarters of growth.

The Us market also continues to show recovery, which is good news for exports. Continued growth in global population levels and in the global economy also provide opportunities for a competitive UK agriculture sector. Indeed, there is clear evidence that UK agriculture exporters are finding new markets further afield. •

LLOYDS BANk AgRICuLTuRE KEY CoNtACtS

NORTh WESTSenior Manager AgricultureDave Knight – 07740 699968 [email protected] & StaffordshireRelationship DirectorColin manton – 07739 817913 [email protected] Relationship ManagersAngela Kirkland – 07834 946435 [email protected] Langridge – 07764 287887 [email protected] Simon – 07725 068737 [email protected] Directorhoward Bruce – 07764 287726 [email protected] ManagerStephen heywood – 07725 426460 [email protected] Managersmark Westcott – 07920 210553 [email protected] Elliott – 07764 287184 [email protected]

NORTh EASTSenior Manager Agriculturegeoff hall – 07836 249680 [email protected] Directorsfelicity hails – 07725 427923 [email protected] thornton – 07912 805688 [email protected] Managerstony Cornell – 07764 625064 [email protected] Danforth – 07766 423359 [email protected] Davies – 07725 427120 [email protected] redfearn – 07793 670459 [email protected]

EAST MIDLANDS AND SOuTh YORkShIRESenior Manager AgricultureSteve thomas – 07525 239513 [email protected] DirectorsSimon Sill – 07966 287412 [email protected] mcNeil – 07734 973057 [email protected]

Relationship Managersmike Buckby – 07793 670542 [email protected] franklin – 07793 670402 [email protected] oakley – 07725 068739 [email protected] Patchett – 07725 068745 [email protected] roper – 07901 104106 [email protected]

EAST ENgLANDSenior Manager AgriculturePaul Sullivan – 07801 472565 [email protected] Directorsmark Berry – 07860 318469 [email protected] West – 07764 625072 [email protected] Managersmike Churcher – 07793 670512 [email protected] Cook – 07702 749283 [email protected] Darling – 07585 981122 [email protected] Kay – 07725 068804 [email protected] Penford – 07725 068743 [email protected]

WALES AND BORDERSNorth Wales & BordersSenior Manager AgricultureJonathan Jenkins – 07802 321355 [email protected] Directormark Lord – 07767 207561 [email protected] ManagersJamie hollyhead – 07921 548502 [email protected] howell – 07841 490299 [email protected] mcgrath – 07793 670344 [email protected] Powis – 07921 548592 [email protected] Preece – 07725 068740 [email protected] Williams – 07793 670460 [email protected] Wales & BordersSenior Manager Agriculturegwilym francis – 07788 438780 [email protected]

Relationship Directorsgwyndaf Williams – 07793 670443 [email protected] thomas – 07841 741365 [email protected] ManagersWyn hinds – 07793 670442 [email protected] Jenkins – 07793 670441 [email protected] Lewis – 07921 548428 [email protected] morgan – 07764 287664 [email protected] richards – 07793 670440 [email protected] Sowerby – 07725 427460 [email protected]

SOuTh CENTRALSenior Manager AgriculturePaul Baker – 07595 125362 [email protected] DirectorsAndy Sheate – 07860 703245 [email protected] Blundell – 07771 815895 [email protected] ManagersJulian Arthurs – 07725 068734 [email protected] Baker – 07834 946095 [email protected] Brimble – 07725 068733 [email protected] fear – 07515 096943 [email protected] Stunt – 07834 946313 [email protected] Warren – 07764 287953 [email protected]

CENTRAL ENgLANDSenior Manager AgricultureCarl Woodwards – 07725 426551 [email protected] DirectorAlick Jones – 07771 886102 [email protected] ManagersLyndon Brown – 07793 670458 [email protected] Everest – 07900 706189 [email protected] humphrey – 07921 548458 [email protected] Phillips – 07793 670282 [email protected]

Neil richardson – 07901 512765 [email protected] unsworth – 07771 886093 [email protected]

SOuTh WESTDevon & SomersetSenior Manager Agriculturehumphrey richards – 07711 239667 [email protected] DirectorDavid fowler – 07802 655897 [email protected] ManagersSimon Abdilla – 07771 810223 [email protected] Baker – 07793 670715 [email protected] griffin – 07725 068731 [email protected] rowbottom – 07764 625730 [email protected] ruth – 07793 670319 [email protected] Wright – 07793 670253 [email protected] & CornwallSenior Manager AgricultureSteve thompson – 07710 663111 [email protected] Directormichael Johns – 07710 030553 [email protected] Managerstim Burston – 07841 780395 [email protected] Cox – 07793 670566 [email protected] Dyer – 07872 032390 [email protected] Pearce – 07764 288015 [email protected] Perry – 07595 123764 [email protected]

SOuTh EASTSenior Manager AgricultureSteve turner – 07801 472627 [email protected] DirectorSimon Collier – 07867 500912 [email protected] ManagersAlan Chilvers – 07725 068946 [email protected] marshall – 07739 817878 [email protected]


TWITTER @LLOYDSBANkBuSINESS LINkEDIN: LLOYDS BANk COMMERCIAL BANkINg

All lending is subject to a satisfactory credit assessment. there is always a possibility that interest rates may go down leaving a fixed rate loan at a higher level compared to a variable rate loan. however, if interest rates rise, a fixed rate loan will remain at the same rate.

Please contact us if you would like this information in an alternative format such as Braille, large print or audio.if you have a hearing or speech impairment you can use text relay (previously typetalk) or if you would prefer to use a textphone, please feel free to call us on 0845 601 6909 (lines open 7am-8pm, monday-friday and 9am-2pm Saturday).

Calls may be monitored or recorded.

Please note that any data sent via e-mail is not secure and could be read by others.

Lloyds Bank plc registered office: 25 gresham Street, London, EC2V 7hN. registered in England and Wales no. 2065. telephone: 0207 626 1500. Authorised by the Prudential

regulation Authority and regulated by the financial Conduct Authority and the Prudential regulation Authority under registration Number 119278. We subscribe to the Lending Code; copies of the Code can be obtained from www.lendingstandardsboard.org.uk. Lloyds Bank plc is covered by the financial Services Compensation Scheme and the financial ombudsman Service. (Please note that due to the schemes’ eligibility criteria not all Lloyds Bank business customers will be covered by these schemes.)

Asset finance, hire Purchase and Leasing facilities are provided by Lloyds Bank Commercial finance. Lloyds Bank Commercial finance is a trading name of Lloyds Bank Commercial finance Ltd. registered office: No.1, Brookhill Way, Banbury oX16 3EL. registered in England and Wales no.733011. When using these products and services your agreement will be with a Lloyds Banking group company whose terms and conditions will apply. Lloyds Bank Commercial finance Limited is part of Lloyds Banking group and is authorised and regulated by the financial Conduct Authority for activities relating to certain types of consumer credit and consumer hire which are regulated under the Consumer Credit Act 1974 and by the financial Services and markets Act 2000 and are not deposit takers and are not regulated by the Prudential regulation Authority. the provision of credit or leasing services by us is subject to your meeting our Credit approval. Please ensure that you only apply for credit or leasing services that you can comfortably afford.

the Lloyds Banking group includes companies using brands including Lloyds Bank, halifax and Bank of Scotland and their associated companies. more information on the Lloyds Banking group can be found at lloydsbankinggroup.com.


We understand how important it is to maintaina healthy cash fl ow when you’re investingin equipment for the year ahead.

Our Hire Purchase loans can help by allowing you tospread the payment over a period of up to 60 months.Plus, as an added incentive, all our rates have beenreduced by 1% for the life of the deal*, thanks tothe Funding for Lending Scheme.

To fi nd out how we can support your businesses,contact your local Agriculture Relationship Manager(found on page 15) or visit lloydsbank.com/fl ourish


FLOURISHWE’LL HELP YOU

WITH AFFORDABLE EQUIPMENT FINANCE

ARTWORKPROOF

2

InDesignFile Name

LBAGRI1_189209AP_1114Artworker’sName Mark Hendricks

Artwork Number

Workfl owNumber189209AP 145604 1 2

Job Name Supporting UK Business – Agricultural Advert 3

Brand Lloyds Bank – Commercial Banking 4

Stock Code Version DateLBAGRI1 5

× Page Count210

11

1pp

14

1pp297Finished

Page Size A4

ColoursPDF Proof

Date/TimeCMYK (Web) 14/11/14 – 11:4311


MONTH (MM)

EXPECTED

YEAR (YY)


8 9 7

6

10

PLEASE READ:Boxes that have a THICK outline will be automatically populated. DO NOT type anything into these boxes as this will break the automation.

*This o� er is only available to businesses with an annual turnover of up to £25m.

LBAGRI1_189209AP_1114.indd 1 14/11/2014 11:43LbLandscapeedn1(1114)

lb landscape final.pdf

Documents

notional rate

rate specifi

combusinessgross rate

contractual rate

farming sector

tax free rate

annual equivalent rate

business needs