The Five Cs: key ingredients for long-term strategic planning
The Covid-19 crisis is spurring many estates to reassess their long-term strategic plans. Knight Frank’s Head of Agri Consultancy Tom Heathcote highlights five themes that should play a key role in future thinking
6 minutes to read
It was Winston Churchill who coined the phrase never let a good crisis go to waste, and the results of our Rural Sentiment Survey show a number of rural businesses have used the time forced upon them by the current pandemic to consider the best way forward.
Of course, every estate or farm is different and I can’t offer a simple blueprint that guarantees a successful future for any one business. For some it may be diversification – although Covid-19 has shown the danger of over-reliance on certain income streams – for others it might be doing more of what you already do.
But there are five underlying themes, which we have named the ‘Five Cs’ – Carbon, (Natural) Capital, Community, Communication and Cooperation – that I believe all businesses should consider incorporating into their future plans.
It's worth remembering that even before Covid-19 struck, our industry was facing significant upheaval. Brexit, climate change and shifting consumer trends, albeit operating on slightly different timetables, but each with the power to disrupt or even destroy existing business models, should have been top of mind for all farms and estates. If they’ve somehow slipped down the agenda, now is the time to focus on them.
Some of our Five Cs will undoubtedly overlap. When you think about Carbon, for example, (Natural) Capital won’t be far behind. Likewise, cooperation, community and communication will often be closely linked. And some will obviously be more relevant to some businesses than others, but taking the time to consider each in turn will help create your own road map and inform decision making.
I have also curated a selection of articles with the help of my colleagues that add some flavour to the concept of the Five Cs. From a future with meat but no animals, to an interview with the Estate Director at Blenheim, which has created its own forward-thinking five-point plan, I hope you find the articles useful and thought provoking.
This is arguably the most esoteric of our Five Cs. But this one element is likely to have more impact on the long-term future of farming than anything else, so I thought it was important to include it. As Andrew Shirley discusses with Dieter Helm at the beginning of this report, reducing carbon emissions and increasing sequestration is already underpinning government policy.
The effect of this on how we manage land will only grow in significance, particularly as it will underpin new additional streams of income. But better carbon management, in my view, should be at the heart of any land-based business regardless of climate change policy and support payments. Retaining soil carbon is critical to productivity, one of the reasons I am passionate about regenerative agriculture, which we look at in one of our focus articles.
This is one of the topics of the moment. A lot of my clients are talking about it – and the figures bandied about are huge. The ONS reckons the UK’s stock of natural capital is worth around £1 trillion – but how to make your own natural capital work harder is not always clear. The first step is to work out and measure what you have already. You can’t sell something that you’re not aware you have in the first place. Some schemes will reward you for producing more natural capital, by increasing the carbon content of your soil for example, so you need to know your starting point. The next step is to identify a market. In some cases, such as bio-diversity offsetting and the Woodland Carbon Scheme, markets already exist. But in other cases, like using your woodland to deliver mental health benefits, the markets could be less clearly signposted. Building better community links as discussed in point 04, will be extremely helpful.
Many of the biggest benefits and potential income streams from the enhanced use of natural capital will come at the landscape level. A group of farmers and estate owners will be able to deliver more substantial outcomes by working together, whether that’s habitat protection or flood mitigation, than on their own. I foresee that an increasing proportion of the money the government assigns to environmental measures will be targeted at these kind of cooperative schemes. First, because the results will be easier to communicate (and the costs easier to justify) to the public. And second, because they will be much simpler to administer. Those in the farming sector are renowned for their independence, but post-Brexit working more closely together will become increasingly important.
Many estates or other rural land owners have been at the hearts of their communities for generations and many have used the Covid-19 crisis to strengthen those links even further, but the ‘public goods for public money’ mantra that will underpin much of the future financial support for agriculture can only increase scrutiny of what happens in the countryside. It wasn’t long ago that some commentators, daring to dream that the UK would fall en-masse under the spell of Jeremy Corbyn’s vision of a socialist revival, were publicly talking about the nationalisation of property that didn’t fulfil certain ideals. That moment has passed for now, but who is to say it won’t return – we live in strange times. But that aside, I can’t think of any business that regrets getting more involved with its local community. Open Farm Sunday, for example, has contributed immensely to the public’s understanding of what goes on beyond the farm gate. Read our article on the Blenheim Estate on to see some of the benefits in action.
From my experience poor communication is at the root of many of the issues that plague rural businesses. I’m not talking about failing to get to grips with social media, which we look at on page 42, but something more intrinsic. Many of the landlord-tenant disputes that our Rural Asset Management team deals with come down to people not speaking to each other. Succession is often another crunch point that could be more easily dealt with if the parties involved talked more openly together. Consider your business as being at the centre of a web linking it to suppliers, customers, tenants, lenders, advisors, stakeholders and other interested parties. Which of those links could work more efficiently, saving you time and often money? But from a wider industry perspective the most important conversation we need to have over the coming years is with the public. Food production is at a crossroads and if we are going to ask the consumer to buy British we need to present a compelling case.