How to be the best: top 5 traits of high-performing farming businesses
In today's rapidly evolving agricultural landscape, it is becoming increasingly evident that profitable farming businesses are not only economically robust but also play a crucial role in environmental sustainability.
3 minutes to read
High-performing farms are best positioned to weather market volatility, invest in environmental conservation and adopt a strategic, purpose-led approach to estate management and food production.
According to Defra's Farm Business Survey, farms performing in the top 25% financially boast net margins ranging from 25% to 30%, regardless of farm size. These thriving businesses also receive greater agri-environmental payments compared to their counterparts in the bottom 25%, who often face losses and lower income from environmental schemes.
To shed light on the factors that set these high-performing farming businesses apart, Knight Frank's Agri-Consultancy team, Simon Britton and Andrew Martin, share valuable insights and key traits exhibited by the most successful farms in this year's Rural Report. These five defining features ensure farms remain profitable, environmentally conscious and adaptable to market changes.
1. Attention to Detail
At the core of every high-performing farm lies an unwavering attention to detail. Farms in the top 25% understand that success in farm management hinges on meticulously examining every aspect of their operations.
"They challenge everything they do and do not take anything for granted," says Simon Britton. By scrutinising even the smallest details, these farms can optimise their processes and enhance overall efficiency.
Instead of focusing on monumental changes, they recognise the power of making incremental adjustments across various aspects of their business, which collectively lead to significant improvements.
2. People Management
A high-performing farming business recognises that its workforce is its most valuable asset. Adopting a proactive, inclusive, and communicative approach to people management fosters a highly motivated and focused workforce.
"Surround yourself with the best people," advises Andrew Martin. This means not only hiring talented individuals but also investing in their growth through upskilling opportunities.
Empowering employees by involving them in decision-making and maintaining regular communication with advisors and team members further strengthens the business. The result is improved retention, recruitment and staff performance, creating a positive and conducive work environment.
3. Open-Minded
Embracing an open-minded approach is vital for top-performing farming businesses. They actively explore new ideas, conduct research and are willing to try innovative methods.
Engaging with peers who challenge and expand their thinking is also common among these successful farms. "Non-traditional communication channels, such as social media and messaging apps, are being used by top-flight farms, but it's also about regular communication and open-mindedness," notes Britton.
This willingness to adapt and evolve positions them to thrive in a rapidly changing agricultural landscape.
4. Financial Awareness
High-performing businesses have a deep understanding of their financial standing and objectives. They benchmark their performance internally and externally, maintain management accounts and budgets and are well aware of their cost of production.
"It was hard trying to take an arable farm producing good yields to one achieving excellent yields," Martin recalls, drawing on personal experience. Understanding the financial structure of his business helped him make informed decisions, such as reducing inputs and experimenting with different wheat varieties.
This focus on financial awareness ensures that the farm remains profitable and can sustainably invest in its infrastructure and environmental initiatives.
5. Market Understanding
Knowledge of the markets they serve is another defining trait of top-performing farms. They not only understand the dynamics of the markets they produce for but also comprehend how those markets impact their business.
This awareness enables them to make informed marketing decisions and optimise their margins. "It's about knowing how these markets will affect margins and then the impact on your marketing decisions," emphasises Martin.
By staying attuned to market trends and consumer demands, these farms can proactively adapt their strategies to maintain their competitive edge.
Download The Rural Report 2023/24
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