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Rural APC 2024 > Agriculture > Flashcards

Agriculture Flashcards

1
Q

What are the fundamental economics of agriculture?

A

Ensuring that the farming of land remains viable and profitable as a business and maintaining the land in a way that it can produce optimum results through the use of inputs and machinery. Essentially, ensuring that yields are as high as possible and prices as high as can be obtained, whilst reducing fixed and variable costs to increase the profit margin.

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2
Q

What are the different types of soil?

A

Sand, clay, silt, loam, peat, chalk, limestone

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3
Q

What is the soil type in your area?

A

Heavy clayey chalky or limestone type soil. The soil generally has high pH levels and usually shallow with good drainage.

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4
Q

Why do we do a stock taking valuation?

A

This occurs at the end of the accounting period to identify and carry forward those costs incurred before that date but which will not give rise to income until a later period. By carrying forward those costs they can be matched with the income when it arises. Profit will be understated if stock is not brought in.

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5
Q

How would you undertake a stock taking valuation?

A

A stock taking valuation is undertaken on a costs of production basis or Net Realisable Value basis, whichever is lower. NRV is generally calculated as sale price minus costs of production. If no accurate cost figures are available, the stock take can be undertaken on the basis of deemed cost, which is where a percentage is removed from the Market Value, for example a 75% discount on crops.

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6
Q

What is the basis of value for a stock taking valuation?

A

Fair value less costs to sell or costs of production.

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7
Q

What guidance would you base a stock taking valuation on?

A

RICS Guidance Note – Farm Stock Taking Valuations
DEFRA Helpsheet HS232 Farm Stock Valuation (2022)

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8
Q

What is a gross margin?

A

A gross margin is a means of measuring the performance of a business enterprise. It considers the outputs and variable costs of the enterprise and produces a figure which can be compared with similar enterprises, known as benchmarking, or can be compared with results from previous years as a means of defining how well the enterprise is performing overtime.

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9
Q

What is included in a gross margin?

A

To obtain the overall output, you would calculate this by multiplying the yield by the price and then by the acreage. Then you would ascertain the variable costs, for seeds, fertilisers and sprays. Then the output minus the variable costs will give you the overall gross margin figure.

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10
Q

How would you submit your SFI/CSS application and on what form?

A

You would submit your SFI/CSS application on the RPA online system, through an RLE1 form if there are any changes to the land use from the previous year or if transferring entitlements. For the application, you would need an SBI (single business identifier) number, holding number, field sizes and corresponding land use codes and signed declaration.

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11
Q

What are the grants available under the Rural Development Programme for England?

A

There are few available grants now, but these include Mid and Higher tier CSS, wildlife offers, FiPL, woodland support and capital grants. BPS is being phased out by 2027 and you can no longer apply for it since May 2023. New ELMS schemes including SFI and LNRS are being trialled and introduced under the Agriculture Act 2020 and the Environment Act 2021.

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12
Q

What impact will Brexit have on the agriculture industry?

A

We will see a delinking of payments from a land occupation basis to a focus on the environment and creation of natural capital. All direct payments will be phased out to zero by 2028, over 7 years from 2021. Funding will then be on the basis of ‘public money for public goods’ and will be under a new scheme, called New Environmental Land Management Scheme, which will run from 2024 – 2027 and replace BPS and CSS funding.

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13
Q

What are the current prices for: wheat, barley, OSR?

A

March 2024
Wheat – milling - £228.60 per tonne
Wheat – feed - £161.25 per tonne
Barley – feed - £138.50 per tonne
OSR - £352.58 per tonne
Beans £236.42 per tonne

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14
Q

What is a typical rotation in your area?

A

WW, WW, OSR, SB (or WW), WW (or SB), OSR

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15
Q

Name me some land use codes for CSS?

A

PG01 – permanent grassland
NA02 – non-agricultural land
AB01 – agricultural building
TC01 – permanent crop

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16
Q

What are some of the most popular grants under CSS?

A

GS2 – low input permanent grassland
BE3 – Management of hedgerows
AB9 – winter bird food
SW1 – buffer strips for habitat corridors

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17
Q

What has happened to entitlements?

A

Entitlements are being phased out by 2024 and delinking payments will end in 2027. New SFI grants are being introduced however the uptake is slow.

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18
Q

What are the VAT rates for agricultural inputs and outputs?

A

VAT is applied to sprays and fertilisers but there is no VAT on seed, hay, straw and grain sales.

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19
Q

What are the British Standards for farm buildings?

A

Codes and Standards for Agricultural Buildings - BS 5502-22. They provide standards on design data and structure.

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20
Q

What is an NVZ?

A

Nitrate Vulnerable Zone. This is an area at risk from agricultural nitrate pollution so there are rules in place that apply to these areas, to include the storage of manure and use of fertiliser.

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21
Q

What is an EFA?

A

Ecological Focus Area. It is one of the three greening rules and is an area of land where farmers can carry out agricultural practice beneficial for the climate and environment. They are usually prohibited from using and plant protection products on these areas.

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22
Q

What is the price of a bale of straw?

A

Straw is usually worth £65 per tonne (baled). Hay is worth slightly more, £70 per tonne. Depends on area of UK

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23
Q

When can you cut hedges?

A

Between 1st September and 1st March.

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24
Q

What is an entitlement?

A

They are the means to collect payments under BPS and farmers should hold an entitlement for every hectare of eligible land that they claim under.

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25
Q

What is the average SFI payment rate?

A

£45 per acre however this is due to be increased after announcements at the Oxford Farming Conference in January 2024 and NFU conference in February 2024

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26
Q

What is the importance of break crops?

A

Break crops are used to aid soil diversity to reduce weed, pest and disease levels. They are used to reduce soil erosion and increase soil fertility and crop yield. Break crops are restorative in nature, compared to arable crops which are exhaustive, so they will fix nitrogen from the air into the organic compounds, which are released to the next crop by the residues of the break crops are incorporated into the soil (nitrogen fixing).

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27
Q

What are the timings for arable operations (and OSR) in a year?

A

Arable
September – ploughing
October – cultivations and drilling, rolling
November – weed control
March and April – fertiliser
May, June – fertiliser, herbicide, insecticide, foliar nitrogen
July – barley harvesting
August – wheat harvesting

OSR
August – cultivations, fertiliser, (direct) drilling, rolling
November – weed control
February – fertiliser
March – fertiliser
April – pest control/herbicide
May – slug pellet
June – pest control/herbicide
July – pre harvest treatments and harvest

28
Q

What are the main policy issues facing the agriculture industry?

A

Brexit - Agriculture Bill/Environmental Bill
Removal of chemicals used in pesticides/fungicides/herbicides from production
Shift towards diversification and biodiversity instead of food production

29
Q

Name some typical pests and diseases?

A

Pests – aphids, slugs, rabbits, birds, wireworms, cabbage stem flea beetle

Diseases – loose smut (seed borne), eyespot (stem based), mildew (foliar attack)

30
Q

What is the purpose of a stocktaking valuation?

A

To assess the value of closing stock at the end of an accounting period, to reflect on profits and losses and include in a balance sheet and financial statements for tax purposes. To also identify and carry forward costs that will not give rise to income until a later period.

31
Q

What is the role of chlorothalonil and of neonicotinoids?

A

Chlorothalonil is an ingredient in fungicide used to prevent ramularia leaf spot disease in barley and septoria in wheat, which has caused substantial yield losses. Many wheat varieties are becoming fully resistant to other fungicides and the cultural control options are limited for wheat. Chlorothalonil has been banned by 20 November 2019 and all chlorothalonil in store must be used by 20 May 2020. The removal of this fungicide means that the costs of production for wheat will increase.

Neonicotinoids is used in pesticides, of which three types of neonicotinoid containing pesticide were banned by the EU in 2018, due to its threat to pollinators such as bees. There are no sustainable alternatives for sugar beet, so yields are lowered as a result of its removal and there is an increase in virus yellow. In barley, there is an increase in yellow dwarf virus and in oil seed rape, this has been impacted the most with cabbage stem flea beetle being a prevalent pest.

32
Q

What is meant by minimum tillage?

A

Minimum tillage is used where the soil is generally in a good condition, is drier and well structured. It aims to minimise soil manipulation and does not turn the soil over. It generally allows farmers to reduce costs in the form of savings of time and machinery. There are fewer or faster cultivation passes at a shallower depth than normal ploughing. Alternatively, cultivations can be avoided by direct drilling. This method of tillage can reduce soil erosion, nitrate leaching and fuel use, increased soil organic matter and improved soil structure.

33
Q

What are the different farming structures available? And the benefits of each?

A

Contract Farming Agreement
Landowner provides land, buildings and bank account, contractor provides labour, power and machinery.
The contractor farms more land without having to buy it or enter into a tenancy agreement, both of which may require higher levels of working and long-term capital and risk. The contractor can increase his or her income if the agreement incentivises the contractor to be as efficient as possible. The contractor should, like the farmer, benefit from economies of scale by spreading machinery and labour over a larger area of land.
The farmer can reduce the amount of physical farm work done and the amount of working capital, for machinery and labour. The farmer can ease back from the requirements of running a farm business by bringing in a third party with modern machinery. CFAs can also be attractive to new farmers who have invested in farmland but have little farming experience. The farmer remains in occupation of the farm, and so can enjoy living there and the benefits of the farming lifestyle. The agreement does not create a tenancy over the land or a partnership with the contractor, and so the farmer keeps the benefits of being a trading farmer. Any income that he or she receives from the agreement is amalgamated with any other farming activities. The agreement should generate higher and more stable income than in-hand farming as the farmer benefits from the contractor’s lower labour and machinery costs, and their experience and expertise. The agreement should also incentivise the contractor to be as efficient as possible. Compared with a tenancy, the farmer has more control over farming practices that could lead to weed or pest problems, such as blackgrass and potato cyst nematode.
The contractor receives a fixed/guaranteed payment from the contract account called the contractor’s charge, often quarterly or half yearly, to cover some of his working costs. Following the sale of the crop and receipt of all income due, the balance left in the account, called the net margin, is split between the two parties according to the terms of the agreement. The farmer usually receives a payment first, called the farmer’s retention. Any remainder, often called the divisible surplus, is then split according to an agreed formula; agreements can include second and third splits, which are used to reduce or balance risk when crop markets or profitability are volatile.

Share Farming
Joint venture between two parties/businesses. The share owner provides land, buildings and fixed equipment. The share farmer will provide labour, fuel, machinery and expertise. There is no guarantee to income and both parties take full commercial risk. However the input costs and output revenue are shared by the parties. The share owner will benefit because they retain occupation and management control and the venture is tax efficient. The share farmer will benefit because they have access to land with a lower capital requirement, providing them with better economies of scale and shared operational risk.

Joint Venture
Where two farmers pool labour and machinery, to form a LLP or LTD enterprise. They will offer a contracting service to the parent business and benefit from contract farming enterprises. The benefits of this are the economies of scale, reduction of fixed costs, technical efficiency and introduction of new opportunities.

Collaboration Agreement
This is efficient as two parties can share resources over a large acreage and not be required to form a separate entity.

Stubble to Stubble Agreement
This is where a contractor carries out work for a landowner, who will retain control and owns the crop. The landowner is responsible for inputs and therefore bears the greatest risk. There is no profit share on the sale of crops so the contractor charge is generally higher than usual.

Cropping Licence
This agreement is for use where a landowner intends to give a grower permission to enter land specifically for the purposes of growing and harvesting one crop, without ever taking possession of the land.

34
Q

Why would you use a contract farming agreement?

A

Maintain active farmer status (CGT, entrepreneurs’ relief, IHT APR & BPR, VAT Trading Business), gain skills and knowledge from contractor, efficient use of land and buildings, incentive for contractor to improve results, average higher returns than from an FBT.

35
Q

what are the regulations for ploughing up permanent pasture?

A

An EIA is required if you would like to do anything which is uncultivated or semi-natural. Nothing to do with the RPA definition of permanent grassland.
Uncultivated land – land that hasn’t been cultivated in last 15 years by physical or chemical means.
Semi-natural land – includes priority habitats, heritage or archaeological features or protected landscape.
If either, you must apply to Natural England for a screening decision to determine is an EIA is required.

36
Q

What are the types/varieties of wheat?

A

Flour (hard wheat = better quality), soft wheat (biscuits), milling wheat, feed wheat.

37
Q

What are the typical field operations in your area for a wheat crop?

A

Winter wheat crop:
September – ploughing
October – cultivations and drilling
November – weed and aphid control
March – fertiliser top-dressing
April – fertiliser top dressing
April – weed control
May – weed and disease control
June – disease control
August – winter wheat harvesting

38
Q

What are the threats to yields for second wheat crops?

A

There is a lot of pressure when growing second wheat crops to maximise yields, given the symptoms of take-all fungal root disease include mild winters/hot summers, previous wheat crop residue and early drilling of the previous wheat crop. Take-all will show through blackened roots and white patches in the cereal. It will survive over the summer on the residues of previous cereals and is highest after wheat/barley.

39
Q

What is the difference between residual and contact fertiliser?

A

Liquid fertiliser - offers cost savings once the necessary system is in place, which can be expensive to put tanks and bunds in to store this safely. It’s easier to handle and apply, requiring less storage space and heavy lifting, significantly reducing labour costs. It also removes the risk of variance that comes with solid fertilisers; liquid fertiliser is homogenous, each drop having the exact chemical composition needed, which has a positive financial effect. The application of liquid fertiliser can be blended with crop protection products.

Granular fertiliser - Easier to store. Slow-release granules help feed crops longer into the season. Cheaper in bulk, easier to store (does not “settle out” over time or “salt out” in cold weather), more efficient for heavy pre-plant applications, slow-release options (polymer-coated urea).

40
Q

What are the rules for greening?

A
  1. 3 crop rule – where over 30 hectares is farmed, the farmer should have planted a minimum of 3 different crops, with no 2 crops covering less than 75% of the claimed area and the 3 crops covering no less than 95% of the area. (2 crop rule applies to where 10-30 hectares is claimed)
  2. Ecological Focus Areas – if the farmer has over 15 hectares of arable land, they must have 5% of this in an EFA, by way of buffer strips, field margins, hedges and trees in a line, catch and cover crops, nitrogen fixing crops.
  3. Permanent grassland – if there is a fall in over 5% of permanent grassland recorded, the farmer may be asked to reinstate this.
41
Q

What is outlined in the Agriculture Act 2020?

A

The Agriculture Act 2020 sets out policy framework for farmers and landowners and provides mechanisms for government to change the existing rules. It primarily establishes a system of public money for public goods. It confirms that direct payments will be phased out over a seven year period to 2028 and that payments will be delinked from farming and will be based on natural capital valuation approach. It confirmed the establishment of the New Environmental Land Management Scheme, which will be rolled out between 2025 – 2027.
The Agriculture Act also outlines changes to AHA tenancies including the removal of the commercial unit test by September 2024 and the minimum retirement age removed.

42
Q

What is outlined in the Environment Act 2021?

A

The Environment Act 2021 puts the government’s 25 year environment plan on a statutory footing and introduces the establishment of the Office for Environmental Protection (governing body) to uphold the standards and take action. It has set out clearly several statutory environmental principles to guide policy making and tackle the biggest environmental issues.

43
Q

What is the concept of natural capital?

A

Natural capital can be defined as the world’s stocks of natural assets which include geology, soil, air, water and all living things. It is from this natural capital that humans derive a wide range of services, often called ecosystem services, which make human life possible.

44
Q

What is meant by biodiversity net gain?

A

Biodiversity net gain is an approach to development which aims to leave the natural environment in a measurably better state than beforehand.

45
Q

What is the purpose of plant growth regulators/trace elements?

A

Plant growth regulators assist with the crop physiology, used in cereal crops to increase straw strength and shorten height, to prevent lodging.

Trace elements provide micronutrients to crops to assist with plan growth.

46
Q

What is the purpose of herbicide/fungicide/insecticide/molluscicide?

A

Herbicide – weeds
Fungicide – disease
Insecticide – pests
Molluscicides - slugs

47
Q

What different ingredients of fertiliser are there?

A

Nitrogen, phosphorus, potassium, magnesium and sulphur.

48
Q

What price per tonne premium would you expect for milling barley/wheat?

A

Wheat - £155 per tonne premium
Barley - £240 per tonne premium

49
Q

What is a gross margin?

A

It is a calculation of the profitability of a business, based on the variable costs, yield, price paid for the crop, all calculated on the basis of the land area.

50
Q

Name some break crops?

A

Maize, peas, beans, OSR.

51
Q

What is blackgrass and its control methods?

A

Blackgrass is a weed that has arisen as a result of herbicide resistance to autumn sown crops, primarily winter wheat. It germinates between August and October and thrives on heavy land where there is poor drainage. It is useful to grow competitive spring sown crops to outcompete weeds, such as spring barley.

There are no new chemicals being brought to the market to assist in chemical control of blackgrass, so there is reliance on cultural control. These include: delayed drilling (late autumn – to control weed seedlings before sowing and the use of residual pre emergence herbicides in later drilled crops, when soil conditions are better), growing competitive crops, fallowing, grass ley breaks, spring cropping (to balance the rotation), higher seed rates (to prevent seed return and spread of resistant seeds), ploughing (to bury blackgrass seeds).

52
Q

What is a variety of each of WW, SB and OSR?

A

WW – Skyfall, Crusoe, Moulton, Santiago
WB – Maris Otter
OSR – Elgar, Flamingo
SB – Sassy, Propino

53
Q

What is the purpose of crop walking?

A

Crop walking is an essential part of an agronomist’s job. It is important to understand how the crop is faring against disease, weeds and pests and what its requirements are for further growth and when the next application may be made and what ingredients/nutrients it should consist of.

54
Q

What is regenerative farming?

A

Regenerative Agriculture describes farming and grazing practices that, among other benefits, reverse climate change by rebuilding soil organic matter and restoring degraded soil biodiversity – resulting in both carbon drawdown and improving the water cycle

55
Q

What equipment might reasonably be required on a dairy farm?

A

Cubicles, covered yard, silage pit, slurry lagoon, water supply, milking parlour, fencing, gates, dutch barn, machinery shed, concrete hardstanding for loafing, transport equipment

56
Q

What is an average year for a shepherd?

A

November – tupping
April/May – lambing
Then care of newborn and orphan lambs. Fatting store lambs for market, worming, fly spraying, weighing, shearing, dipping, dagging, regular checks are daily activities.
Market June/July.

57
Q

What is the current farm gate milk price?

A

0.37.6p per litre current price.

58
Q

When you are advising a client what term would you advise for an FBT tenancy and what factors would influence the term?

A

Depends on if there is an existing relationship with the landlord and the intended use of the farm.
6 year term for a new tenant – 1 year to get to know the farm and 5 years for a stewardship agreement clause. Break clause at year 3.
If an existing relationship, 15 year term with break clauses at years 5 and 10

59
Q

What are the typical FBT rents in your area?

A

£92 for pasture and £120 for arable

60
Q

Can you explain to me the changes in countryside stewardship?

A

Increased rates, deadline extending to end of summer this year. Talk on bringing CSS inline with SFI payments.

61
Q

What is organic farming?

A

Farming system avoids the use of synthetic fertilisers and the principles are based around nourishing plants naturally by building fertile soils. Organically farmed areas represent 2.9% of the total farmed area in the UK. Can also receive higher payment rates through CSS.

62
Q

How long is the transition period to organic farming?

A

Usually takes 2 years but depends on the farm.

63
Q

Can you talk me through a gross margin of winter barley?

A

Gross margin is your yield less seed, fertiliser and spay (fixed costs are not included). Gross margin comes out at approx:

64
Q

What is the difference between organic farming and regenerative agriculture?

A

Regenerative agriculture is based around observable improvement to ecological and social function of the farm, organic farming is more about a set of rules to follow which are mostly things not to do. i.e. don’t use synthetic pesticides. They both have the goal of improve soil health overtime.

65
Q

Can you provide me with three options and payment for CSS?

A

GS2 – low input permanent grassland - £151 per hectare
BE3 – Management of hedgerows - £13 per 100m
SW1 – buffer strips for habitat corridors - £515 per hectare

66
Q

Can you provide me with one current or pending grant, besides SFI that provides significant opportunity for one of your clients?

A

FiPL
Farming Equipment and Technology Fund

Rural APC 2024 (6 decks)

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