Economics

Question 1

Describe main reasons for farming regulations?

Answer 1

Provide common framework in which to operate
Address concerns
Sets out what will happen if you stray

Question 2

Who regulates farming regulation?

Answer 2

EU - directive

National government

Question 3

What is cross compliance and why is it important?

Answer 3

Rules that farmers and landowners must follow if they wish to claim Basic Payment Scheme or Single Payment Scheme

Important to farmers because of Payment schemes. Many would not make a profit without them.

Question 4

What are farm assurance schemes?

Answer 4

Voluntary schemes. Encourages and monitors compliance with legal requirements and industry set standards

Question 5

Why were farm assurance schemes set up?

Answer 5

To increase consumer confidence in UK after a number of high profile scandals. Ensures retailers are keeping to certain production standards.

Question 6

3 examples of farm assurance schemes

Answer 6

Red tractor
Farm assured Welsh livestock
Universal food assurance scheme

Question 7

What does the red tractor logo mean?

Answer 7

Ensures products have met a certain technical assurance standard.
Standards complied throughout supply chain
Members are highly audited

Question 8

State 3 common breaches of U.K. farming regulation and outline actions taken

Answer 8

Food and feed law
Cattle ID registration
Nitrate vulnerable zones

Penalties will result in % reductions in payments
Can be up to 50% for repeat offenders
If knowingly repeated, whole Payment stopped
Bans may follow large breaches- potential jail time

Question 9

What is AHDB?
Explain funding?
Purpose?

Answer 9

Statutory levy board
Funded by farmers, growers and others in supply chain
Purpose? Make agriculture and horticulture industries more competitive and sustainable through factual evidence based advice, information and activity

Question 10

List divisions of AHDB

Answer 10

Beef and lamb
Potatoes
Horticulture
Pork
Dairy
Cereals and oil seeds

Question 11

Describe and explain key trends in consumer buying of animal products

Answer 11

Earnings increase, more spent on animal products
1.6% of home earnings spent on food and drink in 2015

Price is main driver of product choice. Rise of hard discounters- Lidl

Convenience foods rising- less time cooking

Increase in purchasing when consumer confidence is high

Question 12

Outline economics of U.K. Production

Dairy

Answer 12

21,000. Dairy holdings. Decreasing
88 cow herd avg
Dairy meets 100% liquid demand
Key determinant of profit is total cost of production 
( replacements, feed, labour)

Question 13

Outline economics of U.K. production

Beef

Answer 13

58,500 beef holdings. Decreasing
27 herd avg
40% less than ten
U.K. Produces most expensive beef in EU, at a high cost compared to oz and nz 
Price of beef has been rising

Question 14

Outline economics of U.K. production

Sheep

Answer 14

70,000 holdings. Increasing
229 flock avg

Price of lamb usually rises and falls throughout the year due to seasonal trends
Recently prices have stayed low as less households eating lamb

Question 15

Outline economics of U.K. production

Pigs

Answer 15

Breeding sows. 6,000 holdings, 68 sow avg. 57% less than 4
Fattening pigs. 9,600 holdings, 450 pigs avg

Many breeders retain ownership and fatten on contract units.
Increase in supply chain ownership (own abattoir and do own processing) Guarantee supply and don’t have to pay abattoir costs

Question 16

Reasons farmers keep livestock

Answer 16

Can be profitable
Enjoy lifestyle
Kept on land not suitable for ploughing
Can attract environmental and wildlife payments
Make use of grass in an arable rotation

Question 17

List factors that drive high performance and explain ways to achieve this

Answer 17

• focus on margins
• marketing channels (good prices)
• attention to details

How?
Risk management strategies
Manage staff- education and training
Business benchmarking- compare farms