Lack of business skills taxing the agri sector in Wales

A newly published report on skills in the food and drink industry in Wales, including the agricultural sector, has demonstrated that deficiencies in skills relating to business management and accounting has led to a skills gap opening up in the sector.

During the interview stages leading up to the reports publication, a number of the reports participants commented that the lack of general business administration and business management skills, in particular dealing with tax, was having a detrimental effect on the sector as a whole and will lead to greater skills gaps in the future.

The report’s findings found that farmers in particular were susceptible to creating skills gaps in their businesses because of a tendency to create a division between farming activity and the business end of running a farm. This division leads to poor administrative skills with some unaware of the dramatic effects pricing has on their businesses or the level of pricing they need to achieve on their stocks to cover overall costs and overheads. Problems were found to be exacerbated due to lack of succession plans meaning that the future generations of farmers’ weren’t being brought up to speed regarding the business activities and management of their farms.

Findings from the report did note that primary producers were one of the most proactive industries, within the food and drink supply chain, in developing diversification streams with 36% of businesses noting a second business activity. As well as diversifying into hospitality, such as opening farm b&bs, another increasing avenue for diversification was into renewable energies with 1 in 10 producers noting a diversification activity on their farms.

The report, Delivering Skills for the Future Growth 2011 is the collaborative report brought together by The Welsh Food and Drink Skills Project, which surveyed over 2,000 businesses across Wales. The project brings together the four Sector Skills Councils including Lantra, Improve, People 1st and Skillsmart Retail, who have overall responsibility for skills within the food and drink sector to ensure that the Welsh food and drink industry is equipped with the skills needed to meet the challenges of the next ten years.

Other skills gaps in the sector include the need for better understanding around consumer demands – around how to better package, market and brand products. Having a better understanding of marketing and branding would in turn lead to better products, better returns on investment as well as future potential to diversify.

Further still, with greater outsourcing taking place in the industry, newer skills such as contract management and improved negotiation skills are more important than ever in the industry.

Currently the food and drink sector in Wales employs approximately 230,000 people in Wales, with over 57,000 involved in the primary production stage of the food chain.

With agricultural courses taking up the top three slots in the most popular primary production FE courses in Wales, the report highlights the need to include a greater understanding of the business management side of farming into future training needs.

Kevin Thomas, Wales National Director of Lantra, "The report notes a number of positives however tackling these core issues will ensure that the sector will be fighting fit as we weather these harsh economic times. The importance of the sector has been highlighted by the Welsh Government’s recognition of Food and Farming as a priority sector in the Welsh Government Economic Renewal Policy and our aim is to ensure that the sector’s training needs are met and that Wales over the forthcoming 10 years are sector leaders throughout the UK."