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.”

Attached is a copy of the Report’s Executive Summary for more information. Full copies of the report are available in PDF format at www.foodanddrinkskills.co.uk

Project Information

The Welsh Food and Drink Skills Project

The Welsh Food and Drink Skills Project (FDSC) aims to make sure the Welsh food and drink industry is equipped with the skills needed to meet the challenges of the next ten years.

Working with employees, employers and training providers we aim to identify current and future training needs to ensure courses are developed to help businesses and the Welsh food and drink industry be as efficient and effective as possible.

The Welsh Food and Drink Skills Project is supported by the Welsh Government Sector Priorities Fund Pilot (SPFP) programme that also receives additional support from European Social Fund (ESF) and aims to ensure post-16 training is more responsive to, and aligned with, the future needs of employers.

The project is run by a Sector Skills Council (SSC) Steering Group who are:

Lantra Primary production including agriculture, production horticulture, aquaculture, on-farm processing and retail

Improve – All areas of food and drink manufacturing and processing

People 1st All areas of hospitality and tourism allied to food tourism and local sourcing

Skillsmart Retail – Food and drink retail.

Conclusions and Recommendations

The FDSC is important to the Welsh economy, but it needs to add more value to compete with the rest of the UK. This will include taking advantage of the opportunities offered through a whole supply chain approach, considering where transferable skills exist and where joint initiatives on training and business development can either be identified from existing provision or through bespoke development.

Ensuring that the Welsh workforce has the necessary skills to drive the FDSC forward is the responsibility of the SSCs and this research provides a robust evidence base from which they can develop strategies and secure the necessary funding needed to achieve this aim.

Considering the FDSC as a whole, there are two main sources of cross-sectoral skills needs:

o Where skills are common to more than one sector for example, customer service, sales and merchandising or butchery skills

o Where individual businesses have diversified into another sector and so have developed additional skills needs as a result.

Based on the research findings set out in the Welsh Food & Drink Skills Project report, the following five key recommendations are suggested:

1. Raise awareness and develop understanding of cross-sectoral skills in the FDSC

2. Increase the profile and understanding of the FDSC as a potential career

3. Develop a greater understanding of non-accredited training

4. Improve links between education and industry

5. Enhance conditions which enable cross-sectoral business to take place

Skills gap identified per sector

Primary Production

Business skills, such as:

– Negotiating with contractors

– Understanding your customer and products

– Understanding costing and pricing

– Understanding and taking part in basic accounting and record keeping.

Sales and marketing skills such as:

– Product presentation

– Branding

– Promotion and PR.

Other key skill needs included operating and maintaining equipment and the need for information on the development of renewable energy.

Manufacturing

Sales and merchandising / retail skills are becoming important in particular understanding the customer and branding / marketing / retail presentation of products

Food safety legislation is driving skills needs in particular, more food technologists are needed

Business and management skills in particular, process control skills such as lean management, stock control and the management of information

Environmental awareness.

Hospitality

Sales and merchandising skills are one of the sector’s key skill needs restaurateurs feel that selling the story behind the food and using local or seasonal goods are important to meet consumer demand

Environmental awareness and waste awareness are also important skills

People management is an essential skill for many hospitality providers.

Retail

Sales and merchandising including:

– Electronic point of sale (EPOS)

– Online retailing and database management

– Marketing awareness and pricing strategies

– Retail presentation skills for example product ranges, product displays and store layout.

Environmental awareness and waste awareness are also important skills.