CCA board April 2011 - Collison Associates

CCA board April 2011 - Collison Associates

Meeting the Demand for Skills in the Agri-food Sector in 2025 RAU IAgrM Management Leadership Development 29th February 2016 Martin Collison Background Research with Lincolnshire agri-food companies (2015) & young people in Norfolk (2015), plus RNAA careers report (2016) UK Agritech Strategy (2013) Edge Careers project development (2012) HEFCE review of Land Based Studies (2007) ADER project (2000-08) farmer programme 4,500 farmers Multiple EU bids for skills & knowledge transfer projects 28 years in agricultural education now lecture at the National

Centre for Food Manufacturing (University of Lincoln) A lifetime in agriculture & the supply chain Demand for staff Demographic challenge of less young people Economic growth means demand in other sectors growing STEM skills in demand in many other sectors Unknown: future immigration which has met needs for 15+yrs Forecasts (2012-22): Agriculture demand 97,000new recruits

Food manufacturing 109,000new recruits There is debate about the numbers & levels needed, but overall: The types of skills we need more of are in short supply We have to focus on upskilling the existing workforce Many jobs already cross sector boundaries this will increase Professor Sir John Beddington alerted us to the Perfect Storm Notice this says food not agriculture Increased demand 45% by 2030 (IEA) Energy

1. Increasing population Climate Change 2. Increasing urbanisation 3. The rightful goal to alleviate poverty 4. Climate Change Putting food security into context

Food Water Increased demand 50% by 2030 Increased demand 30% by 2030 (FAO) (IFPRI) Importance of Food in the UK Economy Defra (2014) Agriculture in the UK 2013

The Inverted Iceberg Food sector GVA 102bn Catering 26.3% Food Retail 27.3% Approximately For Every 1 of GVA in agriculture there is: Food wholesale 9.5% A further 4 in food processing, logistics and supply industries Input suppliers 3.5%

& Agriculture & fishing 9.6% A further 5 in food retail & catering Food processing 23.7% Food is: the UKs largest manufacturing and retail sector long term post farm gate & input GVA has been growing faster than farming important in other sectors e.g. over 1/3rd of tourism spending is on food & drink Modern Efficient Production: Yield is Critical

- we have fed the World by increasing yield Factor Population Bn Crop area MHa Average Yield t/ha Output million tonnes 1990 5.27 601 3.0 1,803 2000 6.06 587

3.3 1,941 2010 6.89 618 3.8 2,379 20 year trend +31% +3% +28% +32% Sample of crops: Barley, Maize, Oilseed Rape, Rice & Wheat (FAO 2011)

Skills & new technology are the key to being able to deliver more food without destroying the environment Waste reduction & technical efficiency will be essential Young People bridging the gap Industry surveys and meetings routinely report a problem in promoting the industry as a sexy career to young people But my experience is young people are interested but feel disengaged from the industry Agriculture & food processing turn them off . feeding the World, protecting nature, addressing waste & health attract them . Young peoples views Prof Tim ORiordan (UEA) & I ran workshops with 112 young

people on how to meet the food challenge: 3 secondary schools (ages 12-15); VIth formers; BSc geography & science students at UEA; Young Farmers These workshops discussed The Beddington perfect storm challenge 4 ways to address the food challenge (produce more, reduce waste, eat less, change diets) & asked them to rank potential strategies & tactics Results Across all the groups of young people there was a broad consensus that the easiest & most important issue to address first is food waste (scored 3.28 on a 1-4 scale) The three other methods scored much lower: 2nd Produce more food scored 2.44 3rd Change diet scored 2.29

4th Eat less scored 1.99 Other Feedback We asked the young people some overarching questions: The need to preserve wildlife (3.49) scored the most highly of any issue raised supported by a feeling that it was their personal responsibility to act on sustainable food supply (3.39) In contrast there was real scepticism about governments ability to address the challenge of sustainable food production (2.11) Conclusions young people: Wanted to know more about food production Shocked at the scale of food waste & wanted action Sceptical about our ability to get consumers to change their diets or to eat less

Supported the use of new technology to address waste & the food production challenge Had a keen sense of personal responsibility for bio-diversity but were cynical about government So what skills will be needed in agriculture & food in 2025? We will still need agronomy, husbandry, farm management etc. but new business critical areas are emerging 6 Mega Trends in Skill Needs Martins prediction We have

eliminated boom and bust Mega Trend 1: Managing Volatility More volatility is already with us: Product prices feed wheat between 65-200/tonne since 2007 Input costs oil between $35-140/barrel since 2007 $28-140/barrel The 25 year post cold war geo-political stability is breaking down Arab Spring, Radical Islam, Ukraine, Terrorism Is the European Economic project ending Grexit or Brexit? Management skills to manage risk will increase in importance in every area of agriculture, food & ancillary industries Product

Consumption g/person/week 2013 Milk & cream % change in 6 % change in 20 years (2007-2013) years (1987-07) 1,847 -7

-14 Meat 948 -8 -1 Fish 146 -12

+13 Eggs (number) 1.8 +12 -45 Fats and oils 171 -5

-36 Vegetables 1,102 -3 -4 Fruit 1,114 -13

+45 128 -1 -7 1,664 -1 +275 Confectionery Soft drinks (ml)

Source: DEFRA Family Food series Diets in China More importantly for supply & demand, diets in the developing World have been changing rapidly due to rising wealth Product % change in per capita consumption 1980-2010 Urban China Rural China Meat +31%

+172% Poultry +345% +1,568% Eggs +70% +540% . but consumption is still lower than in the UK Source: Zhangyue Zhou, Weiming Tian, Jimin Wang, Hongbo Liu and Lijuan Cao (2012), Food Consumption Trends in China April 2012, Australian Government

Department of Agriculture, Fisheries and Forestry Where will our food choices go next? Culture Taste Health Convenience Premium & niche or basic Local or global

If you know the answer supermarkets & food processors would like to employ you.. ! Mega Trend 2: Marketing growing in importance More mouths increase food demand but changes in diet driven by health, wealth & cultural trends are as important Rising global wealth will have a massive impact on the food & drink consumers want to buy & how they want to consume it Skills will be needed in being able to: Spot trends in diet & respond with new profitable products Explore the potential in export markets we are a high cost premium producer & so rising global wealth must be exploited Marketing selling

UEA CSERGE research: Changes in farm incomes due to climate change - show differences between: SE lowlands increased temperatures & less rainfall lead to reductions in income (red) Upland areas react to the same environmental changes by boosting productivity and hence incomes (green) It is not just extreme locations which climate change will effect Climate change biggest threat is more extremes Historically, what was a 1 in 700 year event is now a 1 in 7-10 year event (Hansen et al, 2012) (from Prof Tim Benton)

Mega Trend 3: Climate Change Climate change will affect us all and the distribution of crops and livestock will change . extremes are the big worry The impact in the UK will be less than in many other countries Skills in managing extreme weather will become important: Technology to manage extremes e.g. heat resistant genes More protected cropping & managed livestock environments New pests & diseases Water efficiency management & flooding Water supply Latest research suggests in East of England by 2050: Winter rainfall up 14% Summer rainfall down 17% UK potato production only uses 29% of the water per tonne of the

global average, cereals circa 35% Globally: 75% of fresh water abstractions used for agriculture 30% increase in water demand by 2030 47% of global population in water stressed areas by 2030 Also think about flooding - flooding spring 2014 Long Term Challenge - Global Why is this important to the UK because we have progressively imported more of the manufactured goods, services and food we consume from water stressed parts of the World long term will this be possible or morally defensible? Mega Trend 4: Water

More focus on water management, both water supply & how to cope with flooding will be essential globally we will run out of water before food . Skills for water management are needed in: Water efficiency on farms Making the case for UK water efficient production Soil management to manage flood & water holding capacity The technology to manage water efficiently including equipment, sensors, control systems, closed systems New genetics for drought & flood tolerance Water recycling Technology We are all getting accustomed to GPS guidance, telematics . Rio Tinto says the self-drive fleet have

superior fuel usage, tyre life and maintenance costs BBC News 19th Nov 2014 Garford Robocrop robotic weeders, made in Lincolnshire, can weed between individual plants But, what about: Graphene 3D printing Urban, enclosed farming systems or lab grown meat? Technology is coming to a field near you Sensors collected more data in 2 years than in the history of mankind up to this point (Data Explosion Cisco 2011)

Liz Truss MP, speech as DEFRA Secretary of State Nov 2014 Our work in this area is being led by Professor Ian Boyd . one of the most exciting programmes Ian is leading is the Copernicus system, a 3 billion pound project across Europe its fleet of six satellites will be streaming out 8 terabytes of data a day as much as 16 modern (500GB) PCs storage of new data per day ... 4G signals will cover 90% of the UK land area by 2017 but what will 4G allow us to do? Mega Trend 5: Technology Technology will extend a farms workforce into a virtual team of geneticists, engineers, data analysts, environmental-engineers, social media wizards . Many jobs of the future dont exist yet ... because the technology to enable them has not been invented

Our education system has to lead new technology adoption so: Farmers have the skills to implement technology Research/innovation centres/companies have skilled staff to develop technology Regulators, politicians, finance & media experts get it so they support the adoption of new technology National Living Wage My prediction in hindsight it will be seen as a major change, probably the most significant seen in employment for more than a decade with potentially major positive impacts on productivity . but it was unexpected & most employers are only just starting to think through what it means to them . at aggregate level, I dont think most government agencies or advisors have fully understood what changes it may lead to It is important we understand the challenges & respond positively

to help businesses sustain & grow their workforce & productivity Living Wage cost pressures Wage cost pressures: Change from minimum wage to living wage of 9 by 2020 Increase in NI as a result Pension auto-enrolment typically 3% of wage for employers paying minimum wage ~ 40% cost rise by 2020 Staff on higher rates (probably up to 12/hour, 25k/year) will want to maintain a differential and push for larger rises as well Overall impact will be inflationary, particularly in areas & sectors with more low paid employees Resolution Foundation Report This report (January 2016) identified Norwich as the city in which the highest % of employees would be affected by the living wage

(out of 33 cities studied) with 32% expected to get a pay rise . But what has been overlooked is that average wages are lower in many rural areas than cities, and thus we can expect more impact : In theory good news for employees But a challenge for employers in remaining competitive Average hourly wage Male Female Norwich Breckland, Norfolk S Holland, Lincs 11.97 10.60 10.81

10.73 8.57 8.79 % impacted by NLW policy Direct; those Below, plus @ below NLW or near NLW = rise expected 19% 32% Farming Farming has some minimum wage staff (mainly basic process staff, harvesting etc.)

. but there are proportionately more in food processing, catering & food retail who will want to share the pain with farmers by passing pressure back down the line Potential solutions Further automation, especially of harvesting & basic processing roles (e.g. vegetable processing) Requires investment in equipment, buildings & new skills Food Chain The food chain employs some low paid staff at every level: Processing Logistics and marketing Food retail Catering Potential solutions include: Processing robots /automation for basic processing, loading

Logistics automatic loading, warehousing etc. Food retail self serve tills, scan whilst shop, RFID, warehouse Catering robotics, less cook from fresh & more reheating of food supplied as cook chilled etc by food processors . Hospitality Hospitality & tourism are major employers, with most staff paid at or just over the minimum wage The challenge is that it is a very competitive market & labour costs are a very high % of total costs in this sector Competition is local (other suppliers), by consumers changing what they do (e.g. eat at home more) or by consumers responding to higher UK prices by travelling overseas more Potential solutions Automate where possible (not as easy as many other sectors) Increase costs for consumers but competitive pressure

Reduce other costs e.g. premises, food ingredient quality etc. Living Wage Opportunity The net result is a big increase in skilled roles and a rapid erosion of basic operative and customer service roles Many food chain workers will have more earnt money to spend Current minimum wage = 13,600 per year (39hr FT) Living wage = 18,300 per year This will create opportunities right across the commercial sector and all could attract new staff to the sector . Living Wage Opportunity Need for leadership & proactive response: Every area of the UK is going to be subject to the wage cost pressures this creates those who respond will take market share But in helping business we have to recognise:

difference between jobs which are mobile (inc. internationally), e.g. manufacturing: have to automate to compete & those which are more fixed e.g. tourism, the product is at a fixed location, but the consumer moves and can choose to go to where the best options are . (including international .) Living Wage Opportunity I expect to see more automation in food processing in 5 years than since 1990 (Germany has 4x as many food robots relative to sales), Dutch lead on horticultural automation Upside is we could use this change to stimulate engineering, automation, advanced manufacturing But will we: develop, install, operate and maintain these machines ourselves i.e. UK companies gain new sales from this or simply buy from countries with higher wages who have

already automated e.g. the Dutch or Germans? & how will we address the skills challenges this creates Living Wage Opportunity The challenge requires investment in: innovation adoption of new technology by employers skills solutions to provide the new skills needed for automation & to retrain those displaced from low wage roles promoting labour efficiency through new ways of working Mega Trend 6: Automation Labour efficiency will grow in significance & with it automation Skills will be needed in: Designing, installing & maintaining automation Managing fewer more highly skilled globally mobile staff

The real challenge is this, will we: Import the automation solution Dutch, Germans already very good at it as their wage costs are higher Or revitalize our agricultural & food engineering sector so they meet the need? . do we have the skilled engineers to do this? Mega Trend 7 I said 6 mega trends but another one unites them all Leadership, adaptability & embracing change Our education system must prepare people for: multiple careers, shocks, crises & change continuous in career learning on & off the job working in & leading inter-disciplinary teams exchanges between sectors, R&D & innovation Technical skills alone are of limited value we need staff who think, take the initiative & get the job done

7 Big Trends If we prepare our staff (existing & new entrants) for 7 areas where skills demand is growing we can meet the challenge of the future, they will need additional skills in: Managing volatility Responding to market changes Adapting to climate change Managing water Embracing technology Adopting automation Providing leadership & embracing change The Response needs

Ambition scale & breadth of the demand for skills requires ambition reaching beyond previous responses Budget scale needed requires investment by government & industry to support Colleges/Universities, Training Groups Commitment we need to be in it for the long haul Delivery depends on momentum to attract new entrants & resourcing to deliver effectively

Excellence the aim must be to lead globally the highest ranked UK agric centre, Reading is 19th (QS rankings) & only one other in the top 50 (Nottingham 48th) . across all subjects the UK has 4 of the top 10 Universities (Cambridge, Oxford, Imperial, UCL) Dont leave it to others The scale & complexity of the challenge is such that: Colleges & Universities can not do it on their own they need to work with industry, charities & government to do it Technology is moving so fast, industry has to be prepared to train their staff, customers & College students to use it Industry & charity funding needs to work alongside government if agriculture doesnt lead government will invest in other sectors

UK & EU money requires match funding Fragmentation & multiple small projects wont work Devolution also means decisions on skills are likely to be devolved from government to Combined Authorities at a local level Thank you Martin Collison [email protected] (07802) 480 848, (01553) 828 405

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