ICAEW.com works better with JavaScript enabled.

Producing a sustainable future for fell farming in Cumbria

Author: ICAEW Insights

Published: 11 Jan 2023

Meat processing company Lake District Farmers is leading by example when it comes to investing in sustainable farming practices. A project with Lancaster University looks to draw a clear line between sustainability and business success.

As sustainability continues its meteoric rise up the list of corporate priorities, the farming and agriculture sector is acutely aware of the need for sustainable business practices, having experienced first-hand some of the devastating impacts of climate change.

Changing rainfall patterns and reduced availability of water for irrigation all threaten agricultural production, particularly in areas where water supplies are already under pressure. Drier soil conditions reduce growth of crops, pasture and trees, and the quantity and quality of feed has a knock-on impact on livestock productivity according to UK Research and Innovation, which also warns of potential increased incidence of some livestock diseases. 

The Lake District is home to a proud farming heritage that is deeply rooted in its environment and follows the same tried and tested methods in place for generations. However, it is increasingly clear that some innovations will be needed to guarantee a sustainable future. 

But how do you encourage the changes required to embrace sustainability in an industry grappling with soaring production costs that are squeezing farmers’ already low margins. The UK languishes towards the bottom of league tables with some of the lowest prices for food generally – and meat specifically – across the EU, largely due to the highly concentrated retail market and strong competition between suppliers. 

Lake District Farmers (LDF) is a meat processing business that is bucking the trend while also making sustainability a core focus. LDF supplies top quality meat to some of the best restaurants in the country, including ICAEW’s very own One Moorgate Place restaurant. More than half of Michelin three-starred restaurants in the UK are customers. The business sources stock from around 50 farms. 

“We trade on our quality,” explains Katrina Chenery, LDF’s Financial Controller. “We work on the basic business model of treating our farmers well, paying above market rates, and in return we get the best quality available. We have a close-knit community of farmers and that gives us arguably the best quality meat on the market.”

The focus on quality means customers pay a premium for meat, which equates to higher margins for farmers. At the same time, longer-term agreements with farmers to give them certainty over volumes makes it easier for them to plan.

But shifting the focus towards a lower volume, higher value product requires education and a change in farming practices. “If I said to a farmer, ‘you can’t work next month, because we need to save the planet’, that would be the end of the conversation about sustainability. They have to earn a living, so you need a viable business model that makes more sense than what they are currently doing,” Chenery says. 

Phil Scott, LDF’s Head of Purpose and Sustainability, agrees that it’s only possible to follow through on sustainability promises when there’s a robust financial framework. More environmentally sound farming practices can benefit the sector in multiple ways, he says. 

“When you’re implementing sustainability projects within any business, there’s a certain amount of disruption that comes with that. What we’re trying to do is change the system for a better end result. Reducing your carbon or water usage means you’ll achieve a better profit margin, but you’re also doing your bit for the planet.”

The war in Ukraine has brought the issues to a head, with fertiliser prices – an important component of intensively reared livestock – soaring as a result. “Beef farmers might spend £40,000 a year on fertiliser, to make grass grow very quickly. But there are no nutrients in that grass, so it’s like feeding your children nothing but sweets. So then they have to supplement the cows’ diets with mineral licks,” Chenery explains. 

Instead, a more sustainable farming model involves shunning fertilisers and allowing the land to regenerate naturally, giving multiple varieties of grass the time to put down long roots and develop nutrients. “Nature will do it itself but you have to reduce the number of animals on the land.” 

Improving the nutritional content of the meat allows farmers to command a higher price, but there are no shortcuts to producing quality meat. LDF takes stock that is nearer 30 months old when it goes to slaughter, and is then hung traditionally on the bone, unlike supermarket beef, which typically comes from 18-month-old cattle and uses a ‘wet ageing’ technique devised in the 1960s for fast turnaround.

The good news is that many of the sustainable practices that LDF is trying to nudge its farmers towards are already happening, albeit instinctively. “I’ve tried to talk to farmers about sustainability, and many of them are already doing it, but they just don’t know the terminology,” Scott explains

But instinct will only get you so far, and for that reason LDF is collaborating with Lancaster University – thanks to a grant from Innovate UK – on a project designed to take the guesswork out of quantifying sustainability initiatives’ benefits. The 24-month project, due to kick off in March, will set out to devise a financial framework that draws clear lines between regenerative farming practices and financial payback. 

Using carbon and soil data from farms supplying LDF, experts at Lancaster University’s Pentland Centre for Sustainability in Business led by chartered accountant Jan Bebbington will devise a financial framework that illustrates the business benefits of more sustainable farming practices. “Once that framework has been created, we can say to our farming network, ‘This is your carbon baseline, this is where we need you to be to future-proof our business model, and this is how you make it work,’” Scott says.

The end of the Single Farm Payment – the agricultural subsidy paid to farmers in the EU – and uncertainty about the post-Brexit funding regime is helping the case for sustainability, Scott says. “Stocking density – that is the available resources you have on your farm including water, grasses and how many livestock you need to graze it sustainably – is something that a lot of farmers are looking at.”

Diversification has long been a buzzword in agriculture as farmers look to new income streams – commonly holiday lets, campsites or fishing rights – to plug income gaps. But diversification also includes a greater focus on biodiversity and a shift away from single species farms as part of a strategy to make farms profitable but also safeguard natural ecosystems. The UK is one of the most nature-depleted countries in the world, according to the Biodiversity Intactness Index, with a 60% decline in species abundance over the past 50 years.

For farmers, the economics of biodiversity, through diversification, are obvious. “You reduce your risk, because instead of having all your eggs in the same proverbial basket, if you lose one income stream, you’ve got others to fall back on,” Chenery explains. 

Despite widespread turmoil across the sector, Scott is confident that sustainable farming practices will become mainstream over the coming years. “There are too many indicators for people not to start to make the change, or to at least start joining up the dots. Everyone talks about sustainability – I can’t order a coffee without someone telling me it’s sustainable – but the clock is ticking.”

Even though meat consumption in the UK is declining, LDF is confident that the ‘quality not quantity’ mantra will play to its favour. But action on sustainability is everyone’s problem, Scott says. “It’s affecting farming first because we’re at the coalface. But eventually, these problems will also affect your business; when you can’t source raw materials, when your employees can’t get to work, when you can’t feed your staff. 

“We need a huge push towards taking sustainability seriously – not just buying carbon credits but changing business models. You’d be amazed at how much more efficient you can make your company when you start limiting the amount of waste that you’re producing.”

Join our community

Join ICAEW's Farming & Rural Business Community to access guidance on key technical and strategic issues plus the latest sector news and views.

Farming polaroid

Discover more from ICAEW Insights

Insights showcases news, opinion, analysis, interviews and features on the profession with a focus on the key issues affecting accountancy and the world of business.

Podcast icon
Insights Podcast

Hear a panel of guests dissect the latest headlines and provide expert analysis on the top stories from across the world of business, finance and accountancy.

Find out more
Daily summaries
Three yellow pins planted into a surface in a row
News in brief

Read ICAEW's daily summary of accountancy news from across the mainstream media and broader financing sector.

See more
A megaphone
Stay up to date

You can receive email update from ICAEW insights either daily, weekly or monthly, subscribe to whichever works for you.

Sign up