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Executive Summary

1. Introduction

1.1 Background

The Monitor Farm Project commenced in Scotland in 2003, following a model developed in New Zealand, to help farmers rapidly adapt to changes and become market focused as part of the focus for recovery from the aftermath of Foot and Mouth Disease in 2001-2002.

The Monitor Farm Project sets out to improve the performance and profitability of a commercial farm, typical of the local area, over a three year period. The concept is for one farmer to open his business to a wider community group, mainly consisting of other farmers, but also professionals such as veterinary practices, bank managers and feed specialists. The Monitor Farmer agrees to host regular group meetings at his business, where subjects are discussed in practical way, involving site tours working groups and open discussion. There are also less frequent open meetings, usually annually.

Support is given by a facilitator, who provides advice on objective setting, data analysis and management of meetings. The concept is that group members with the facilitator and Monitor Farmer agree a range of improvements at the monitor farm, and that changes put in practice will be adopted by the wider community group of farms.

There are currently 11 monitor farms running in Scotland and five have completed the 3-year programme. Quality Meat Scotland ( QMS) funds nine of these, with other funding from the Scottish Government, Scottish Enterprise Borders, Highland Council, Dairy Co (formerly MDC) and HGCA and the Scottish Organic Producers Association ( SOPA). The facilitation for the programme is provided from a range of sources with SAC facilitating eight of the Monitor Farm Projects and other contracted organisations deliver no more than 2 Monitor Farm projects each, or in the case of HGCA and Dairy Co provide facilitation as an in-kind contribution.

1.2 Terms of Reference

The following objectives for the study were agreed with the Scottish Government:

• To produce an evidence base research that demonstrates the effectiveness or otherwise of Monitor Farms ( MFs) in delivering changes in farm practice that have led, or are likely to lead, to improvements in farm enterprise profitability and sustainability for the MF and the wider MF community group;
• To provide evidence on the potential for MFs to deliver wider benefits to the rural economy in terms of social sustainability, co-operative action and delivery of public goods and services;
• To use benchmarks or other indicators against which the future performance of MFs can be measured.
• To identify possible improvements to the programme and its monitoring."

1.3 Methodology

To meet the project objectives, a combination of qualitative and quantitative research was carried out, in a series of work packages. The research framework included:

• Desk research to establish details of all key contacts for the five monitor farms to be studied in detail and details of the individual monitor farm programmes and objectives.
• Interviews with key stakeholders, including funders and facilitators of the programme and interviews with monitor farmers.
• Workshops with monitor farm community groups
• Collection and analysis of financial data from community group workshops and through farm visits to some selected host farmers to enable value for money estimation.
• A large postal survey of non members of the programme

Five monitor farm groups were studied in detail located at, Ayrshire, Bute, North Argyll, Highlands, and Wigtownshire.

The financial analysis was carried out at two levels, first to determine the impact of the improvements on the Monitor Farm and second from a sample of Community Group members.

For the Monitor Farms relevant physical and financial data was collected, including examination of the farms audited accounts and available gross margin and physical performance data. A calculation of imputed rent for tenants and unpaid labour was made.

The information that was collected allowed the calculation of Net Farm Income ¹ ( NFI) at the start and, for 4 of the 5 farms the 2007 position was established. The remaining farm with a December year end did not have the latest relevant accounts available. The change in the farms' NFI from the start of the programme was adjusted for any change seen in similar farm types ². This removed any benefits resulting from the general trend of similar farms (Deadweight). This deadweight calculation was based on financial year 2005-7 except one farm (who had fully completed the programme) which was 2004-7.

In addition we examined trends in farm profit, enterprise margins and physical performance from the annual reports. In each report physical data and gross margin information was available.

For the Community Group members, data was collected at each of the 5 focus group meetings that covered changes which had occurred as a direct result of being involved. Actual figures were recorded where possible and farmers own estimates where hard data was not provided. Where enterprises had increased in size as a result of the programme (e.g. keeping 50 more breeding ewes as a result of better grassland management) the benefit was expressed using published gross margins.

The information gained from both the open discussion and the physical and financial data was extracted, calculated and summarised. The 2007/8 SAC Farm Management Handbook was used as the reference where for example changes in stock numbers and crop areas were influenced by the programme. Other benefits that the farmers could clearly identify were also taken into account.

For each group the average of the financial progress of group participants was calculated and then multiplied by the Community Group farmer membership size as an assessment of the progress of each community group. The results were then expressed as total progress over the time of the project at that farm, having adjusted for Net Farm Income deadweight.

2. The Degree to which Monitor Farms have been Effective in Delivering Changes in Farm Practice

2.1 Overall

The programme has been effective in bringing about business improvements on the Monitor Farms themselves, amongst community group members and in the wider farming community who are not directly involved in the programme.

For the 5 farms studied in detail, a total of over 200 members were involved in some way; the majority of these were farmers. Others who were part of the groups and attended included: Vets, RSPB, Funders, Banks, Machinery Ring, Supply trade, NFU Scotland etc. Regular attendance ranged from 20 to 45 on these farms giving an average of 33.

The programme has also achieved a high degree of penetration in the farming community in Scotland. Of those who had had no direct involvement in the programme (other than perhaps a single open day) 78% had heard of the programme with the farming press being particularly influential in disseminating knowledge about the programme with 91% citing this as their source. Other sources were word of mouth at 19%, industry news letters 19% (e.g. SAC, NFU Scotland and Scottish Farmer) and farm advisors/consultant (15%) of which 67% cited SAC.

A significant proportion (9%) of this constituency of programme non-members have noted that some topics had led them to implement changes to their business and further 7% intended to do so. The changes particularly focused on livestock performance, animal health and welfare and grassland management and performance.

2.2 Financial Impact

Our analysis has estimated benefits of £6.5 for every £1 of programme spend. If all the other consequent changes which community group members identified were fully estimated, the benefits would be even greater.

On the Monitor Farms studied, the calculated financial changes ranged from -£24,000 to +£36,000 over the life of the project on those farms to date. The impact of poor weather conditions was cited as a major contributor to the negative result found on one farm.

The average improvement (including the negative value) produced an annual improvement of £6,729 (net of deadweight) per monitor host farm for each year in the programme.

The total annual improvement net of deadweight for the 5 community groups was estimated to be £558,392. In addition a benefit of £26,916 occurred on the host farms, creating a grand total of £585,308. Although it must be noted that the annual improvements were strongly positive in four groups but negative in one group at minus £66,000. The group with the greatest improvement achieved an annual improvement of £220,000. A large number of other cost savings and technical changes were recorded from community group members but the quality of information did not allow inclusion in these figures. However it is certain the true figure would be greater than already calculated.

2.3 Wider Impacts

There were some 514 valid responses to the postal survey of farmers who are not in a monitor farm group, a very good response rate of 17% of the 3000 sample. The programme brand is widely recognised with 78% being aware, although their level of understanding was much less with 40% saying their knowledge was good or very good, but significant numbers felt their knowledge could be much better. This awareness of the programme is distributed right across the country, although there is some variation in regional awareness ranging from 62% in the Northern Isles to 92% in the Borders.

There is a bias to younger age groups in their level of knowledge with 45% of those below 45 years rating their knowledge as very good or good, compared to only 34% of those aged 55+. This trend towards the younger element concurs with a similar picture found in those who were attracted to the Pilot Scottish Monitor Farms (Mc Roberts 2007)

Significant numbers could identify topics that had been covered by the programme, although it is unsurprising in the light of the focus of most of the programme that these mostly relate to livestock performance (57%), animal health and welfare (50%) and grassland management (45%). However it is also encouraging that 38% identified Business Management.

For 12% this new knowledge has lead to changes in the business that they have identified and around 1 in 7 (15%) identified an increase in profit or financial performance. This must be taken with some caution as the general changes in the industry will be influencing perception of this. It is not possible to make a meaningful estimate of this impact but suffice to say it adds a significant dimension to the more detailed analysis.

The promotion of the programme has been good, and a range of media leading to different levels of awareness. The most significant by far of these is the farming press. This bias to written media remains in how farmers would like to receive information about the programme in the future. However one quarter would like such information by email and nearly a fifth from a website.

There are some regional differences: in Forth, Highlands and Dumfries and Galloway farmers were slightly more likely to hear of Monitor Farms through another farmer (23%, 22% and 22% respectively), while those in Clyde Valley were less likely (6%). Industry newsletters would seem to be slightly less important in Forth and Clyde Valley (11% and 12% respectively). Farm Advisor/Consultant was a more important source in the Borders (29%) while less important in Clyde Valley (6%), Highlands (6%) and Ayrshire (8%). Farmer discussion groups seem to be more important in Borders (15%) and Dumfries and Galloway (11%).

Two thirds specified specific topics areas on which they would like more information. Although mostly related to Monitor Farms in general, around a quarter of respondents identified information relating to livestock performance. There are some regional differences in the prevalence of the type of information wanted.

When asked to identify why they had not been to events at the Monitor Farms, time and distance are clearly key issues as well as lack of invitation or membership. Some also would prefer to read about it than attend and others are not sure what they would gain from it. It is interesting that availability of time seems more important than distance although for some of course, the two issues will be closely related.

The appendices to the main report provide a series of maps showing the distribution of respondents and their awareness for each of the 16 farms (completed and current). Whilst awareness is correlated quite closely to location in the case of some of the farms, for others, awareness is distributed across the country. This will be related to the farm type, location and length of time the farm has been a Monitor Farm.

The programme has enabled those participating to get to know each other better, and as result, sharing knowledge is likely to be more commonplace as a result. There is only limited evidence to reinforce this although several of the facilitators have described how the groups have become more engaged with each other over time. In addition evidence from the Community Groups demonstrates closer relationships have been established, which has helped the morale of the local community.

2.4 Organisation

Although the pilot programme and the policy of this programme has been to choose farmers who are respected and viewed as in the top levels of performance, there was some suggestion that other less well performing farms would enable more progress to be demonstrated and so be more relevant and attractive to many members.

There is evidence to suggest that a strong farmer chairman supported by a committee with the facilitator and monitor farmer provides clearer focus to managing the programme and in setting objectives.

Facilitators and other stakeholders recognise more time before the first Community Group meeting is needed to properly baseline the Monitor Farm; develop clear objectives, indicators and targets. This will provide a framework against which progress can be more robustly monitored and impacts calculated. Current practice has lead to variability in approaches and reporting, lack of clarity in objectives and limited understanding among Community Group members of what they are. It will also allow a greater degree of dialogue, debate and challenge within the group:- a need identified by some facilitators and Monitor Farmers.

However it is clear the bottom up approach and the involvement of the Community Group members in decision making is viewed as a very positive aspect of the programme fostering ownership and commitment.

Currently the programme has been largely technically oriented as this is what farmers have wanted. Facilitators have introduced benchmarking and integrated business concepts, but the overall impression is one focused on technical improvements in output and efficiency. There has been limited dialogue and structured feedback on how improvements are affecting members businesses, although Monitor Farmers have reported changes in their whole mindset and approach to the business.

The facilitators are generally viewed as doing a good job although there is some recognition that some could be better at being more proactive in engaging more Community Group members in debate and dynamic in challenging preconceptions.

The use of facilitator's networks of specialists was received positively; however there was some concern among some that a wider range of specialists could be used. In this way it is hoped that even greater challenge to current thinking could be achieved. However it is essential that they are able to fit their message into the local context and circumstances of the farm concerned, and local speakers are seen as being able to be more real drawing on their local knowledge.

3. The Potential for a Monitor Farm Approach to Deliver Wider Benefits

There is no consensus on the desirability or practicality of using the Monitor Farm for other knowledge transfer purposes despite the interest of some funders that the approach should be more stretching in the issues it covers. If the group members do not see the need, benefit or purpose of learning about a wider agenda, trying to impose this on the process could prove unhelpful and potentially undermine the business improvement benefits it has so clearly shown.

However, there are indications that if approached with sensitivity and in a way that integrates the wider agenda with the farmers' clear focus on financial and physical improvements, there may be potential for some other dimensions to be included particularly where associated with environmental management. This is already happening on some current Monitor Farms in areas with environmental designation. Here the facilitators use publicly funded financial incentives and regulation as motivators. To achieve this more widely, the individuals appointed for facilitation would also need to be convinced or persuaded of the merits of including other issues, as there are clearly strong beliefs and values in the wider community about the vision for farming.

There was no support for using the process for diversification as this is so dependent on location and personal objectives and beliefs, and was regarded very negatively by some.

There is evidence of the wider networking and social sustainability aspects of the programme and some evidence of co-operative activity taking place. There is also evidence of increased networking away from group meetings. These indications - albeit limited - provide a platform on which to explore more co-operative ventures.

4. Indicators for Measurement of Future Success

In the current set up and operation of the Monitor Farms we found that there is no consistent process to measure the success of the programme with either the Monitor Farms, Community Group or wider farming community. The ethos we found was focused on important practical issues and the physical and financial performance of those. There was much less emphasis on the overall financial impact of adopting and implementing best practice across the total business. .

The programme would benefit from having a common approach and set of indicators of success that could be tracked right through from the set up stage to the completion of activity, and beyond as changes instigated towards the end may take 1-2 years to yield impact. This should apply to both the host farm and the community group members, although the records kept could be slightly different, with more emphasis on detail at the Monitor Farm.

The specified indicators could be prescribed as a requirement of the operation of the programme when the facilitation roles are let by tender. As such these in themselves would provide a focus for the objective setting at the highest level. These should adhere to the SMART approach to objective setting - Specific, Measurable, Achievable, Result focused, Time bound.

Over time this approach will allow the effectiveness and impact of the programme to be more readily assessed.

Information on key indicators of physical performance such as yields of crops, milk yield, calving and lambing percentages, daily liveweight gain should continue to be tracked from just prior to joining through to completion of the project. This is very important for the monitor farm. It is likely that this will require some additional facilitator input and input from the monitor farmer.

Our interviews with facilitators noted that whilst attempts had been made to do this with group members, the farmers found it difficult to put the information together. There is the opportunity in future to consider the use of farm secretarial type input to work occasionally one to one to help group members gather this data. This would have significant cost savings over using facilitator time to do this.

For the monitor host farm the Net Farm Income should be calculated and recorded by the facilitator in a standardised way. It can then be tracked over time adjusted for deadweight, in the same way as we have done using the published NFI figures for similar farm types.

The activities of the groups are often focused on enterprise level management and improvements. In the programme to date there has been less focus on direct financial management techniques, how they can help how to access and use them,(e.g. the use of benchmarking a whole farm business to look at margins and costs and identify opportunities).

At programme managerial level an ethos of farm business management being an important and integral element of the programme should be encouraged.

5. Potential for Improving the Programme and its Monitoring

There is merit in considering a wider diversity of performance amongst the Monitor Farms where even greater improvement can be demonstrated and wider constituency of farmers attracted. A caveat is that these farms should be drawn from those who, although they may not be seen as top performers, are respected among their peers.

More groundwork needs to be carried out by facilitators in understanding the Monitor Farm business and in working with a Chairman and small committee in setting SMART objectives, targets and a monitoring framework.

A common basis for measuring progress and impacts on the Monitor Farms should be considered to improve monitoring and measurement of impacts. We suggest this is based around gross margins using common approach to assumptions and the calculation of Net Farm Income prior to commencement and annually. The use of Net Farm Income will allow improvements to be measured whilst correcting for general trends in the industry.

Greater emphasis on how physical improvements integrate with the overall management of the farm and its financial performance relative to the wider industry and group members should be considered. A structured framework for benchmarking and monitoring among members would achieve this. Additional resources would be required, although this could be in the form of farm secretarial support.

Facilitators should be selected not just for their industry knowledge but also for their ability to effect change through their understanding of and practice of communication and group learning skills.

More formalised arrangements for networking and training of facilitators would enable a sharing of knowledge about what works and what does not and would provide a forum for agreeing approaches to objective setting and monitoring.

The Monitor Farm projects take place within a wide landscape of knowledge transfer and information activity. There is some evidence that this creates choice difficulties and time conflicts for potential group members. Further consideration should be given to how this programme integrates with other publicly or industry funded initiatives to seek synergies, and avoid overlap.

The programme is already proving good at extending the message to a very wide audience. This could be enhanced with a more co-ordinated approach across all of the farms. Direct mail and the use of the press are favoured, specific technical notes and a structured approach to reporting on changes and performance via the press could extend the impact even further. Other possibilities include exclusive press initiatives.

Currently the presence on the internet is embedded within funders existing websites. Greater visibility could be achieved though a central identity through either its' web site or a portal linking to other sites.

Funders are broadly content that value is obtained from their current level of funding and that they doubted the willingness of farmers to contribute. The majority of funds from outside Scottish Government are from levy bodies. The levy bodies feel that as levy contributions, these are already farmer contributions. Introducing direct farmer funds some funders consider might create unrealistic expectations and be hard to manage, although off setting some direct costs might prove easier.

There may be an opportunity to encourage farmers to match fund levy or other public funds such as the SRDP on the basis of the direct benefit the business would receive from a programme tailored to their needs, whilst constraining expectations through the need to meet the public funding objectives. Care would be needed to ensure that farmers can identify the direct benefits and so are not dissuaded from engaging in the process.

In addition it may be possible to encourage the supply chain to fund key aspects that benefit them, e.g. specialist advice on produce quality, complying with the dairy road map to encourage a more sustainable supply chain. Again care would be needed to avoid the potential of commercial bias interfering with the independence of the current approach a concern also expressed in Kelly et al 2004.

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