Flexible approach gets joint venture new entrants milking
An agricultural accountant and a farm mechanic may seem unlikely partners when it comes to setting up a new dairy enterprise. But having seen friends build up a large equity share in a 1,000-cow herd in New Zealand, Neil Grigg and Tom Foot decided to do the same thing closer to home.
Both from farming families, they studied at Seale Hayne agricultural college and soon decided to look out for an investment opportunity. Pooling their resources under the name Prospect Farming, they bought 25 empty dairy cows in 2009. These were grazed on a mixture of contract agreements and at Mr Grigg’s rented Burrow Farm on the Killerton Estate in Devon, where he produces Red Ruby beef with his wife Sally.
While still waiting to find a suitable farm on which to milk their new herd, they also bought high genetic New Zealand-bred cows and some cross-breds, ending up with just over 300 cows.
“We had a tremendous amount of help from local farmers,” says Mr Foot. “We were taking land anywhere we could get it, including grazing on a building site and next to a roundabout on the Dorchester bypass.” However, with the cows ready to calve in 2011 and no farm to milk on, the pair leased the herd to a nearby farmer for a year to buy a bit more time.
Their big chance arose in spring 2011, when they won a five-year farm business tenancy at Longlands Farm, Little Bredy, Dorset, a 360ha arable farm with no house and few buildings. “It was rather bigger than we’d planned, but it really was a fantastic opportunity.”
They drilled just over 160ha of grass but decided not to invest in much infrastructure, given that any capital improvements they made to the farm would not be compensated at the end of the tenancy.
Matching skill sets
Each member of the team brings a different skill to the mix, with Neil Grigg running the office and accounts, and Tom Foot managing staff and fabricating farm equipment. “We talk to each other twice a day, and Neil comes up to the farm two or three times a week,” says Tom.
“We report to the bank every month, and have a structured meeting with the herd manager fortnightly. We also employ two friends to monitor the business quarterly – one is good at grass management and the other helps with systems and protocols so that we can monitor and control our fledgling business.”
Capital and cashflow
“The idea behind Prospect Farming is capital appreciation – we had limited capital to start with and we want to build it up, while also generating cashflow,” says Mr Grigg. “We always thought that if it didn’t work out we could just sell the cows and get our money back.”
Although the pair had £200,000 to set up the required infrastructure and parlour to milk 300 cows, they decided it would not make enough of the opportunity they had.
Putting in a larger swing-over parlour to milk 1,000 cows made no financial sense, given the extra infrastructure required in a nitrate vulnerable zone, so they eventually opted for mobile milking bails.
“By hiring a couple of Hosier milking bails we could invest the original £200,000 into more cows,” says Mr Grigg. “We bought another 200 in-calf heifers – it was really exciting to see how cheaply we could do things.”
They purchased a lot of second-hand machinery, which put Mr Foot’s mechanic skills to the test, and installed 9km of above-ground water main to supply mobile water troughs and the milking parlour wherever they go on the farm.
However, while making the best use of their differing skill sets, Mr Foot and Mr Griggs knew they would need to bring in someone to actually manage the cows. “It was a key priority to get the right people on board,” says Mr Grigg.
Nick Haines came in as an experienced herd and grassland manager, along with Stuart Horsley, who had previously worked at Longlands Farm, plus another milker and three part-time helpers.
Learning curve
The group began milking in February 2012, and have learned a lot along the way. “We started milking in the silage clamp as we wanted secure walls – and we fed 3kg of cake to encourage the cows into the parlour to start with,” says Mr Grigg.
“Later we moved out to the fields and cut out the cake altogether.” Initially it took five people five hours to milk 250 cows – by the end of the season it was taking two people half that time to milk double the number of cows.
“We try to keep it as relaxed and simple as we can – we just use an electric fence for the collecting yard and no longer need a backing gate,” says Mr Foot. He delivers the milk in a borrowed tanker direct to the dairy, although this year they plan to use a bigger tanker, which will be collected by the dairy.
The cows are kept out 350 days a year, grazing stubble turnips, silage and straw over the winter, and are housed to calve in early spring. “There are lots of arable farms around here so we buy their straw and they plant stubble turnips for us to graze, so we don’t have to touch our grazing platform,” he adds. “It also means we can drain down the water pipes at home over the winter.”
The herd is milked once a day, and peaked at 6,500 litres last year. The team is aiming for a much higher peak this year, now that the herd and system has settled into place. The cows are inseminated or put to the bull for 12 weeks, and fertility is excellent, with only 9% empty last year.
“We’re ultimately aiming for 5% empty at nine weeks – if you take the pressure off the cows they will perform for you,” says Mr Grigg. All the routine management such as artificial insemination is carried out in the parlour, with Kamars used to identify bulling cows while heifers run with the bulls.
By having as low a replacement rate as possible, the partners are aiming to sell surplus stock to repay debt. “Cash is a key driver – it cost £300 per cow place to set up and we put everything we had into this,” says Mr Grigg. “As young farmers, sourcing finance has been a challenge – and it’s important to get a bank manager on your side who really understands your system.
Return on investment
“We’re aiming for a return on investment of 10-15%. And we’ve grown very quickly so now we’re consolidating. Budgeting for a negative cashflow in the first two years and living through it are two different things. It is a risk, but if we had to walk away today we could sell everything and cover our costs,” he adds.
It hasn’t been easy. In October 2011, after the first stock arrived on the farm, 90 cows aborted and 10 died as result of red water disease – a tick-borne condition that also led to salmonella problems due to the cows’ compromised immune systems. “Instead of milking 580 we had 460 cows – it cost us £100,000 and was just heartbreaking,” adds Mr Grigg.
However, by budgeting carefully, with a forecast yield of 2,400 litres and milk price of 29p/litre, the pair still managed to come out on top, with an actual yield of 2,600 litres and milk price of 32p/litre.
Spotting lameness also proved difficult, because the cows do not have to walk to be milked. “We’re on flinty ground and it got quite bad before we noticed it – so now we foot-trim and foot-bath frequently to keep on top of it,” says Mr Foot.
Milk for cheese
All the milk goes to Ford Farm dairy for cheese production, with an average of 5.4% butterfat and 3.7% protein. Bull calves are taken to slaughter at 10 days old due to TB restrictions, and the team will be rearing 300-350 heifers this year.
“We rotate the grazing, so even in the wet summer it didn’t get too poached,” says Mr Grigg. “We’ve reseeded some more fields, and hopefully now the heifers will be resistant to red water.”
By spending less time delivering milk, and moving the parlours more efficiently, it may be possible to move from once to twice a day milking. The plan is to milk 750 cows for the next three years at least, but the team now has three milking bails, so it would be possible to increase to 900, says Mr Grigg.
“But there are so many options available that it’s very exciting. This isn’t the only way forward – the beauty of dairy farming is that there are so many ways to do it.”
Prospect Farming
- Joint venture milk production – 750 cows
- Began in 2009, buying empty cows and taking grazing
- Five year FBT from 2011 on 360ha in Dorset
- Aim is to build capital value alongside cash flow
- Hiring mobile milking bails and buying old machinery cut establishment and production costs
- Aims for 10-15% return on investment and to milk at least 750 cows a year for next three years
- Low replacement rate (11% and falling) allows maximum income from stock sales
- Robust formal partnership agreement includes exit strategies
- Complementary skills are important