On the 12th October 1988 the Kimland Herd of pedigree British Friesians was sold, I hadn’t quite understood at the time the impact of the sale. At 19 years of age I was studying Agriculture at Nottingham University and it really hadn’t clicked that my opportunity to become a dairy farmer had just vanished. In any case, I was far too busy with the social side of University to worry about the sale of a few cows. How wrong I was.

Dairy farming gets inside you. It eats away at you. It becomes a drug, and you can’t shake it off. Having graduated with a respectable 2:1, two extra stones in weight and a much reduced bank balance, I returned to the family farm, which at that stage was attempting to carve out a living farming suckler cows and sheep. But it wasn’t the same. The pace of life was in my eyes too slow. There was nothing to really get your teeth into. So I applied for and got a job with W J Oldacres working initially out of Calne in Wiltshire. Back with dairy cows again life was good. I was then lucky enough to join ADAS and work under John Allen and David Levick on my home patch in North Devon. This time spent with two industry heavy weights was invaluable in shaping my views on the future of dairy farming, and confirmed that the dairy industry was where I felt most comfortable.

Hence the next career change was a complete shock to all involved, me included. As the break-up of ADAS loomed, rather than join one of the many fledgling consultancy businesses that were attempting to fill the ADAS void, I took a sharp about turn and accepted a position as general manager in a jewellery wholesale and design company owned by my brother and sister in law. After progressing to become operations director in a then multi million pound turnover business, I left to join forces with my wife as an independent jewellery retailer, a business we have been successfully running for the past 9 years. In the meantime I also became co-owner and director of a children’s daycare nursery (long story). And so a variety of business interests have kept me fully occupied. So why return to farming?

There had always been a private joke between me and my brother, that I was never interested in coming back to the family farm unless it was into dairying. This was a dead cert – no way would he be interested in converting back to a dairy from a beef and sheep enterprise. Simon was just 12 when the herd was sold in 1988, and so the bug hadn’t bitten him. He had been spared. And then one night in January 2014, whilst calving a suckler cow, he hit me with the killer question, ‘How about it then, fancy having a go at dairying?’

And so here we are almost 12 months on, a fully fledged dairy farmer milking 253 mainly Dutch and German imported heifers, and loving it. We started milking on the 7th October 2014 and the first 8 weeks were absolute hell. I am currently living in Glastonbury, a 90 minute drive from the farm, and so I seem to spend most of my time either in the parlour, on the M5 or on the phone, as well as keeping in touch with the jewellery and nursery businesses. I have managed to lose 2 stone in weight (the 2 stone I gained whilst at University), but I cannot recommended stress related weight loss as an answer to the looming obesity crisis in the UK. But yes, I am still loving it, and here are my reasons why I decided to go back into the industry and why it was the right move for me and my family.

Passion/Opportunity

You have to do something you love. I have seen far too many people in dead end jobs where they are marking time, getting from one week to the next, just to survive. Some are in well paid roles as well, so it is not all about the money. I had wanted to do this all my life and here was my opportunity. Could I risk spending the rest of my life wondering if I could have been a successful dairy farmer? Time to put up or shut up.

Many long standing dairy farmer friends gleefully reminded me of the long hours, 365 day per year commitment, loneliness and weather induced depression. It is true that dairy farming is a 24/7 commitment, but there are also very attractive reasons for joining the dairy industry which as a high street retailer, I can fully appreciate.

Firstly you have just one customer, as opposed to many hundreds of customers. The customer tells you the price he is prepared to pay for your product and you can sell him as much of it as you can produce. He doesn’t stipulate stringent QC control on your product, but is happy to pay more for quality. Not a problem with that. He is also happy to come and pick it up in his own lorry so that you do not have to arrange or pay for transport and he then puts the money direct into your bank account on the 15th day of the month following, without you having to chase for it, and best of all you don’t even need to send him an invoice.

Your customer doesn’t ring you up a week after you have delivered your product and tell you that the product is broken or that the customer doesn’t like it any more and wants a refund. Nor does the customer stand in the middle of your yard and tell other customers, farmers and your staff how disgusted he is at the way he has been treated and that he is never going to deal with you again.

Now much of this is a little tongue in cheek, but we should all try and remember that farming and dairy farming in particular has its challenges, but these are no more stressful than those faced by many independent businessmen and women up and down the country who are trying to carve out a living.

Family/Labour

My father is now 71 and still works an 8 day week. He has been and continues to be a valued member of the team, but could not contemplate lambing 600 ewes and calving 120 suckler cows as well as the additional workload of finishing 600 head of beef cattle each year. If we had to replace him with another employed member of staff this would put further pressure on the financial viability of the farm in its current form.

Finance

When considering the future of the farm before taking the plunge back into dairy farming, we carried out a ‘what can I earn before I get out of bed’ test. It was clear that with strong demand for quality land driven by NVZ restrictions, and a general shortage within the area, that by liquidating the livestock and dead-stock, clearing all or most of the debt and then letting the land, our income was similar if not a little higher than had been achieved over the previous 5 years (averaged) through farming. This is never easy to come to terms with, as farmers pride themselves on the quality of their workmanship, and my father is no different. But the reality is that on many family run livestock farms, the profit per acre does not cover the opportunity cost of land rental. In order to sustain long term viability something had to change, and doing nothing was not an option (Dad’s words not mine).

Inheritance

Dad and Mum are traditional farmers, and would cite their aims in life to farm and then pass the farming business onto the next generation. Sadly, as land prices continue to rise to levels beyond commercial viability, the chance of siblings spreading their wings to farm additional acres has almost disappeared amongst traditional livestock farms. We are a family of 3 siblings and the reality is that the farm as a beef and sheep farm could only sustain two families at best (my parents and my brother). It is also highly unlikely that the farm could survive being saddled with additional debt should one or more siblings wish to receive an inheritance (should one be available!).

I am sure this is the position that many farmers now find themselves in. The only way forward for us was to find a way of farming that afforded us the opportunity to generate sufficient profit to either pay down debt, or make provisions so that all current and future generations could benefit in some way from the capital asset. This was clearly not possible with the current enterprise mix.

Control

Having worked outside Agriculture, and used modern technology to fine tune stock management systems or plan childcare ratios and staffing, it was clear that the combination of technology and agriculture should go hand in hand. In the livestock sector the use of technology is limited and therefore the skill of the stockman is still paramount. However in the dairy industry technology has a much bigger role to play. Managing large numbers of cows as individuals is now possible using RFID ear tags, electronic milk meters, pedometers and various other tools that are now widely available. Fine tuning diets almost daily allows the feedback loop to work seamlessly.

When we were finishing suckler calves we would weigh them every 3 weeks during the finishing period, and then hold our breath as the computer gave the magic DLWG numbers. If gains were good, everyone was smiling. If gains were bad, we had just lost 3 weeks of growth, and we weren’t quite sure what had caused the slowdown – weather, change in silage, disease challenge etc. Now we can make a change today and measure the effect tomorrow. We can focus on identifying the cause and implementing the effect.

The dynamic nature of the dairy industry means you are faced with daily choices based upon a whole range of factors. Ultimately the decisions taken are done so in the light of the net margin per litre of milk produced taking into account the guaranteed price you are receiving for the product being sold. And so the level of concentrate being fed (the main input cost) can be adjusted to reflect this. Adjustments can also be made on other input costs, but invariably there is much less flexibility here to influence net margin significantly. You tend to feel in Dairy Farming that you have a degree of control, something that is definitely missing in the livestock sector.

And so to the present and what of the future. At the moment we are farming approximately 475 acres with 253 cows in milk. Clearly we will have to increase cow numbers in order to maximise our total farm margin and we already have the accommodation (housing and slurry) for another 150 cattle. Our only limiting resource at present is silage accommodation, which I am sure can be dealt with reasonably quickly and efficiently.

We have taken the decision to run a flying herd and hence all cattle will be served to Belgian Blue. That isn’t strictly true as we have some spare cattle accommodation and 40 acres of land that is not suitable for silage, so as a Christmas present my brother has bought 120 straws of sexed semen for me to play with, and we are selecting our top 45 cows to be bred to Cogent Genomic sires.

We have been very impressed with the quality of cattle we have been able to source from Holland and Germany at extremely competitive prices. This may not be the most politically correct part of my speech to the BCBC, but I cannot see a commercial reason for breeding our own replacements. I accept that we will have a ceiling on yield per cow and the truly amazing figures that some of the best breeders in the UK are currently achieving will be outside our reach. However, we cannot dismiss the lost income from the Holstein bull calf. The additional semen costs and lost output in calf sales amount to £160 per head and whilst I may lose £70 in cull cow value over a 3 year lifespan, the £36,000, or 1ppl net profit gained on a 400 cow herd is too large to ignore.

The advent of sexed semen in the dairy industry will I feel in time put immense pressure on the UK suckler industry, or certainly condemn it to a niche position in the market, unless the consumer recognises and ultimately is prepared to pay for beef reared in the traditional way. As the pregnancy success rates for sexed semen increase and ultimately price per pregnancy decreases, then high quality beef as a by-product of the dairy industry could be enough to supply the UK market with much of its demand. Current figures suggest there are just over 250,000 holstein bull calves that do not enter the traditional beef finishing cycle each year compared with 300,000 male cattle from the suckler herd (Eblex 2008). It will not take long for farmers to realise that those 250,000 calves represent £45 million per annum in lost revenue to the dairy sector.

Cows are being fed on a basic diet of grass silage Trafford Gold, home grown cereals and a protein blend. Maize and whole crop do not feature in the diet and are unlikely to in future years. We have our own small contracting business which allows us the luxury of a New Holland self propelled forager. With land running to 1,000 feet above sea level we cannot grow Maize or wheat successfully, but we can make high dry matter 11.5 ME grass silage consistently, which when costed at £17 per tonne fresh weight in the clamp versus Maize at £45 per tonne (bought in) makes the decision to stick with grass silage even easier. The Trafford Gold seems to have a positive impact on intakes and we have been able to keep total feed costs down to 8.5ppl (including forage).

As you can see, many decisions being made about the direction of the business are driven by the need to generate profit first and foremost rather than trend or personal preference. This is not to say that farmers shouldn’t follow their heart and gain personal satisfaction from the way they farm. But in tough economic times, the cost of producing a litre of milk has to be the number one focus.

Milk price – the hot topic of conversation. I am happy to say that with the help of John Allen, we saw this one coming and prepared our budgets back in March 2014 at 28ppl Oct-Dec, 27ppl Jan-Mar and 26ppl Apr-Jun. Let’s hope that even these don’t prove to be too optimistic. As to why we felt prices were going to be so low, it seems with the benefit of hindsight so obvious. No threat of UK super levy, high milk prices, good quantities of good quality silage and hey presto a recipe for record milk production. The part of the equation that we couldn’t predict and the other half of the supply and demand perfect storm was the significant reduction in global demand, not helped by political turmoil in Russia. Whether we like it or not, we are part of the world market and our market cannot be insulated form the effects of world demand and world supply. It is likely over the next 10 years that demand is going to outstrip supply, and hence many commentators view the medium term future as bright for the world’s dairy farmers. But this will not be a journey without its ups and downs.

So why as a new entrant to the industry do I remain confident that we have made the right decision after 28 years in the wilderness. Many in this room will see me and others like me as part of the over supply problem, and they would be correct. There has been significant movement out of livestock and into dairy production over the past 12 months, adding to the oversupply problem. But it seems to me that we have a clear case of the haves and have not’s. Whilst we are hearing of prices for liquid milk of 21.7ppl for January deliveries, we still have farmers on gold plated cost of production contracts of around 30ppl for January supplies. We also hear that the cost of milk production is around 32ppl, whereas some of the best UK operators will be producing milk this winter at 24ppl (including family labour costs) and so the variation in profit margin could be as much as 16ppl between the worst and best operators in the UK. This may be a rather crude analogy and the variation may lie somewhere in the middle, but even with a differential of 8ppl between the best and the worst performing farms in the UK, we can soon see that the best farmers will continue to invest and expand and the worst performers will cease to produce milk. In the UK only 2% of herds have more than 500 cows (2013 census) and average herd size is 156 whereas according to the New Zealand Dairy Board, average herd size in 2013/14 was 413. The UK has a great deal of consolidation to consider over the next 10 years if it is to compete on the world stage.

It is critical that a degree of stability returns to the milk market so that good businesses can plan ahead and invest. In the words of a famous soon to be retired politician, there can be no return to the days of boom and bust. But in an unregulated marketplace this will remain very difficult. I can see a return to some form of milk quota, not imposed by governing bodies but by processors, who despite our cries of unfair play have also been at the end of some difficult times in recent months. The recent well documented proposal of a return to processor led A and B style quota may well be the system we end up with, and if that is the case, we will need to make sure that we are producing as much milk as possible when that day comes.

So yes I am confident that we will be successful dairy farmers but first and 45 foremost successful businessmen. Having come back into the industry from a commercial background, the concept of a lifestyle business is not an option. This business has to be highly profitable. We will focus on all aspects of milk production to make our cost of production as low as possible and continue to invest in areas where the return on capital investment is high. In the famous words of Sir Clive Woodward, ‘winning the rugby world cup was not about doing one thing 100% better, but about doing 100 things 1% better’. Successful dairy farming should be no different.

We will look to build a strong relationship with a processor who is committed to adding value to the milk we produce. We will need to compete, not only with other UK producers, but with our European neighbours and yes with producers across the world. And most of all we will try and have as much fun doing it as possible.