1 January 1999

A GOOD VEHICLE FOR DIVERSIFICATION?

LARGE numbers of small and medium-sized farmers know they should diversify; the question is into what? Many potential diversifications require vast injections of cash, others only work if the farm is in a scenic area or involve learning a set of completely new skills. But a sideline that you could turn into a successful diversification may be right under your nose.

Andrew Harrison-Smith is a case in point. A third-generation tenant farmer at Manor Farm, Ailsworth, near Peterborough, he came back to the farm after college and two years travelling with the benefit of an outsiders view of farming and a feeling that the future was uncertain.

"This was in 1986/87 and I could see that within a decade the whole situation of agriculture within the EEC would change. My father had retired and I was 23 and knew that I had to do something different."

At the time the 240ha (600 acre) farm was down mainly to combinable crops plus a 30-head suckler herd on 20ha (50 acres) of grass. Realising that the drought-prone grade 3/4 land couldnt grow big crops, he expanded the beef side to 100 suckler cows and followers. But then the BSE crisis hit and he sold up the cattle and concentrated on growing cereal crops and potatoes.

The possibility that Land Rover sales and servicing might provide a useful diversification didnt come out of the blue. Andrews grandfather had both bought and sold farm machinery in the past as a sideline, as well as the odd Land Rover, and it seemed logical to think that this side of the farm could be expanded into a business in its own right.

It might have got no further than that, were it not for neighbouring farmer Nick Vergette – also with a 240ha (600 acre) mixed farm – who was looking to restructure his business. Between them they hatched a radical plan to safeguard the profitability of both businesses into the future. Both farmers sold off virtually all their farm machinery, Andrew by private sale and Mr Vergette via a farm sale, to release capital.

Mr Vergette then re-equipped with new machinery – a 130 and 150hp tractor, Knight 24m sprayer, two 14t trailers, a 6m (20ft) cut Deere combine, JCB handler and combination drill – with the aim of doing the field work on both his farm and on a contract basis on Andrews.

Staffing levels are minimal. Mr Vergette does all the fieldwork, apart from a student who helps with combining and cultivations for three months in the summer. Block cropping and simple grain storage systems allow high outputs but pre-harvest planning is vital.

With his own input into the farm limited to management and purchase of seed, fertilisers and sprays, and a useful sum of money netted by the sale of farm machinery, Mr Harrison-Smith was now in a position to throw his energies into the Land Rover sales, service and parts business.

"I realised that I had to find a market that didnt compete directly with Land Rover main dealers," he says. "So I decided to sell two to 10-year-old Land Rover Defenders, Discoverys and Range Rovers rather than new ones."

The first job was to convert one of the barns into the main workshop – and to get planning permission for change of use. Second-hand ramps were bought and an office and parts department carved out of the existing space. A first-year target of 100 second-hand vehicle sales was quickly met.

Mr Harrison-Smith found that running the business – called Nene Overland because the farm runs down to the River Nene – had two main advantages. "Compared to main dealers, who have expensive premises on city centre sites and lots of sales and administration staff, we have lower costs so we can be more competitive than them on pricing," he says. "We know also that many of our farmer and commercial customers prefer to deal with someone who is a farmer himself and knows the vehicles inside out."

While some new vehicles are supplied, most of the business at Nene Overland consists of servicing, maintenance and sales of second-hand vehicles. About 25% of customers are farmers, 25% domestic buyers, 20% export and trade (ie sales to other LR dealers) and 30% are to other professional users like landscape gardeners, public utilities, tree surgeons and civil engineering firms.

Annual sales now amount to about 400 vehicles a year and turnover has doubled in each of the three years since the business was established to reach a current level of £5m.

Newer sidelines include lpg conversions to petrol-powered vehicles and Classic Coachworks, a specialist body shop that refurbishes classic sports cars.