21 February 1997

Adding value is winning policy for protection

A diversity of entrants took part in the recent Marks & Spencer/ farmers weekly Added Value Award, each with their own story to tell. Choosing the winners and runners-up was not easy, but eventually we whittled it down to four. Winner of the section for larger companies was Denhay Farms in Dorset, from where Philip Clarke reports

A diversity of entrants took part in the recent Marks & Spencer/ farmers weekly Added Value Award, each with their own story to tell. Choosing the winners and runners-up was not easy, but eventually we whittled it down to four. Winner of the section for larger companies was Denhay Farms in Dorset, from where Philip Clarke reports

DIFFERENT people have acted in different ways to try to overcome the worst excesses of the pig cycle.

In the 1980s, the futures market was used by some as a hedging mechanism to lock into an acceptable price. More recently, in the 1990s, some buyers have offered minimum and maximum price contracts, to "top and tail" the market.

But at Denhay Farms in Dorset, the policy has been to "add value" as a way of protecting the business from price swings.

Denhay Farms was established in 1952 as a partnership between the late John Streatfeild and Alexander Hood, who together ran beef, sheep, pigs and cereals on 100ha (250 acres) in the Marshwood Vale.

"But my father quickly realised dairying was the only way to make any money in this part of west Dorset and they soon became focused on milking cows," says son George Streatfeild, now a company director.

The first move into adding value at Denhay came with the introduction of cheese making in 1959, and this is still the mainstay of the business.

Pigs were retained as an integral part of the operation. "The system is traditional, with grass turned into milk, milk turned into cheese and the whey by-product going to feed the pigs," says George.

Steady growth

Growth has been steady and today, Denhay Farms has a £4m turnover, achieved on 750ha (1860 acres) with 920 cows milked at five sites. All the milk goes for Farmhouse Cheddar.

There are also 660 sows split equally into two breeding herds, one of which is an enclosed unit supplying maiden gilts to the Pig Improvement Company. The other provides weaners for the finishing units at Denhay.

The decision to start adding value to the pigs was taken after a management review of company strategy in the late 1980s.

At that time the outlook for agriculture was poor, with many commodities weighed down by surpluses and Brussels introducing increasingly restrictive policies to try to manage the problem.

Profitability was threatened. But the directors of Denhay preferred to find a marketing solution. "We wanted to spread enterprise dependence, avoid the excesses of the pig cycle and get away from being a commodity producer and, as such, a price taker," explains George.

Market research was critical and, as well as talking to potential customers in the UK, trips were made to Parma to find out more about ham production from the Italians. A food technologist, Jim French, was also employed and eventually a brining recipe was devised, leading to the launch of Denhay Air Dried Ham in 1990.

The process is straightforward enough. Hind legs are bought back each week from the slaughterhouse – Cases at Shaftesbury. These are trimmed, the &#42 bone removed and they are then cured in specially prepared brine before being oak-smoked and left to mature in chill rooms for up to a year.

The mature hams are then boned and skinned, sliced and vacuum packed, ready for consumption.

The product is truly unique, more succulent than Parma ham and with a distinctive flavour. Sales have built to over 3000 hams a year, with customers ranging from the top London food halls and hotels, to delicatessens and corner shops. Over 20% of business also comes from supermarket group, Safeway.

"We do most of our own deliveries and try not to sell to too many wholesalers as we like to get direct feed back from retailers," says George.

It was the favourable reaction from customers that persuaded the directors to launch a second line of cured products, Denhay Dry Cured Bacon, in 1995.

Pork middles are boned, derinded and split, before being rubbed with curing salts. Two weeks later, some are smoked before they are sliced and vacuum packed.

The product is of the highest standard, richly flavoured and with none of the water loss so often associated with mass-produced bacon.

Sales have rocketed in the first 18 months to about 6000 middles a year. That is equivalent to 3000 pigs, or half the number currently produced at Denhay. "As the business expands, we still have plenty of scope to keep using our own pigs," says George. "This is crucial both in terms of quality and guaranteeing traceability."

Getting the pricing right is also critical. "We try to only change our rates twice a year, as customers want stability. Pricing, therefore, takes more discussion than any other issue in our board meetings. We have to achieve a balance between covering our costs and charging only what the market will take. Once we have agreed, we have to stand by that decision."

Last year that proved a painful experience, as prices were set in February, just before the BSE scare sent pig values into orbit. As such, retail margins were squeezed until prices were reviewed in September and raw material costs came down.

But having a foot in both camps at least enables Denhay Farms as a whole to enjoy steady returns. For, while the added value part of the business suffered in 1996, the pig production side had a bumper year, enjoying buoyant prices for the 3000 finishers not bought back for curing.

Cured meat production currently generates a turnover approaching £500,000 and employs 11 staff – two drivers, two curers, four slicers and one in dispatch, as well as David Rose and Georges wife Amanda, who oversee the sales and marketing.

Committed staff

"Having a good committed staff is essential. The team we have here is motivated and efficient. Last year we gained an Investors In People award and we are currently devising our own training manual," says George.

Taking the business forward is fundamental to such a progressive company and each year a business plan is written, including budgets and a policy statement.

There is no shortage of ideas for further products either. Denhay Cured Meat Sausages were launched last year, a genuine by-product, using pork leg trimmings and ham off-cuts. Devils on Horseback (prunes wrapped in ham) are the latest addition, while Denhay Gammons were also tried for the first time last Christmas.

Product development is certainly important. But if any three criteria could be chosen to sum up the priorities at Denhay they would be quality, consistency and service.

"Quality starts in the piggery and feeding our own whey is crucial to giving us that good start. Consistency is achieved in our new, EU approved, temperature controlled meat plant. And service comes from listening to our customers and going out of our way to deliver it. If someone phones up wanting an urgent delivery of ham, but there is a cow that needs calving, sort the ham out first!"n

John Streatfeild: Quality, consistency and service count for everything when it comes to adding value to pigmeat.