How a family affair paid off
In the first of a series of
articles looking at the
changing structure of arable
farm businesses Amanda
Dunn finds out how the
merger of two family farms
more than a decade ago has
resulted in a substantial
farming business covering
more than 800ha (2000
CAREFUL planning, looking for synergies between farms and merging at the gross margin level have been the keys to success for a Suffolk-based farming business cropping 800ha (2000 acres).
"Basically we had two neighbouring farms which, for mutually beneficial reasons, made sense to farm as one unit," says Julian Swift, director of Belchamp Farm Services in Suffolk.
"Our 275-acre farm had two staff plus myself, a good range of machinery, but poor grain storage. Our neighbour, Charlie Raymond, had 400 acres, boasted decent storage facilities, but lacked machinery and labour. So it made sense to farm together."
Legal advice was taken wherever available and the farms subsequently joined on two levels.
"First we set up a separate company to act as contractors to the two farms that we were trying to unite, with Charlie and I employed as directors.
"Farm staff were seconded to the company to provide the labour element, while a new machinery portfolio was financed by an overdraft facility."
Any redundant machinery was sold off, with released funds being deposited in the respective farm bank accounts.
Each farm was then charged for work carried out by the contracting company, on a one-off acreage basis.
"Second we joined the farms at gross margin level," says Mr Swift.
"It seemed as though every plan that we came up with could potentially impinge on someones rights – who would get drilled first, combined first and so on. So we joined at gross margin level, pooling all sales and purchases."
A clients account was set up. All purchases directed through the account were then charged out to the individual farms on an area basis. Grain sales were handled in the same way. Costs and income were attributed on a percentage basis taking into account quality and area of land farmed by each party.
"At least this way there are no arguments if someones milling wheat quality is lost because the combine is busy elsewhere. All grain is owned by the whole farm and land managed as a single unit," says Mr Swift.
But each farm still maintains independent farm accounts and effectively farms in its own right.
"At the time we only intended to farm our 700 acres. But land came up for contract farming, share farming and rent. Over the years we have tendered and been successful and now farm just over 2000 acres.
"My role has subsequently changed. I have to make the whole thing tick.
"The two staff are now employed by the contracting company and third parties are used to provide expertise."
An independent agronomist offers regular advice, a local buying group is used to source variable inputs and all grain is sold via Fengrain.
Each year a detailed business plan and machinery replacement policy is compiled for the company, individual cashflows generated for each of the farming arrangements and comprehensive work plans created for the total area. Management figures are looked at on a regular basis.
"The merger has been a success because we have been able to survive and grow into a viable business," says Mr Swift.
"The paperwork is a nightmare, but like anything you get used to it. While grain stays at or above £60/t, we plan to continue to expand, perhaps more selectively and go on to introduce a better management structure."
Belchamp Farm Services
1989 273 (675)
1992 +160 +(400)
1993 + 60 +(150)
1996 +160 +(400)
1999 +200 +(500)
Total 853 (2,125)
• Case Axial flow 20m header combine.
• Caterpillar Challenger 65 (300hp).
• JD 8300 (230hp).
• Kuhn 8f plough.
• Simba 6m Freeflow.
• Accord Lemken 6m power harrow drill combination.
• Simba 6m Top Tilth.
• Seven-leg subsoiler.
• Simba 9m rolls.
• Kuhn fertiliser spreader.
• Bateman RB15 self-propelled sprayer.
• JD 3050 tractor.
• JD 6800 tractor.
• 2x 10t grain trailers.
Farming together makes sense, say Julian Swift (left) and Charlie Raymond. But both their farms still retain independent accounts.