Management Matters: Joint venture group brings big rewards

Working together in a contract-farming partnership has allowed Guy Hildred, Edward Bishop and Vaughan Williams to drastically cut labour and machinery costs on their farming operations near Wallingford, Oxfordshire.

In just five years their new business, HBH Farming, has repaid original loans of about £400,000 and slashed labour and machinery costs to about £68/acre for Guy Hildred, who farms 1900 acres at Ipsden, near Wallingford.

Edward Bishop has also witnessed a big change in the way he approaches farming. “I can’t believe more people don’t do this. I wouldn’t want to go back to farming on my own again.”

By early 2003, Mr Hildred was farming 1900 acres in a family partnership with his father, who had mostly stepped back from the business. The farm was half owner-occupied and the rest of the land was either rented or on share- or contract-farming agreements.

The soil is mostly Thames Valley gravel, relatively light with some flints and chalky areas. The land varies from 80ft above sea level, closest to the Thames, rising to 600ft where the Chiltern Hills begin. Cropping was mostly wheat and barley and the rotation had included sugar beet up until 2000. With two full-time employees, Mr Hildred was running the business on a day-to-day basis.

“To be honest, I was feeling increasingly lonely and isolated. We couldn’t carry on long-term with two employees. One of my contract farms had a dairy which was a significant draw on labour. And I felt I needed a new challenge.”

Similarly, Mr Bishop was farming about 1000 acres of cereals, 350 acres of grassland plus running a whole-farm contract on another 3500-5000-acre unit on the opposite side of the Thames at Streatley. With his father and one employee, Mr Bishop also ran 850 Mule ewes from his base at Streatley Farm, where his family moved in 1972.

“I discovered I was knackered. You think you’re a hero keeping going on your own, spraying till well after midnight all the time, but you just can’t go on like that indefinitely.

“Then one day Guy and I were sitting in the pub talking. We’d already done bits and pieces together, but began to talk about working more together. But we both had our own combines and drills, and decided we really needed a third to make any kind of joint venture work.”

And so Mr Hildred approached nearby farmer Stephen Hart, who was running his wife’s family’s Woodhouse Estate and whose farm manager was nearing retirement. Mr Hart agreed to be involved and brought the 1000 acres of arable land he was farming into the partnership, retaining his 1000-ewe flock.

“He was a very popular man, a real community man,” says Mr Hildred. Stephen Hart passed away two years ago, aged 70. His brother in law, Vaughn, has since taken over the running of the Woodhouse Estate.


Getting started

In early 2002, Mr Hildred and his partners held a meeting with consultant Geoffrey Adams, through the Farm Business Advice Service, the government scheme that then provided some free strategic planning advice to farmers. This led them to consultant Edward Darling at Royston in Hertfordshire, who had considerable experience in setting up joint-venture farming partnerships.

“He gave us a very useful exercise to do,” remembers Mr Bishop. “He had a model tractor to represent each of the tractors in our individual businesses, and put them in a line. The outcome of that meeting was that we reduced our total of 14 machines to just four.”

HBH (Farming) , was set up as a limited liability partnership, and operates as a contract farming business, providing labour and machinery operations to the three “parent” businesses, plus a variety of other customers.

The parent businesses – Woodhouse Estate, the Hildred Farming Partnership and Richard Bishop & Partners – made loans to the new business to equip it with the essential machinery, while privately disposing of surplus kit individually.

HBH timeline

• 2000 – Three original partners come together. HBH farming just over 4000 acres.
• Stage 2 – Contract-farming agreement established with Mapledurham Estate, near Reading. Adds another 550 acres.
• Philip Walters (landlord of some of R Bishop & Partners’ land) adds 500 and then 1100 acres on a whole-farm contract with HBH.
• Contract farming an estate near Whitchurch in Hampshire nets HBH another 650 acres.
• Other contract-farming agreements, the removal of set-aside and some grassland ploughed back into arable production adds further acres.
• 2008 – HBH operating over about 8000 acres in total

Mr Hildred provided a big combine, Mr Bishop loaned two tractors and Stephen Hart provided HBH with two more tractors and its main drill. Two independent agricultural valuers agreed the sums these machines represented.

The parent businesses remain independent the partners store and market all their own grain, choose their cropping and employ staff. HBH contracts in the labour it uses from the parent businesses.

Most of the work is now done by the four-man team of Paul Stevens, George Davis, Steve Franklin and Geoff Hobden. There is also some seasonal help at harvest.

But it soon became clear that HBH kit had to cover a multitude of tasks. “Not all the machinery was right for each farm,” says Mr Hildred. “We wanted to be able to set up a business where we could go on to any farm and do the job.

“We’re now in a situation where we’re equipped to deal with any soil type. We have three drilling systems.”

The new business is now well-equipped and well-invested to manage the 8000 acres in front of it, which includes a number of contract-farming clients as far away as Whitchurch in Hampshire.

The tractor fleet includes three Fendt tractors and one Massey Ferguson, ranging from 195-300hp. There are two large combines – a Claas Lexion 600 and 580+, equipped with rubber tracks, as some of the lowest-lying land is fen and the tracked combines are significantly narrower than the wheeled variety, which is useful when you have road miles to cover.

A 4m Vaderstad drill will shortly be joined by a 6m Horsch, while two six- and seven-furrow ploughs and a Simba Solo provide the tillage tackle. “We operate on a policy of opportunistic tillage,” says Mr Hildred. “We’ll plough if we have to, or direct-drill where we can.” There is also a set of 6m Vaderstad discs. “That’s our capital reinvestment for this year, as well as annual replacement of one tractor.”

Rewarding experience

One thing the partners agree on is that the contract farming business has made their experience of farming more rewarding. “I enjoy farming with Guy,” says Mr Bishop. “And under this arrangement, for three-quarters of the year I can go away for a few days and not worry.”

Similarly, Mr Hildred has no regrets. “It’s made farming more enjoyable. It allowed me time to look up and get my head out of what I was doing before.”

As well as reducing labour and machinery costs the parent businesses have seen a meaningful financial impact.

HBH’s financial management is overseen by the partners with part-time help from a farm administrator. HBH’s trading account holds a monthly float of £1500 and this has to be reconciled every month at a partners’ meeting. “We don’t run an overdraft,” says Mr Bishop.

It has also released working capital for the parent businesses. “By not owning a combine we are saving £30,000 a year in depreciation,” says Mr Hildred. “This has to be right.

See more