New building work – do your ground work first

Parlours that are poorly installed or inadequately specified can cause problems including teat end damage, uneven milking, mastitis and elevated somatic cell counts and high bactoscans – all of which have significant cost implications.

It can be even more fundamental than that. If the building layout hasn’t been optimised then cow flow and handling can be compromised from the outset – something that is hard to put right once the building is finished.

One client installed a new parlour where the rump rail was put in too tight. This led to cow discomfort and to cows being reluctant to come into the parlour, responding with lots of kicking and treading behaviour when being milked. Mastitis levels increased markedly and the farm saw significant financial losses as a result.

The farmer had a real dispute with the dealer and consulted lawyers but it became clear that the only way of getting compensation for the problems would be to sue the supplying dealer, with the potential for high legal costs.

Eventually they decided it wasn’t worth the hassle and cost and another brand new parlour was put in six years later as the first one simply didn’t work as it had been installed. The costs arising from this were significant.

Another farmer installed a large rotary parlour to milk a high-yielding herd and had problems from the outset with unreliable automatic cluster removers, vacuum issues and elevated mastitis incidence. After significant wrangling with the supplying dealer, the farmer threatened legal action for a claim of £100,000 relating to lost output and costs. The dealer responded by threatening to wind up the company to avoid the claim.

These are just two examples but there are many more. Problems don’t always manifest themselves immediately – some take weeks or months to become evident. So it is not always easy to determine the root cause of the issue.

How to minimise the chance of problems before starting on a large project

• Involve an independent dairy husbandry/parlour specialist when designing the new facilities to ensure that the equipment will be fit for purpose. You should be able to re-coup fees by tendering against an agreed specification, getting better value for money from suppliers.

• Take legal advice on contracts before signing. “Very few farm businesses seek legal counsel relating to contracts presented to them,” says Sian Edmunds, senior associate at solicitor Burges Salmon LLP.

“This can leave them very exposed if things go wrong, as they are contractually bound to terms relating to payment and liability.

“The cost of such advice would typically be less than £1,000 which, on a project costing tens or even hundreds of thousands, really is a small price to pay to protect your own position.”

It is also important to check contractual terms in relation to sub-contractors – often the wording can lead to you having a direct contract with a third party who you know nothing about.

• Do due diligence on suppliers and deal with credible companies. “Due diligence isn’t just about asking for references from other customers (although this is important), it is also about carrying out credit checks on suppliers and all sub contractors,” Sian explains. “Are they financially sound? Do they have any other claims against them? Are they based in the UK?”

This point is subtle but important – Sian is currently pursuing a claim for a farmer against a UK company that is a subsidiary of a German business. Unwittingly, the farmer signed a contract that stated that it was governed by German law. When things went wrong this meant that the farmer was forced to pursue a claim through the German courts, adding complexity and cost.

• Have newly installed equipment independently checked on commissioning and before payment of the final amount due. If you get this included within the contract then the supplier knows that someone else is checking their work and it means that you have retained some of the funds until a satisfactory job is completed.

These simple steps ensure that you protect your own position. Many farmers still work on trust but it is important to ensure that there is something more tangible in place if you are embarking on major expenditure, whether parlour related or not.

This is also the case when investing in second hand equipment. I was asked to advise a farmer who had purchased and installed a second hand parlour from a reputable dealer. However the equipment was badly installed, with poor cluster placement and the farmer was not happy.

When he tried to raise his concern with the dealer, they wouldn’t return his calls. Eventually he got them to resolve the issues by threatening adverse publicity if they didn’t, but it shouldn’t have to come to that.

What if you’ve already completed building or parlour work and are now having issues?

“Seek legal advice early,” says Sian. “Lawyers know how best to word things and which ‘buttons’ to press to get results. Start by talking to your supplier to see if they will address your concerns. If that doesn’t get anywhere then write a firm but polite letter, stating your areas of concerns and the action that you expect. Then involve lawyers, as it could save you money in the long term.”

Your initial approach should be to get any issues resolved as soon as possible to mitigate any potential losses or costs arising. If you are starting to see associated issues then make sure that you document them and, if appropriate take photos or videos to help provide evidence of the problems – these can be useful if you come to take court action against the supplier.

Getting independent expert opinion can make your case much stronger. Asking your vet or an independent consultant to review the situation and provide impartial comment will help you determine whether you have a case or not and will add credibility to any claim.

“Suing a supplier is time consuming and expensive – you need to weigh up the potential gains against the costs to determine whether it is worthwhile,” says Sian.

“It is therefore important to take proper advice before launching litigation and go in ‘eyes open’ so that you are aware of the distraction from your normal business that the case will cause as well as the financial implications if you lose.

“Do your homework on suppliers, do credit checks and ask for references and get contracts reviewed by your legal adviser – it will save you time and money in the long term.”

Independent advisors should be used to help specify equipment and monitor and quality check the works prior to paying the final bill. Most major construction projects outside agriculture would employ architects, project managers and quantity surveyors to make sure that contractors do things right but generally farmers will try to do those roles alongside the day job.

Spending a small amount of money to get independent expertise can save a lot of heartache and financial pressure in the future.

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