In the final visit to our south-west Management Matters farm, Paul Spackman discovers how the move to organic production has paid off and looks at what the future holds
It is almost seven years since Clinton Devon Farms entered into organic conversion and while the sector has undoubtedly seen many casualties during the recession, manager George Perrott still believes it is the best direction for the business.
“There is no doubt that the credit crunch led to a lot of people getting out of organic, but we’re coming through that now and it really feels like things are picking up again.
“It’s almost gone full circle from the days of organic just taking off, through the drop in demand and haemorrhaging of producers to the situation we’re now in where our processor wants all the milk we can produce.”
Since October last year, all milk from the farm’s two 250-cow herds has attracted Dairy Crest’s full organic price (41p/litre for January 2014), reflecting the relatively tight supply and demand balance for organic milk, he says.
“There is no doubt that the credit crunch led to a lot of people getting out of organic, but we’re coming throughthat now and it really feels like things are picking up again.”
Prior to last October only a proportion of the milk attracted the full organic price, with the balance being paid for at the conventional price. This modulated payment scale paid full price for 72% of what the farm had originally predicted it would be producing by 2009. This had the effect of suppressing milk production because it was not profitable to produce at the conventional milk price.
“That meant we weren’t maximising cow output because there was no incentive to do so – milk yields were down to 6,500 litres a cow a year.
“It’s a much better situation now with a premium on every litre and cows milking well on the back of last year’s good-quality silage. We will be tight for silage after the wet winter, but have been able to feed oats to stretch out the forage. Also the grass has kept growing in the mild weather, so hopefully it’ll work out all right.”
The farm’s autumn-calving herd is currently averaging 7,500 litres, which is just 1,000 litres less than when farming conventionally and around the level Mr Perrott originally budgeted for before conversion.
“When we converted to organic, conventional milk was at 19p/litre with a 10p/litre premium for organic. That premium is still there, plus we’ve reduced input costs significantly, so it still stacks up. Organic dairy cake is our only real input cost, at £100/t more than conventional. Because the cows aren’t being pushed as hard, they are under less stress, which has saved on veterinary and replacement costs,” he adds.
Fewer sheep but still worthwhile
While sheep numbers have fallen from 1,300 to around 400 ewes since converting to organic, Mr Perrott says they still provide an addition to the farming system by tidying up grazing after cows and generating income.
The lower stocking density has made a significant difference to animal health, he adds. “We used to routinely worm the lambs every three weeks, but now only if faecal egg counts warrant it and there is also no coccidiosis, which used to be a major problem, for which we routinely medicated all ewe feed.”
Arable is a mixed bag
Mr Perrott is less happy with the organic cereal market, where the price premium over conventional has narrowed to around £75-80/t for feed wheat. However, with most crops going back into the dairy enterprise rather than on to the open market, lower prices have less direct impact on the bottom line, he says.
“I’ve always worked on the assumption of half the yield for double the price. We’ve taken the hit to yield, but the current organic cereal price isn’t high enough. At least it means our dairy ration is effectively costing less and we’re not spending anything on fertiliser and sprays.”
Diesel is now the biggest input cost for the arable enterprise and Mr Perrott reckons much more fuel is used per tonne when farming organically. Total red diesel use is estimated at around 98,000 litres, which is around 20,000 litres less than before conversion. However, total cereal tonnage has fallen from just over 3,000t in 2006 to nearer 900t last harvest.
“When we were farming conventionally, most land was min-tilled with a dose of Roundup (glyphosate) ahead of drilling. Now we’re back to ploughing and power-harrowing almost everything, as well as topping weeds.
“Organic production would be a much more profitable and less fuel-dependent job if we were allowed just one application of an environmentally benign herbicide like Roundup. It would also help us to keep organic matter in the top of the soil profile where it’s needed, rather than burying it every year with the plough.”
Prior to organic conversion he also thought harvest would be a quicker and easier job given the smaller area and tonnage to bring in, but that has not proved to be the case. “We’re cutting half the acreage we used to conventionally but it almost takes the same amount of time, mainly because of the difficulties caused by weedy crops. The slower progress does at least mean we’re able to leave trailers in the field and get on with other jobs, rather than chasing back and forth trying to keep up with the combine.”
Weedy stubbles have delivered indirect benefits to wildlife on the farm though, especially birds and insects, he notes.
Black bindweed, docks, thistles and pockets of ragwort are the main weed challenges to have developed over the past few years, although established problems of conventional production such as cleavers, wild oats and charlock have diminished under the organic system, he says.
Building a profitable future
For now at least, Mr Perrott sees a bright future for organic production at Clinton Devon Farms. However, he is under no illusion that conditions can quickly change and is keen to maintain an open mind about where the business goes in the longer term.
“It’s a commercial decision and really all comes down to milk price and becoming even more efficient at what we do,” he says.
A key part of this future efficiency drive is the substantial investment in new cubicle housing at Otter Farm. After a lengthy and exhausting planning process, construction is now well under way and it should be ready for housing cows by the summer. Mr Perrott hopes to increase total cow numbers to 600-700 by this winter and reach the target of 750 cows across three herds by next year.
“We’re trying to breed-up most of the extra numbers ourselves rather than buying-in animals and potentially bringing in outside diseases. We haven’t been able to build up numbers as quickly as hoped because of the shortage of silage.”
Two herds will be housed at Otter Farm and milked through the existing parlour to improve its efficiency and spread costs, while the other off-lying herd will continue to be run independently.
“That 10p/litre organic premium across 750 cows yielding 7,500 litres is worth an extra £563,000 a year to the business, so it’s certainly the right strategy at the moment,” says Mr Perrott.
“However, there’s nothing we’ve changed in the system that wouldn’t allow us to easily convert back to conventional production if necessary, and I’m positive there are many things that I wouldn’t actually change anyway.”
An additional incentive to drive the farm business forward has come from the trustees of the Clinton Devon Estate, who, as part of the strategy to 2021, have tasked the farm enterprise with delivering a bigger share of income back into the estate. “That’s quite a turnaround from the situation when I took over 17 years ago and the farm was heavily in debt, and it is great to see the farm becoming a more important cash supplier for the estate as a whole.
“If the estate can get more than £150/acre for just renting the land out, it’s only right that the farm provides a decent return on any investments that are made and delivers more than that, otherwise what are we doing it for?
“Who knows what is around the corner, but I’m confident we have the right farming system, infrastructure and staff in place to make the most of our situation. That said, we are also not shy of making tough decisions.
“Converting to organic production as a purely commercial decision has been a steep learning curve, but I think we have now got a system that’s ideally suited to this business whatever the future holds. Who knows, maybe one day we’ll get a conversion subsidy to switch back to conventional to help feed the world.”
Many thanks to George Perrott and Clinton Devon Farms for giving up time to help with this series of Management Matters articles.
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