Students’ plan hits the spot on Oxon farm

IS BEING an agricultural student in the early 21st century all it”s cracked up to be? You no doubt still get to drink copious amounts of beer, stay up all night and exist on a diet of kebabs and pot noodles. But on the basis of the submissions by the winners of this year”s Farm Planner of the Year competition, you also have to master the black art of ag economics and exhibit headache-inducing powers of clairvoyance. Think of Gordon Brown crossed with Gipsy Lil and you pretty much have it.

As in previous years, teams of students have to come up with a five-year development plan for a host farm. In essence, they must produce the sort of authoritative report that you would normally pay a farm management consultant 1500 or so to compile.

The students get a farm walk and chance to quiz the farmer. But in return they have to decide if the mix of enterprises is right, which ones should be expanded and which ones should be cut back. They have to look at staffing levels, machinery policy, marketing policy and judge whether the farmer is doing a good job or not. Toughest of all, they have to look at where the farm will be in five years, taking into account CAP reform, seesawing prices, future government legislation and commodity prices. It all has to be fully costed out and justified. All in all, not a job for the faint hearted.

Entering this gladiatorial arena were 11 college teams from Cannington College, Duchy College, Harper Adams (four teams), Newcastle, Reading, Royal Agricultural College, SAC and Writtle. Some teams consisted of just one person, others had as many as five people pooling their knowledge and ideas.

The Farm 

Previous Farm Planner of the Year host farms have tended to be owner-occupiers, with arable, livestock, shooting interests and often a few cottages bringing in useful income.

This year”s host farm is very different. Kingston Hill Farm is a 339ha (838-acre) tenanted farm near Kingston Bagpuize, south of Oxford. It”s a big, specialist dairy farm with 460 cows and farmer David Christensen has a strong grip on the financial tiller. There”s no arable (other than maize for silage), no converted barns or other diversifications and very little land in environmental schemes. In an era in which farmers increasingly feel they should get involved with marketing, Mr Christensen is unashamedly focused on production. In fact, he”s happy to describe the farm business as a “focused dinosaur”.

The task

Even focused dinosaurs have to think about the future, and Kingston Hill Farm has a relatively straightforward decision to make as to how it will face the future. Should it continue with the same herd size? Should it expand a bit to 550 cows? Or should it take a deep breath and jump to 650 cows?

Big may be beautiful, but it brings dangers. More cows potentially mean extra investment, more cow accommodation, more muck and slurry to deal with, more cubicles and bigger silage clamps. Not to mention employing (and housing) more staff.

There’s another complicating factor, too. It’s that Mr Christensen is also in the process of paying out his two brothers and his sister, so there is a capital outflow that means he hasn”t got bags of money to spend on new buildings and equipment.

The Writtle Plan and why it won

So Douglas Jackson and William King from Writtle College, near Chelmsford, Essex, had a tough task ahead of them. What did they suggest?

The main proposal was to increase the herd to 550 cows over the next two years, then push on to 650 cows by the end of the third year.

The first part of that task is relatively straightforward, since it involves no extra capital investment in infrastructure, pointed out Mr Jackson and Mr King.

Why not carry on at the same herd size? Because profits will slowly decrease as the milk price inevitably falls. Why not just increase to 550 cows and stick there? Because, though that would improve the financial situation, it”s still less attractive than making the jump to 650 cows.

The extra quota required, they suggested, should be bought rather than leased. With the quota system continuing for at least another two years, it should prove a good investment.

They also suggested that the farm sell its milk direct to a supermarket rather than to MilkLink as they do now. That would bring a better financial return and greater security, they figured.

What did the judges think of Writtle’s ideas?

“Their plan was sensible, multi-optional and well backed up with detail,” says David Ansell from the Institute of Agricultural Management.

“Of all the teams, they picked up most accurately what we were trying to achieve,” adds Mr Christensen. “They took on board that we wanted to increase family wealth and that lifestyle was important. They even quizzed my wife about family aspirations while they were waiting in the kitchen to do the interview and that was very impressive.”

“Interestingly, both Writtle and runners-up Duchy College did full budgets and cashflows for going to 650 cows, but their conclusions were very different, adds Mr Ansell. “It shows how these budgets are of limited use unless you vary the assumptions about milk price and feed price.”

So what is Kingston Hill’s plan for the next few years?

“The Writtle team had it pretty much right,” says Mr Christensen. “We plan to expand the herd to 550 cows over the next couple of years and then we”ll look and see before expanding any further.” The rotary parlour put in two years ago was sensibly bought bigger than necessary and could handle 1000 cows, so there”s no need for an expensive new parlour.

With the current unpredictable state of agriculture, it”s impossible to predict what milk production levels and prices will be, even a modest two years on, he adds. He can see some environmental threats to further intensification in the form of phosphate limits, though with mostly arable neighbours finding room to spread slurry shouldn”t be a problem.

And the milk price? “We want to see where it goes,” he says. “The next 12 months will give a real indication.”

And what about the farm moving to direct sales to a supermarket? It might bring in more money, but Mr Christensen is committed to the principles of co-operation, hence his decision to sell his milk to MilkLink. So there”s not too much chance of budging here.

“An extra 1p on the price is attractive – that”s 40,000 for us,” he says. “But if farmers want to have any strength in the market we have to add the value ourselves. Direct selling allows supermarkets and others to set the price and weakens the co-operatives.

“Every time he visits, our dairy consultant asks why we”re selling to a co-op. But at the moment we”re efficient enough not to have to go down the direct sales route.” Mr Christensen isn”t totally convinced by Writtle”s argument that he should buy quota, either. “We don”t want to commit a lot of capital to it and we”re not convinced we”ll need it,” he says. “I expect a tightening of the milk supply which could mean demand suddenly exceeding supply.”

“We have 4m litres of quota at the moment. If we add 30 or 40 cows in 2005, we”ll have enough quota to almost cover that. After that we”ll just have to acquire it.”

What did David Christensen and David Ansell think of the overall standard?

Very good, they point out, with even the non-winners” reports having lots of good points in them. Some college teams did get rather sidetracked by suggestions about the buildings and provided rather more technical detail than was required on this front.

And while every team did the obligatory SWOT (Strengths Weaknesses, Opportunities, Threats) analysis, many did not build on them.

The reports submitted by the Writtle and Duchy teams were particularly good, agreed the judges. “They”re what I would expect from a consultant,” says Mr Christensen. IagrM judge Mr Ansell agrees “The specialist nature of this farm made it a particularly challenging task for the students to chart a course for the future. But they did a very good job.”