High jump or marathon?

DOUBLING HERD size, installing a new 24/48 parlour, tracks and cubicles in just one year proved challenging, but it was a profitable decision, say Wendy and Tim Radley.

Having done the maths, they realised that being cautious and expanding in stages would keep them farming at Holly Farm, Swettenham, Cheshire, but wouldn”t make them money. To pay for large herd facilities and employ labour, they would have to milk their target 300 cows in the first year, explains Mr Radley.

 “Figures showed that output wouldn”t cover our costs in the initial years – particularly after putting in the infrastructure for 300 cows. But it did if we put all cows on at the start.

“So, we doubled output and bought 800,000 litres of quota. However, doing it all in one year meant we had to be careful not to take our eye off running the farm.”

Expansion was necessary because despite switching to more milk production from grazed grass, their 6250-litre crossbred herd still had a legacy of high fixed costs and profits were falling.

“We then had the opportunity to rent more land – the 130-acre farm across the road – so we could either expand or give up.”

 But, in an area where land for rent is scarce, time was tight and they had to decide quickly. Knowing their production costs meant the Radleys were able to quickly assess the benefits of taking on the extra acres.

extended block

 “We worked out the benefits of adding 50 cows a year, projecting our milk income and factoring in seasonality. A strict spring block calving hit us hard and the dry two months affected cashflow, so we extended the block to earn a winter bonus,” says Mrs Radley.

The result was a three-year detailed budget which projected income, added in extra staff, feed costs and adjusted other costs pro rata. Mrs Radley says they looked at where efficiencies in a larger herd would come from, in terms of pence a litre, /ha and percentage of output.

 “This is when we found that expanding bit by bit would not make money, because we would still have labour and parlour costs up front.

 “We used our computer programs and spent a lot of time on detailed figures. Then we involved a consultant to check our plans stacked up.”

 To keep costs of expansion down, the Radleys did most of the work themselves. Some 1.5 miles of cow tracks were laid on both farms and a central partition between two clamps was removed to create a 20m wide face for self-feeding. Their only difficulty was finding enough grazing type cows to suit their system.

 Throughout the year, regular support from their discussion group was invaluable, says Mrs Radley. “They challenged us to achieve our goals and we had a massive sense of achievement.”

She advises other producers considering expansion to plan carefully, test all scenarios and speak to others with experience. “If we hadn”t done it in one year, we would have come out of milk within five years.”