Young farmers face starting problems

When ill health forced James and Owain Stephens’ father to give up milk production on his Carmarthenshire farm it presented an opportunity for the brothers to set up their own dairying business.

However, with youth and no track record in business working against them, convincing the bank to support their ambition proved to be a challenge.

“It was really hard to persuade the bank to give us a loan because we were so young. I was 20 and James 24, so in the bank manager’s eyes we weren’t mature enough to have the experience to run a business successfully,” Owain recalls.

“But how old are you supposed to be? Surely it makes more sense to borrow when you are younger and have the chance to pay it back rather than borrowing a big sum when you are 40 and still be in debt when you die. Our bank manager could see we had the practical skills to run a farm but wasn’t convinced of our business sense.”

Business plan

He was eventually won over by the combination of a sound business plan and sheer determination.

Through the Welsh ­government’s Farming Connect Whole Farm Plan, the brothers qualified for 80% funding for a three-day consultancy with Grant Hartman of Kite Consulting and that much- needed business plan was drawn up.

“We knew what we wanted but we had to get it down on paper and make it work,” says James. “That business plan was everything. Without it we wouldn’t have got the loan.”

As well as their enormous determination, the brothers share an optimistic outlook. So much so that even before that loan was approved they invested £18,000 of their savings in refurbishing the 12/12 milking parlour at Garnwen Farm, near Llanddarog, and buying a new milk bulk tank.

“How were we meant to have accumulated that trading history when we were just starting out?”
Owain Stephens

“We were on the phone to the bank manager daily and he assured us the loan would be forthcoming, it was just a matter of time,” says James.

They had planned to start milking on 1 March 2012, but because the approval of the loan took longer than they anticipated it was 23 April before that long-awaited first milking – the day of Owain’s 21st birthday.

Once the loan was approved the brothers were in a position to invest £200,000 in a milking herd and replacements.

Set up

Their father had sold the initial herd so the brothers had to set up their own herd. They started by buying 26 pedigree Holstein Friesians from the Terling herd in Cheshire and a week later they imported 64 cows from Holland and Germany. They also purchased 40 heifer replacements and these are due to calve this spring.

Most of the cows were first and second calvers, but those came at a high price so to bring up numbers and to balance the overall average price slightly older cows were also bought. By December, James and Owain hope to be milking 180 cows on their all-the-year-round calving system.

They were in a strong position to secure a milk buyer that best suited their business because they had no existing contract.

Garnwen Farm is 144 acres and the family also owns another 94 acres three miles from the main holding. The brothers admit if their parents hadn’t owned the farm it would have been very difficult to get the start-up funding.

“Dairying is very capital intensive. We just wouldn’t have been able to get the money together had the farm not already been there,” says James.


One unexpected hurdle was securing finance for a tractor. They hadn’t allowed for this in their loan application because they planned to finance it through a separate agreement. Again, it was their youth that proved a barrier.

Their application was declined because they didn’t have the required four years of trading history. “How were we meant to have accumulated that trading history when we were just starting out?” asks Owain. “We have gone back to the company now that a year has passed. We have shown them a set of profitable accounts and now have that finance in place.”

Until now they have run the farm by hiring the services of contractors. The only machinery they have of their own is a telescopic handler and a small tractor for scraping out the cubicles.

Although there was existing infrastructure at the farm, new housing was needed for calving cows and rearing calves.

It may have been a struggle for James and Owain to convince the bank and finance company of the financial soundness of their business, but the Welsh government recognised their potential.

Support schemes

Through the Young Entrants Support Scheme (YESS) they were given £15,000 to help fund the new housing. YESS entitles people under the age of 40 to apply for grant aid of up to £15,000 for capital schemes if they are either setting up as head of the holding for the first time or have done so in the past 12 months.

This funding, says Owain, has been a big boost. “We would have needed to put up the shed anyway, but without the grant funding it would have stretched us financially.”

Support from family has been important too. Their parents, Gwyn and Julie, are on hand to give advice, but only when it is requested. James and Owain are also grateful for the support of their sisters, Anwen and Helen.

The brothers also have understanding partners – Esther Jones and Gwenllian Davies, who are both dairy farmers’ daughters. “They have been there to support us all the way and it has been tough because we work very long hours,” James says.

The Stephens also gained hugely from working on dairy farms for two years before establishing their own business. “Our bosses were very supportive of our ambitions. We learned something new every day, I don’t think you ever stop learning,” reflects Owain.

Advice for young people starting out in dairying

  1. It is better to over-borrow than under borrow; you will often need more money than you expect and it is better to have the finance in place to keep the cashflow sound.
  2. Listen to the opinions of others and always be open-minded to change – join discussion groups.
  3. Look for grant funding opportunities; there are several initiatives specifically aimed at young entrants to dairy farming and other mainstream grants too.
  4. Do your research to avoid getting caught out. “We bought a standing crop of silage and the quality and quantity didn’t match the price. We now research things more,” said James.
  5. Be half nice, half ruthless. “If you’re not tough people will walk over you,” says Owain.

More on this topic

Farming Connect is funded through the Rural Development Plan 2007-2013, which is financed by the European Agricultural Fund for Rural Development and the Welsh government. For further information about Farming Connect services telephone 01970 636565 or email:

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