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Future-proofing and spreading risk behind farmer's diversifications

Ambitious and ‘out of the box’ thinking comes naturally to David Haynes. Yet the Leicestershire farmer hit a brick wall 30 years ago.

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Future-proofing and spreading risk behind farmer's various diversifications

The farm needed to progress, and with two children already helping out on-farm, he wanted to ensure it was financially viable for future generations.

 

Mr Haynes says: “Diversification is essential for many farms because it allows you to spread risk.

 

“If you look at the situation at the moment with the weather and the knockon effects on prices we could have next year, it really brings things into sharp focus.

 

“Of course, you never know what is on the horizon with farming, but doing what you can to shore up your business takes the pressure off slightly.”

 

Mr Haynes, who farms in Lutterworth, on the Leicestershire/Warwickshire border, sought advice from consultancy firm Active Business Partnerships (ABP).

 

He says doing your homework and getting professional advice is an essential first step for anyone thinking of changing their farming practices, whatever the level of investment.

 

“I have always been good at coming up with ideas, but it is always best to get help from experts before making any move,” he adds.

 

Angus Bell, a consultant at ABP, started the process with a business review.

 

He says: “The initial review revisited Mr Haynes’ business and personal objectives and came up with steps to reduce volatility and capitalise on diversification opportunities, with the aim of improving profitability.”

 

Since then Mr Haynes has grasped a number of opportunities to expand.

 

He scaled down his livestock enterprises, freeing up about 40 hectares of land for arable and began diversifying the business to develop new revenue streams.

 

Volatile

 

He also bought some additional land which has enabled him to diversify the business further by moving into renewable energy generation.


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“Historically, rearing beef cattle had been a profitable enterprise, but with increasing store cattle prices and volatile grain prices, the ongoing instability was too risky to continue on a large scale,” says Mr Haynes.

 

“I always liked the idea of renewable energy and when we started the projects seven years ago, the Government’s Feed-in Tariffs were extremely attractive.”

 

ABP carried out feasibility studies on anaerobic digestion, solar and wind. After reviewing all the options, Mr Haynes opted for a 30kW solar array and a 500kW wind turbine. The solar panels sit on a shed roof, with all electricity being sold straight to the National Grid.

 

“It is only a small installation, but it is the largest we could have because of the grid’s capacity,” adds Mr Haynes.

 

The wind turbine was a slightly trickier process, with some objections being lodged from residents in neighbouring villages.

 

“We are very lucky in that we did not have many objections, and the scheme is just one turbine on its own, not like others in the area where there are a few all grouped together in a mass,” he says.

 

“I do not think it is a blot on the landscape. You hardly notice it. And it does not affect our farming as it is out of the way.”

 

Again, Mr Haynes’ team of advisers dealt with due diligence, planning permission, funding and the contract with the manufacturer.

 

“We installed the wind turbine in 2012,” he says.

 

“We looked at the costs and returns involved and decided that was the best option.

 

Lucrative

 

“The technologies have been a lucrative addition to the farm with all the energy generated going directly to the grid.”

 

Mr Haynes is now enjoying a truly diversified business.

 

“Today, we have many eggs in different baskets,” he adds.

 

“I am still a mixed farmer, but with pigs, arable, a small amount of beef cattle and many diversification income streams, including a wind turbine, solar panels, involvement in environmental schemes and building lettings.”

FURTHER REVENUE STREAMS

 

KEEN to diversify even further, David Haynes took the opportunity to start contract rearing pigs.

 

This utilises the farm’s men, machinery and buildings, and also provides useful farmyard manure to maintain the farm’s arable soil fertility.

 

Mr Haynes has 4,000 pigs and provides straw and husbandry.

 

As the business continued to develop, escalating machinery costs led to the formation of a successful machinery joint venture which has reduced costs and allowed access to bigger, more efficient machinery and better utilisation of labour.

 

Moving into environmental stewardship has also brought another income stream.

 

The farm, like many others, has suffered a progressive increase in black-grass, which resulted in escalating herbicide costs, later drilling and lower output spring crops.

 

“To help tackle the problem, we joined the Mid-Tier Environmental Scheme, which includes an area of land dedicated to growing a legume grass ley mix. This is the second year we have been involved and this option has generated a secure income and reduced the blackgrass while improving the soil’s fertility,” says Mr Haynes.

 

“We can rotate this round the farm and along with the other environmental options, this has created a new enterprise.”

 

Peter Roberts, a farm consultant at Active Business Partnerships, says: “The key to continued success is ongoing planning, monitoring and reviewing.

 

“We are now accommodating the next generation’s objectives in the overall forward plan.

 

“Working with Mr Haynes is fantastic, his ideas are endless and he is a very innovative, forwardthinking farmer.

 

“We have worked together on mixed ventures to reduce costs and increase profitability, and now succession planning forms a key part of the ongoing management decision making process.”

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